UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________
Form 10-K
__________________________________________________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2013
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
(Address of principal executive offices)
30309-7676
(Zip Code)
(404) 853-1400
(Registrant’s telephone number, including area code)
__________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock ($0.01 Par Value)
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
__________________________________________________________
Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
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 and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-
K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller Reporting Company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
Based on the closing price of the Registrant’s common stock of $68.13 as quoted on the New York Stock Exchange on February 28, 2013, the aggregate market
value of the voting stock held by nonaffiliates of the registrant was $2,917,282,861.
The number of shares outstanding of the registrant’s common stock, $0.01 par value, was 42,932,068 shares as of October 25, 2013.
__________________________________________________________
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K
Part II, Item 5
Incorporated Document
Proxy Statement for 2013 Annual Meeting of Stockholders
Part III, Items 10, 11, 12, 13, and 14
Proxy Statement for 2013 Annual Meeting of Stockholders
ACUITY BRANDS, INC.
Table of Contents
Part I
Part II
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Item 1.
Item 1a.
Item 1b.
Item 2.
Item 3.
Item 5.
Item 6.
Item 7.
Item 7a.
Item 8.
Item 9.
Item 9a.
Item 9b.
Other Information
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Part III
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
Part IV
Signatures
Financial Statement Schedules
Page No.
3
7
13
14
14
15
17
18
32
34
80
80
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81
81
81
81
81
82
90
91
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Item 1.
($ in millions, except per-share data and as indicated)
Business
PART I
Overview
Acuity Brands, Inc. (“Acuity Brands”), the parent company of Acuity Brands Lighting, Inc. (“ABL”), and other
subsidiaries (collectively referred to herein as “the Company”), was incorporated in 2001 under the laws of the State of
Delaware. The Company is one of the world’s leading providers of lighting solutions for commercial, institutional, industrial,
infrastructure, and residential applications throughout North America and select international markets. The Company’s lighting
solutions include devices such as luminaires, lighting controls, lighting components, power supplies, prismatic skylights, light-
emitting diode (“LED”) lamps, and integrated lighting systems for indoor and outdoor applications utilizing a combination of
light sources, including daylight, and other devices controlled by software that monitors and manages light levels while
optimizing energy consumption (collectively referred to herein as “lighting solutions”). As a goal-oriented, customer-centric
company, we expect to continue to align the unique capabilities and resources of our organization to drive profitable growth
through a keen focus on providing comprehensive and differentiated lighting solutions for our customers, driving world-class
cost efficiency, and leveraging a culture of continuous improvement.
The Company manufactures or procures lighting devices primarily in North America, Europe, and Asia. These devices can
be sold separately or as part of an integrated lighting system. Devices used in lighting systems vary significantly in terms of
functionality and performance and are selected based on a customer's specification, including the aesthetic desires and
performance requirements for a given lighting application. The Company’s lighting solutions are marketed under numerous
brand names, including Lithonia Lighting®, Holophane®, Peerless®, Mark Architectural Lighting™, Hydrel®, American Electric
Lighting®, Gotham®, Carandini®, RELOC®, Antique Street Lamps™, Winona® Lighting, Synergy® Lighting Controls, Sensor
Switch®, Lighting Control & Design™, Dark to Light®, ROAM®, Sunoptics®, Axion™ Controls, acculamp®, Pathway
Connectivity™, Healthcare Lighting® and eldoLED®. As of August 31, 2013, the Company manufactures products in 16
facilities in North America and two facilities in Europe.
Principal customers include electrical distributors, retail home improvement centers, electric utilities, lighting
showrooms, national accounts, and energy service companies located in North America and select international markets serving
new construction, renovation, and maintenance and repair applications. In North America, the Company’s lighting solutions are
sold primarily by independent sales agents, electrical wholesalers, and factory sales representatives who cover specific
geographic areas and market channels. Products are delivered directly or through a network of distribution centers, regional
warehouses, and commercial warehouses using both common carriers and a company-owned truck fleet. To serve international
customers, the sales forces utilize a variety of distribution methods to meet specific individual customer or country
requirements. In fiscal 2013, sales originated in North America accounted for approximately 98% of net sales. See the
Geographic Information footnote of the Notes to Consolidated Financial Statements for more information concerning the
domestic and international net sales of the Company. The Company has one operating segment serving the North American
lighting market and select international markets.
Industry Overview
Based on industry sources and government information, the Company estimates that in fiscal 2013 the size of the North
American lighting market served by the Company (also referred to herein as “N.A. addressable lighting market”) was
approximately $13 billion and includes non-portable luminaires (as defined by the National Electrical Manufacturers
Association), poles for outdoor lighting, emergency lighting fixtures, daylighting, lighting controls, LED drivers, and certain
types of LED lamps. This market estimate is based on a combination of external industry data and internal estimates, and
excludes portable and vehicular lighting fixtures and certain related lighting components, such as lighting ballasts and most
lamps. The U.S. market, which represents approximately 75% of the North American market, is relatively fragmented.
The Company operates in a highly competitive industry that is affected by volatility from a number of general business
and economic factors, such as gross domestic product growth, employment levels, credit availability, energy costs, and
commodity costs. The Company’s primary market is based on non-residential construction, both new and renovation activity,
which is sensitive to the volatility of these general economic factors. The Company is not aware of any data that accurately
quantifies the split of the non-residential lighting market between new construction and renovations; however, recent trends
developed from industry sources and Company estimates suggest that renovation activity, including retrofit, represents a
growing proportion of the total non-residential lighting market. Construction spending on infrastructure projects such as
highways, streets, and urban developments has a material impact on the demand for the Company’s infrastructure-focused
lighting solutions. Demand for the Company’s lighting solutions sold through certain retail channels is highly dependent on
economic drivers, such as consumer spending and discretionary income, along with housing construction and home
improvement spending.
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A source of demand for the lighting industry is attributed to the renovation and retrofit of lighting systems in existing
buildings. The Company estimates the potential market size of the installed base of U.S. non-residential lighting and lighting
controls to be significant (approximately $250 billion) based on square footage of existing non-residential buildings, of which a
majority represents potential space for relighting activities as they contain older, less efficient lighting systems.
The industry is influenced by the development of new lighting technologies, including solid-state lighting, electronic
drivers, embedded lighting controls, and more effective optical designs and lamps; federal, state, and local requirements for
updated energy codes; incentives by federal, state, and local municipal authorities, as well as utility companies, for using more
energy-efficient lighting solutions; and design technologies addressing sustainability. The Company is a leading provider of
lighting solutions based on these technologies and utilizes internally developed, licensed, or acquired intellectual property. The
industry is experiencing increased competition from new entrants with a focus on new technology-based lighting devices and
controls components.
Products
The Company provides a broad and deep product portfolio including indoor lighting, outdoor lighting, and controls for
commercial, institutional, industrial, infrastructure and residential applications. The Company also provides certain services
across applications and certain components to other original equipment manufacturers.
Indoor Lighting - includes lighting products to illuminate an extensive number of indoor applications. Product
categories include recessed, surface, and suspended lighting products, downlighting, decorative lighting, emergency
and exit lighting, track lighting, and daylighting as well as special-use lighting. These products primarily utilize
fluorescent, LED, high intensity discharge ("HID"), metal halide, and incandescent light sources.
Outdoor Lighting - includes integrated lighting solutions for various outdoor architectural, commercial and utility
applications. Product categories include street and roadway, underwater, parking garage, area, pedestrian, flood,
decorative site, and landscape lighting. These products primarily utilize fluorescent, LED, HID, metal halide, and
incandescent light sources.
Lighting Controls - includes multi-layered lighting control solutions from simple to sophisticated. Product categories
include occupancy sensors, photocontrols, relay panels, architectural dimming panels, theatrical, and integrated
lighting controls systems for indoor and outdoor applications.
Components - includes wiring, LED drivers, glass, and inverters sold primarily to original equipment manufacturers.
Services - includes monitoring and controlling of lighting systems through network technologies, as well as the
commissioning of control systems.
Sales of lighting solutions, excluding services, accounted for approximately 99% of total consolidated net sales for Acuity
Brands in fiscal 2013, 2012, and 2011.
Sales and Marketing
Sales. The Company sells to customers in the North American market with separate sales forces targeted at delivering
value added lighting solutions and services to various customer, channel, and geographic segments. As of August 31, 2013,
these sales forces consist of approximately 250 company-employed salespeople and a network of approximately 150
independent sales agencies, each of which employs numerous salespeople. The Company also operates separate European sales
forces, including independent international sales agencies, and an international sales group coordinating export sales outside of
North America and Europe.
Marketing. The Company markets its portfolio to end users in multiple channels through a broad spectrum of marketing
and promotional vehicles, including direct customer contact, trade shows, on-site training, print advertising in industry
publications, product brochures and other literature, as well as the Internet and other electronic media. The Company owns and
operates training and display facilities in several locations throughout North America and Europe designed to enhance the
lighting knowledge of customers and industry professionals.
Customers
Customers of the Company include electrical distributors, retail home improvement centers, electric utilities, utility
distributors, national accounts, U.S. government and municipalities, lighting showrooms, original equipment manufacturers
("OEMs"), and energy service companies. In addition, there are a variety of other professionals who could represent a
significant influence in the product specification process for any given project. These generally include business owners,
federal, state, and local governments, contractors, engineers, architects, and lighting designers.
4
A single customer of the Company, The Home Depot, accounted for approximately 13% of net sales of the Company in
fiscal 2013 and 10% in both fiscal 2012 and 2011. These sales include products for resale as well as for lighting its facilities.
The loss of The Home Depot’s business could temporarily adversely affect the Company’s results of operations.
Manufacturing
The Company operates 18 manufacturing facilities, including nine facilities in the United States, six facilities in Mexico,
two facilities in Europe, and one in Canada. The Company utilizes a blend of internal and outsourced manufacturing processes
and capabilities to fulfill a variety of customer needs in the most cost-effective manner. Certain critical processes, such as
reflector forming and anodizing, high-end glass production, surface mount circuit board production, LED driver production,
software development, and assembly, are primarily (but not exclusively) performed at company-operated facilities, offering the
ability to differentiate end-products through superior capabilities. Other critical components, such as lamps, LEDs, sockets, and
ballasts are purchased primarily from outside vendors. The Company’s investment in its production facilities is focused on
improving capabilities, product quality, and manufacturing efficiency. The Company also utilizes contract manufacturing from
U.S., Asian, and European sources for certain products. Additionally, the Company purchases certain finished goods, including
poles, to complement its area lighting fixtures, as well as a variety of residential and commercial lighting equipment. Of total
finished goods manufactured and purchased in fiscal 2013, the Company’s U.S. operations produced approximately 26%; its
Mexican operations produced approximately 51%; its European operations produced approximately 2%; and finished product
manufactured by others accounted for approximately 21%.
Distribution
Lighting solutions are delivered directly or through a network of strategically located distribution centers, regional
warehouses, and commercial warehouses in North America using both common carriers and a company-owned truck fleet. For
international customers, distribution methods are adapted to meet individual customer or country requirements.
Research and Development
Research and development (“R&D”) efforts are targeted toward the development of lighting solutions with an ever-
increasing performance-to-cost ratio and energy efficiency, while mutually beneficial relationships with lamp, ballast, LED, and
power supply manufacturers are maintained to understand technology enhancements and incorporate them in the design of the
Company’s lighting solutions. R&D is defined as the critical investigation aimed at discovery of new knowledge and the
conversion of that knowledge into the design of a new product or significant improvement to an existing product. R&D
expenses consist of salaries, payroll taxes, employee benefits, materials, supplies, and other administrative costs, but do not
include all new product development costs. For fiscal 2013, 2012, and 2011, research and development expense totaled $32.7,
$34.7, and $31.3, respectively.
Competition
The lighting market served by the Company is highly competitive, with some of the largest suppliers of lighting
components also serving many of the same markets and competing for the same customers. Competition is based on numerous
factors, including brand name recognition, product quality, product and lighting system design, energy efficiency, customer
relationships, service capabilities, and price. The Company’s largest competitors in the North American lighting market include
Eaton Corporation's Cooper Lighting division, Hubbell Incorporated, and Koninklijke Philips N.V. The Company estimates that
the largest publicly traded manufacturers (including Acuity Brands), which participate in varying degrees in the total North
American lighting market, have approximately half of the total market share. In addition to these large competitors, the
Company also competes with hundreds of manufacturers of varying size.
The market for lighting solutions and services is competitive and continues to evolve. Certain global and more diversified
electrical manufacturers may provide a broader product offering utilizing electrical, lighting, and building automation products.
In addition, there have been a growing number of new competitors, from small startup companies to global consumer
electronics companies, offering solid-state (primarily LED) lighting solutions.
Environmental Regulation
The operations of the Company are subject to numerous comprehensive laws and regulations relating to the generation,
storage, handling, transportation, and disposal of hazardous substances, as well as solid and hazardous wastes, and to the
remediation of contaminated sites. In addition, permits and environmental controls are required for certain of the Company’s
operations to limit air and water pollution, and these permits are subject to modification, renewal, and revocation by issuing
authorities. On an ongoing basis, the Company allocates resources, including investments in capital and operating costs relating
to environmental compliance. Environmental laws and regulations have generally become stricter in recent years, and federal,
state, and local governments domestically and internationally are considering new laws and regulations, including those
5
governing raw material composition, air emissions, end-of-life product dispositions, and energy-efficiency. The Company is not
aware of any pending legislation or proposed regulation related to environmental issues that would have a material adverse
effect on the Company. The cost of responding to future changes, however, may be substantial.
Raw Materials
The devices produced by the Company require certain raw materials, including certain grades of steel and aluminum,
electrical components, plastics, and other petroleum-based materials and components. In fiscal 2013, the Company purchased
approximately 95,000 tons of steel and aluminum. The Company estimates that approximately 8% of purchased raw materials
are petroleum-based. Additionally, the Company estimates that approximately four million gallons of diesel fuel were
consumed in fiscal 2013 through the Company’s distribution activities. The Company purchases most raw materials and other
components on the open market and relies on third parties for providing certain finished goods. While these items are generally
available from multiple sources, the cost of products sold may be affected by changes in the market price of raw materials, as
well as disruptions in availability of raw materials, components, and sourced finished goods.
The Company does not currently engage in or expect to engage in significant commodity hedging transactions for raw
materials, though the Company has and will continue to commit to purchase certain materials for a period of up to 12 months.
Significant increases in the prices of the Company’s products due to increases in the cost of raw materials and components
could have a negative effect on demand for products and on profitability. While the Company has generally been able to pass
along these increases in cost in the form of higher selling prices for its products, there can be no assurance that future
disruptions in either supply or price of these materials will not negatively affect future results.
The Company monitors and investigates alternative suppliers and materials based on numerous attributes including
quality, service, and price. The Company currently sources raw materials from a number of suppliers, but the Company’s
ongoing efforts to improve the cost effectiveness of its products and services may result in a reduction in the number of its
suppliers. A reduction in the number of suppliers could cause increased risk associated with reliance on a single or limited
number of suppliers for certain raw materials, component parts (such as lamps, LEDs, ballasts, and power supplies), and
finished goods.
Backlog Orders
The Company produces and stocks quantities of inventory at key distribution centers and warehouses throughout North
America. The backlog of orders at any given time is affected by various factors, including seasonality, cancellations, sales
promotions, production cycle times, and the timing of receipt and shipment of orders, which are usually shipped within a few
weeks of order receipt. Accordingly, a comparison of backlog orders from period to period is not necessarily meaningful and
may not be indicative of future shipments.
Patents, Licenses and Trademarks
The Company owns or has licenses to use various domestic and foreign patents and trademarks related to its products,
processes, and businesses. These intellectual property rights are important factors for its businesses. To protect these proprietary
rights, the Company relies on copyright, patent, trade secret, and trademark laws. Despite these protections, unauthorized
parties may attempt to infringe on the intellectual property of the Company. Management is not aware of any pending claims
asserting that the Company does not have the right to use intellectual property that is material to the Company. While patents
and patent applications in the aggregate are important to the competitive position of the Company, no single patent or patent
application is individually material to the Company.
Seasonality and Cyclicality
The Company’s business exhibits some seasonality, with net sales being affected by the impact of weather and seasonal
demand on construction and installation programs, particularly during the winter months, as well as the annual budget cycles of
major customers. Because of these seasonal factors, the Company has experienced, and generally expects to experience, its
highest sales in the last two quarters of each fiscal year.
The Company's lighting solutions are sold to customers in both the new construction and renovation and retrofit markets.
The construction market is cyclical in nature and subject to changes in general economic conditions. Unit sales volume has a
major impact on the profitability of the Company. Economic downturns and the potential decline in key construction markets
may have a material adverse effect on the net sales and operating income of the Company.
6
International Operations
The Company manufactures and assembles products at numerous facilities, some of which are located outside the United
States. Approximately 53% of the products produced by the Company are manufactured outside the United States, specifically
in Mexico and Europe. In addition, the Company sources certain finished goods from third parties with operations outside the
United States, primarily in Asia.
Of the products produced by the Company, approximately 51% are manufactured at six facilities in Mexico. Most of
these facilities are authorized to operate as Maquiladoras by the Ministry of Economy of Mexico. Maquiladora status allows the
Company to import certain items from the United States into Mexico duty-free, provided that such items, after processing, are
exported from Mexico within 18 months. Maquiladora status, which is renewed every year, is subject to various restrictions and
requirements, including compliance with the terms of the Maquiladora program and other local regulations.
For fiscal 2013, net sales initiated outside of the U.S. represented approximately 11% of total net sales. See the
Geographic Information footnote of the Notes to Consolidated Financial Statements for additional information regarding the
geographic distribution of net sales, operating profit, and long-lived assets.
Information Concerning Acuity Brands
The Company makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
(and all amendments to these reports) and proxy statements, together with all reports filed pursuant to Section 16 of the
Securities Exchange Act of 1934 by the Company’s officers, directors, and beneficial owners of 10% or more of the Company’s
common stock, available free of charge through the “SEC Filings” link on the Company’s website, located at
www.acuitybrands.com, as soon as reasonably practicable after they are filed with or furnished to the SEC. Information
included on the Company’s website is not incorporated by reference into this Annual Report on Form 10-K. The Company’s
reports are also available at the Securities and Exchange Commission’s Public Reference Room at 100 F. Street, NE,
Washington, DC 20549 or on their website at www.sec.gov. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
Additionally, the Company has adopted a written Code of Ethics and Business Conduct that applies to all of the
Company’s directors, officers, and employees, including its principal executive officer and senior financial officers. The Code
of Ethics and Business Conduct and the Company’s Corporate Governance Guidelines are available free of charge through the
“Corporate Governance” link on the Company’s website. Any amendments to, or waivers of, the Code of Ethics and Business
Conduct for our principal executive officer and senior financial officers will be disclosed on our website promptly following the
date of such amendment or waiver. Additionally, the Statement of Responsibilities of Committees of the Board and the
Statement of Rules and Procedures of Committees of the Board, which contain the charters for the Company’s Audit
Committee, Compensation Committee, and Governance Committee, and the rules and procedures relating thereto, are available
free of charge through the “Corporate Governance” link on the Company’s website. Each of the Code of Ethics and Business
Conduct, the Corporate Governance Guidelines, the Statement of Responsibilities of Committees of the Board, and the
Statement of Rules and Procedures of Committees of the Board is available in print to any stockholder of the Company that
requests such document by contacting the Company’s Investor Relations department.
Employees
Acuity Brands employs approximately 6,500 people, of which approximately 3,200 are employed in the United States,
approximately 3,000 in Mexico, and approximately 300 in other international locations, including Europe, Canada, and the
Asia/Pacific region. Union recognition and collective bargaining arrangements are in place, covering approximately
4,000 persons (including approximately 1,300 in the United States). Union recognition and collective bargaining arrangements
covering approximately 3,000 persons will expire within the next fiscal year. The Company believes that it has a good
relationship with both its unionized and non-unionized employees.
Item 1a.
Risk Factors
This filing contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of
1995. A variety of risks and uncertainties could cause Acuity Brands’ actual results to differ materially from the anticipated
results or other expectations expressed in the Company’s forward-looking statements. See “Cautionary Statement Regarding
Forward-Looking Information” included in Management's Discussion and Analysis of Financial Condition and Results of
Operations. These risks include, without limitation:
7
Risks Related to the Business of Acuity Brands, Inc.
General business and economic conditions, including the strength of the construction market, political events, or other
factors may affect demand for the Company’s products and services, which could impact results of operations.
The Company competes based on such factors as name recognition and reputation, service, product features, innovation,
and price. In addition, the Company operates in a highly competitive environment that is influenced by a number of general
business and economic factors, such as general economic vitality, employment levels, credit availability, interest rates, trends in
vacancy rates and rent values, energy costs, and commodity costs. Sales of lighting equipment depend significantly on the level
of activity in new construction and renovation/retrofits. Declines in general economic activity or uncertainty regarding the
United States debt ceiling and government regulation, including tax policy, may negatively impact new construction and
renovation projects, which in turn may impact demand for the Company’s product and service offerings. The impact of these
factors could adversely affect the Company’s financial position, results of operations, and cash flows.
Tight credit conditions could impair the ability of the Company and other industry parties to effectively access capital
markets, which could negatively impact the Company’s capital position and demand for the Company’s products and
services.
The impact of tight credit conditions could impair the ability of real estate developers, property owners, and contractors to
effectively access capital markets or obtain reasonable costs of capital on borrowed funds, resulting in depressed levels of
construction and renovation projects. The inability of these constituents to borrow money to fund construction and renovation
projects reduces the demand for the Company’s products and services and could adversely affect the Company’s results of
operations and cash flows.
In addition to the impact on customers, tight credit conditions could impair the Company’s ability to effectively access
capital. This could impair the Company’s ability to refinance debt as it becomes due or to obtain additional credit, if needed.
The inability to effectively access capital markets could adversely affect the Company’s financial position, results of operations,
and cash flows.
Acuity Brands’ results may be adversely affected by fluctuations in the cost or availability of raw materials, components,
purchased finished goods or services.
The Company utilizes a variety of raw materials and components in its production process including steel, aluminum,
lamps, certain rare earth materials, LEDs, ballasts, wire, electronic components, power supplies, petroleum-based by-products,
natural gas, and copper. The Company also sources certain finished goods externally. Future increases in the costs of these
items could adversely affect operating margins, as there can be no assurance that future price increases will be successfully
passed through to customers. The Company generally sources these goods from a number of suppliers. However, there are a
limited number of suppliers for certain components and certain purchased finished goods, which on a limited basis results in
sole-source supplier situations. Disruptions in the supply of those items could negatively impact the Company’s short-term
performance. In addition, the Company's ongoing efforts to improve the cost effectiveness of its products and services may
result in a reduction in the number of its suppliers, and in turn, increased risk associated with reliance on a single or limited
number of suppliers. Furthermore, volatility in certain commodities, such as oil, impacts all suppliers and, therefore, may cause
the Company to experience significant price increases from time to time regardless of the number and availability of suppliers.
Profitability and volume could be negatively impacted by limitations inherent within the supply chain of certain of these
component parts, including competitive, governmental, and legal limitations, natural disasters, and other events that could
impact both supply and price. Additionally, the Company is dependent on certain service providers for key operational
functions. While there are a number of suppliers of these services, the cost to change service providers and set up new
processes could be significant. Variability in cost and availability of raw materials, components, purchased finished goods, or
services could adversely affect the Company’s results of operations and cash flows.
Acuity Brand’s results may be adversely affected by the Company’s inability to maintain pricing.
Aggressive pricing actions by competitors may affect the Company’s ability to achieve desired unit volume growth and
profitability levels under its current pricing strategies. The Company may also decide to lower pricing to match the competition.
Additionally, the Company may not be able to increase prices to cover rising costs of components and raw materials. Even if
the Company were able to increase prices to cover costs, competitive pricing pressures may not allow the Company to pass on
any more than the cost increases. Alternatively, if component and raw material costs were to decline, the marketplace may not
allow the Company to hold prices at their current levels, which could negatively impact net sales, gross margins, and cash
flows.
8
Acuity Brands may experience difficulties in the consolidation of manufacturing facilities which could impact the
shipments to customers, product quality, and the ability to realize the expected savings from streamlining actions.
The Company will benefit from its ongoing programs to streamline operations, including the consolidation of certain
manufacturing facilities and the reduction of overhead costs, only to the extent that it can effectively leverage assets, personnel,
and operating processes in the transition of production between manufacturing facilities. Uncertainty is inherent within the
facility consolidation process and unforeseen circumstances could offset the anticipated benefits, disrupt service to customers,
and impact product quality.
Acuity Brands is subject to risks related to operations outside the United States.
The Company has substantial activities outside of the United States, including sourcing of products, materials,
components and purchased finished goods. The Company’s operations, as well as those of key vendors, are therefore subject to
regulatory, economic, political, military, and other events in countries where these operations are located, particularly Mexico.
In addition to the risks that are common to both the Company’s domestic and international operations, the Company faces risks
specifically related to its foreign operations, including but not limited to: foreign currency fluctuations; unstable political,
social, regulatory, economic, financial, and market conditions; potential for privatization and other confiscatory actions; trade
restrictions and disruption; criminal activities; and unforeseen increases in tariffs and taxes. The Company continues to monitor
conditions affecting its international locations, including potential changes in income from a strengthening or weakening in
foreign exchange rates in relation to the U.S. dollar. Some of these risks, including foreign exchange risk, could have a material
adverse effect on the Company’s business, financial condition, results of operations, and cash flows.
Technological developments and increased competition could affect the Company’s operating profit margins and sales
volume.
The Company competes in an industry where technology and innovation play major roles in the competitive landscape.
The Company is highly engaged in the investigation, development, and implementation of new technologies. Securing key
partnerships and alliances as well as employee talent, including having access to technologies developed by others, and
obtaining appropriate patents play a significant role in protecting the Company’s intellectual property and development
activities. Additionally, the continual development of new technologies (e.g., LED, OLED, lamp/ballast systems, drivers,
lighting controls systems, etc.) by existing and new source suppliers — including non-traditional competitors with significant
resources — looking for either direct market access or partnerships with competing large manufacturers, coupled with
significant associated exclusivity and/or patent activity, could adversely affect the Company’s ability to sustain operating profit
margins and desirable levels of sales volume. Also, certain key suppliers of components compete with the Company and could
choose to cease supplying the Company, which could temporarily disrupt production by the Company until alternative supplier
relationships are established. In addition, there have been a growing number of new competitors, from small startup companies
to global consumer electronics companies, offering solid-state (primarily LED) lighting solutions to compete with traditional
lighting providers. Certain global and more diversified electrical manufacturers may be able to obtain a competitive advantage
over the Company by offering broader and more integrated electrical solutions utilizing electrical, lighting, and building
automation products, and small startup companies may offer more localized product sales and support services within
individual regions, which could have a material adverse effect on the Company’s business, financial condition, results of
operations, and cash flows.
The Company’s inability to effectively introduce new products could adversely affect its ability to compete and its
operating performance.
Continual introductions of new products, services, and technologies, enhancement of existing products and services, and
effective servicing of customers are key to the Company’s competitive strategy. The success of new product introductions
depends on a number of factors, including, but not limited to, timely and successful product development, market acceptance,
the Company’s ability to manage the risks associated with product life cycles, such as new products and production capabilities,
the effective management of purchase commitments and inventory levels to support anticipated product manufacturing and
demand, the availability of products in appropriate quantities and costs to meet anticipated demand, and the risk that new
products may have quality or other defects in the early stages of introduction. Accordingly, the Company cannot fully predict
the ultimate effect of new product introductions and transitions on the Company’s business, financial condition, results of
operations, and cash flows.
The Company may be subject to risk in connection with third party relationships necessary to operate the Company's
business.
The Company utilizes strategic partners and third party relationships in order to operate and grow its business. For
instance, the Company utilizes third parties for contract manufacturing for certain products, a portion of its sales function and
some of its distribution requirements. The Company cannot control the actions or performance of these third parties and
9
therefore, cannot be certain that the Company or its end-users will be satisfied. For example, in March 2013, a freight payment
and audit service provider provided notice to the Company that all freight payment services would immediately cease as a result
of a failure in the freight service company's internal system for processing and making payments stemming from a fraud at the
freight service company. As a result, the Company recorded an estimated loss of $8.1 million during fiscal 2013 due to the
funds disbursed by the Company to the freight service company not being subsequently remitted to freight carriers that
provided services to the Company. Any future actions of or any failure to act by any third party on which the Company’s
business relies could cause the Company to incur losses or interruptions in its operations and adversely affect the Company’s
financial condition and results of operations.
Acuity Brands is subject to a broad range of environmental, health, and safety laws and regulations in the jurisdictions in
which it operates, and the Company may be exposed to substantial environmental, health, and safety costs and liabilities.
The Company is subject to a broad range of environmental, health, and safety laws and regulations in the jurisdictions in
which the Company operates. These laws and regulations impose increasingly stringent environmental, health, and safety
protection standards and permitting requirements regarding, among other things, air emissions, wastewater storage, treatment,
and discharges, the use and handling of hazardous or toxic materials, waste disposal practices, the remediation of environmental
contamination, and working conditions for the Company’s employees. Some environmental laws, such as Superfund, the Clean
Water Act, and comparable laws in U.S. states and other jurisdictions world-wide, impose joint and several liability for the cost
of environmental remediation, natural resource damages, third party claims, and other expenses, without regard to the fault or
the legality of the original conduct, on those persons who contributed to the release of a hazardous substance into the
environment. The Company may also be affected by future laws or regulations, including those imposed in response to energy,
climate change, geopolitical, or similar concerns. These laws may impact the sourcing of raw materials and the manufacture
and distribution of the Company’s products and place restrictions and other requirements on the products the Company can sell
in certain geographical locations.
The costs of complying with these laws and regulations, including participation in assessments and remediation of
contaminated sites and installation of pollution control capabilities, have been, and in the future could be, significant. In
addition, these laws and regulations may also result in substantial environmental liabilities associated with divested assets, third
party locations, and past activities. The Company establishes reserves for environmental remediation activities and liabilities
where appropriate. However, the cost of addressing environmental matters (including the timing of any charges related thereto)
cannot be predicted with certainty, and these reserves may not ultimately be adequate, especially in light of potential changes in
environmental conditions, changing interpretations of laws and regulations by regulators and courts, the discovery of previously
unknown environmental conditions, the risk of governmental orders to carry out additional compliance on certain sites not
initially included in remediation in progress, the Company’s potential liability to remediate sites for which provisions have not
previously been established, and the adoption of more stringent environmental laws. Such future developments could result in
increased environmental costs and liabilities and could require significant capital and other ongoing expenditures, any of which
could have a material adverse effect on the Company’s financial condition or results of operations. In addition, the presence of
environmental contamination at the Company’s properties could adversely affect its ability to sell a property, receive full value
for a property, or use a property as collateral for a loan.
Acuity Brands may develop unexpected legal contingencies or matters that exceed insurance coverage.
The Company is subject to various claims, including legal claims arising in the normal course of business. The Company
is insured up to specified limits for certain types of losses with a self-insurance retention per occurrence, including product
liability claims, and is fully self-insured for certain other types of losses, including environmental, product recall, warranties,
commercial disputes, and patent infringement. The Company establishes reserves for legal claims when the costs associated
with the claims become probable and can be reasonably estimated. The actual costs of resolving legal claims may be
substantially higher or lower than the level of insurance coverage held by the Company and/or the amounts reserved for such
claims. In the event of unexpected future developments, it is possible that the ultimate resolutions of such matters, if
unfavorable, could have a material adverse effect on the Company’s results of operations, financial position, or cash flows. The
Company’s insurance coverage is negotiated on an annual basis, and insurance policies in the future may have coverage
exclusions that could cause claim-related costs to rise.
If Acuity Brands’ products are improperly designed, manufactured, packaged, or labeled, the Company may need to
recall those items, may have increased warranty costs, and could be the target of product liability claims.
The Company may need to recall products if they are improperly designed, manufactured, packaged, or labeled, and the
Company does not maintain insurance for such recall events. Many of the Company's products and solutions have become more
complex in recent years and include more sophisticated and sensitive electronic components. The Company has increasingly
manufactured certain of those components and products in its own facilities. The Company has previously initiated product
recalls as a result of potentially faulty components, assembly, installation, and packaging of its products, and widespread
10
product recalls could result in significant losses due to the costs of a recall, the destruction of product inventory, and lost sales
due to the unavailability of a product for a period of time. In addition, products developed by the Company that incorporate new
technologies, such as LED technology, generally provide for more extensive warranty protection which may result in higher
costs if warranty claims on these products are higher than historical amounts. The Company may also be liable if the use of any
of its products causes harm, and could suffer losses from a significant product liability judgment against the Company in excess
of its insurance limits. The Company may not be able to obtain indemnity or reimbursement from its suppliers or other third
parties for the warranty costs or liabilities associated with its products. A significant product recall, warranty claim, or product
liability case could also result in adverse publicity, damage to the Company’s reputation, and a loss of consumer confidence in
its products, which could have a material adverse effect on the Company’s business, financial condition, results of operations,
and cash flows.
Acuity Brands may pursue future growth through strategic acquisitions and alliances, which may not yield anticipated
benefits.
The Company has strengthened its business through strategic acquisitions and alliances and may continue to do so as
opportunities arise in the future. The Company will benefit from such activity only to the extent that it can effectively leverage
the assets of the acquired businesses and alliances, including, but not limited to, personnel, technology, and operating processes.
Uncertainty is inherent within the acquisition and alliance process and unforeseen circumstances arising from recent and future
acquisitions or alliances could offset their anticipated benefits. In addition, unanticipated events, negative revisions to valuation
assumptions and estimates, and/or difficulties in attaining synergies, among other factors, could adversely affect the Company’s
ability to recover initial and subsequent investments, particularly those related to acquired goodwill and intangible assets. Any
of these factors could have a material adverse effect on the Company’s financial condition, results of operations, and cash
flows. In addition, an investment in acquisitions or alliances may limit the Company's ability to invest in other activities, which
could be more profitable or advantageous.
Failure to effectively estimate employer-sponsored health insurance premiums and incremental costs due to the
Affordable Healthcare Act could materially and adversely affect the Company's financial condition, results of operations,
and cash flows.
In March 2010, the United States federal government enacted comprehensive health care reform legislation, which,
among other things, includes guaranteed coverage requirements, eliminates pre-existing condition exclusions and annual and
lifetime maximum limits, restricts the extent to which policies can be rescinded, and imposes new taxes on health insurers, self-
insured companies, and health care benefits. The legislation imposes implementation effective dates that began in 2010 and
extend through 2020 with many of the changes requiring additional guidance and regulations from federal agencies. Possible
adverse effects could include increased costs, exposure to expanded liability, and requirements for the Company to revise the
ways in which healthcare and other benefits are provided to employees. To date, the Company has experienced increased,
although immaterial, costs related to such legislation; however, due to the phased-in nature of the implementation and the lack
of interpretive guidance, the Company continues to monitor the potential impacts the health care reform legislation will have on
the Company’s financial results. Future costs could have a material adverse effect on the Company's financial condition, results
of operations, and cash flows.
Acuity Brands may be unable to sustain significant customer and/or channel partner relationships.
Relationships with customers, including The Home Depot which historically has represented approximately 10% of the
Company’s total net sales, are directly impacted by the Company’s ability to deliver high-quality products and services. The
loss of or a substantial decrease in the volume of purchases by The Home Depot could temporarily harm the Company’s sales,
profitability, and cash flows. The Company also has relationships with channel partners such as electrical distributors and
independent sales agencies. While the Company has experienced positive, and in most cases long-term, relationships with these
channel partners, the loss of a number of these channel partners or a substantial decrease in the volume of purchases from a
major channel partner or a group of channel partners could, at least in the short-term, adversely affect the Company’s sales,
profitability, and cash flows.
Acuity Brands could be adversely affected by disruptions of its operations.
The breakdown of equipment or other events, including labor disputes, strikes, pandemics or catastrophic events such as
war or natural disasters, leading to production interruptions in the Company’s or one or more of its suppliers’ facilities could
have a material adverse effect on the Company’s financial results and cash flows. Approximately 51% of the Company’s
finished products are manufactured in Mexico, a country that periodically experiences heightened civil unrest which could also
disrupt supply of products to or from these facilities. Further, because many of the Company’s customers are to varying
degrees, dependent on planned deliveries from the Company’s facilities, those customers that have to reschedule their own
production or delay opening a facility due to the Company’s missed deliveries could pursue financial claims against the
11
Company. The Company may incur costs to correct any of these problems in addition to facing claims from customers. Further,
the Company’s reputation among actual and potential customers may be harmed and result in a loss of business. While the
Company has developed business continuity plans, including alternative capacity, to support responses to such events or
disruptions and maintains insurance policies covering, among other things, physical damage and business interruptions, these
policies may not cover all losses. The Company could incur uninsured losses and liabilities arising from such events, including
damage to its reputation, loss of customers, and substantial losses in operational capacity, any of which could have a material
adverse effect on its financial condition, results of operations, and cash flows.
Failure of a Company operating or information system or a compromise of security with respect to an operating or
information system or portable electronic device could adversely affect the Company’s results of operations and financial
condition or the effectiveness of internal controls over operations and financial reporting.
The Company is highly dependent on automated systems to record and process Company and customer transactions and
certain other components of the Company’s financial statements. The Company could experience a failure of one or more of
these systems or could fail to complete all necessary data reconciliation or other conversion controls when implementing a new
software system. The Company could also experience a compromise of its security due to technical system flaws, clerical, data
input or record-keeping errors, or tampering or manipulation of its systems by employees or unauthorized third parties.
Information security risks also exist with respect to the use of portable electronic devices, such as laptops and smartphones,
which are particularly vulnerable to loss and theft. The Company may also be subject to disruptions of any of these systems
arising from events that are wholly or partially beyond its control (for example, natural disasters, acts of terrorism, epidemics,
computer viruses, and electrical/telecommunications outages). All of these risks are also applicable where the Company relies
on outside vendors to provide services, which may operate in a cloud environment. The Company is dependent on the third-
party vendors to operate secure and reliable systems which may include data transfers over the internet.
The Company also maintains information technology to support lighting controls systems in certain of its customer
offerings, which are integral to the functionality of those integrated systems. In addition to the risks noted above, there are
other risks associated with these customer offerings. Customers may be installing software on their networks and utilizing
portable electronic devices, which may have security protocol variations that are outside of the Company’s control and could
result in a data compromise.
Operating system failures, ineffective system implementation or disruptions, or the compromise of security with respect to
internal or external operating systems or portable electronic devices could subject the Company to liability claims, harm the
Company’s reputation, interrupt the Company’s operations, disrupt customer operations, and adversely affect the Company’s
internal control over financial reporting, business, financial condition, results of operations, or cash flows.
The inability to attract and retain talented employees and/or a loss of key employees could adversely affect the
effectiveness of the Company’s operations.
The Company relies upon the knowledge and experience of employees involved in functions throughout the organization
that require technical expertise and knowledge of the industry. An inability to attract and retain such employees could adversely
impact the Company’s ability to execute key operational functions and could adversely affect the Company’s operations.
The Company may not be able to adequately protect its intellectual property.
The Company owns certain patents, trademarks, copyrights, trade secrets, and other intellectual property. In addition, the
Company continues to file patent applications, when appropriate. The Company cannot be certain that others have not and will
not infringe on its intellectual property rights; however, the Company seeks to establish and protect those rights, which could
result in significant legal expense and adversely affect the Company's financial condition and results of operations.
The risks associated with the inability to effectively execute its strategies could adversely affect the Company’s financial
condition and results of operations.
Various uncertainties and risks are associated with the implementation of a number of aspects of the Company’s global
business strategy, including but not limited to new product development, effective integration of acquisitions, and efforts to
streamline operations. Those uncertainties and risks include, but are not limited to: diversion of management’s attention;
difficulty in retaining or attracting employees; negative impact on relationships with distributors and customers; obsolescence
of current products and slow new product development; additional streamlining efforts; and unforeseen difficulties in the
implementation of the management operating structure. Problems with strategy execution could offset anticipated benefits,
disrupt service to customers, and impact product quality as well as adversely affect the Company’s financial condition and
results of operations.
12
Compliance with new reporting requirements related to the use of conflict minerals, within the meaning of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, may result in additional expense, supply chain limitations, or loss
of customers.
In July 2010, the United States federal government enacted the Dodd–Frank Wall Street Reform and Consumer Protection
Act, which contained provisions that mandated the creation of rules by the SEC for public companies to ascertain the region of
origin of conflict minerals (i.e., cassiterite, wolframite, coltan, and gold) used in the production of goods. In August 2012, the
SEC adopted new rules requiring disclosures of conflict minerals that are necessary to the functionality or production of
products manufactured or contracted to be manufactured by public companies. The new rule requires companies to perform due
diligence and disclose through the issuance of a report whether or not such minerals originate from the Democratic Republic of
Congo or an adjoining country. The new rule could affect sourcing at competitive prices and availability in sufficient quantities
of certain minerals used in the manufacture of the Company’s products, including tantalum, tin, tungsten, and gold. The number
of suppliers who provide conflict-free minerals may be limited, which could have an adverse affect on the Company’s ability to
source these products in the future. In addition, due to the complexity of the Company's supply chain, compliance with the rules
requires significant efforts from a cross-functional project team, including identifying and contacting the Company's suppliers
(who in turn may be required to contact their suppliers), compiling and documenting the findings, and possibly providing for an
independent third party audit. Therefore, costs attributable to compliance with the disclosure requirements of the SEC’s new
rules will be incurred and could be material. In addition, pressure from customers for more information or due diligence could
result in increased costs or potentially the loss of certain customers. Jurisdictions other than the U.S. federal government, such
as U.S. states and the European Union, may adopt similar rules and regulations, which could have different reporting
requirements or time lines. The costs of compliance, including those related to supply chain research, unexpected consequences
to the Company’s reputation or customer relationships, the limited number of suppliers, and possible changes in the sourcing of
these materials could adversely affect the Company’s results of operations and cash flows.
Risk Related to Ownership of Acuity Brands Common Stock
The market price and trading volume of the Company’s shares may be volatile.
The market price of the Company’s common shares could fluctuate significantly for many reasons, including for reasons
unrelated to the Company’s specific performance, such as reports by industry analysts, investor perceptions, or negative
announcements by customers, competitors or suppliers regarding their own performance, as well as general global economic
and industry conditions. To the extent that other large companies within the Company’s industry experience declines in their
share price, the Company’s share price may decline as well. In addition, when the market price of a company’s shares drops
significantly, shareholders could institute securities class action lawsuits against the company. A lawsuit against the Company
could cause the Company to incur substantial costs and could divert the time and attention of the Company’s management and
other resources.
Item 1b.
Unresolved Staff Comments
None.
13
Item 2.
Properties
The general corporate offices of Acuity Brands are located in Atlanta, Georgia. Because of the diverse nature of
operations and the large number of individual locations, it is neither practical nor meaningful to describe each of the operating
facilities owned or leased by the Company. The following listing summarizes the significant facility categories:
Nature of Facilities
Manufacturing Facilities
Warehouses
Distribution Centers*
Offices
Owned
Leased
11
—
2
3
7
3
5
19
11
7
18
______________________________________
* The majority of the Distribution Centers also have manufacturing capabilities.
The following table provides additional geographic information related to Acuity Brands’ manufacturing facilities:
Owned
Leased
Total
United States
Mexico
Europe
Canada
Total
5
4
9
5
1
6
1
1
2
—
1
1
None of the individual properties of Acuity Brands is considered to have a value that is significant in relation to the assets
of Acuity Brands as a whole. Though a loss at certain facilities could have an impact on the Company’s ability to serve the
needs of its customers, the Company believes that the financial impact would be partially mitigated by various insurance
programs in place. Acuity Brands believes that its properties are well maintained and in good operating condition and that its
properties are suitable and adequate for its present needs. The Company believes that it has additional capacity available at most
of its production facilities and that it could increase production without substantial capital expenditures. As noted above,
initiatives related to enhancing the global supply chain may continue to result in the consolidation of certain manufacturing
facilities. The Company believes that the remaining facilities will have sufficient capacity to serve current and projected market
demand.
Item 3.
General
Legal Proceedings
Acuity Brands is subject to various legal claims arising in the normal course of business, including, but not limited to,
patent infringement, product liability claims, and employment matters. Acuity Brands is self-insured up to specified limits for
certain types of claims, including product liability, and is fully self-insured for certain other types of claims, including
environmental, product recall, and patent infringement. 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
the financial condition, results of operations, or cash flows of Acuity Brands. However, in the event of unexpected future
developments, it is possible that the ultimate resolution of any such matters, if unfavorable, could have a material adverse effect
on the financial condition, results of operations, or cash flows of Acuity Brands in future periods. Acuity Brands establishes
reserves for legal claims when the costs associated with the claims become probable and can be reasonably estimated. The
actual costs of resolving legal claims may be substantially higher than the amounts reserved for such claims. However, the
Company cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the
amounts reserved.
Environmental Matters
The operations of the Company are subject to numerous comprehensive laws and regulations relating to the generation,
storage, handling, transportation, and disposal of hazardous substances, as well as solid and hazardous wastes, and to the
remediation of contaminated sites. In addition, permits and environmental controls are required for certain of the Company’s
operations to limit air and water pollution, and these permits are subject to modification, renewal, and revocation by issuing
authorities. On an ongoing basis, Acuity Brands invests capital and incurs operating costs relating to environmental compliance.
Environmental laws and regulations have generally become stricter in recent years. The cost of responding to future changes
may be substantial. Acuity Brands establishes reserves for known environmental claims when the costs associated with the
claims become probable and can be reasonably estimated. The actual cost of environmental issues may be substantially higher
than that reserved due to difficulty in estimating such costs.
14
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
The common stock of Acuity Brands, Inc. (“Acuity Brands” or the “Company”) is listed on the New York Stock
Exchange under the symbol “AYI”. At October 25, 2013, there were 3,217 stockholders of record. The following table sets
forth the New York Stock Exchange high and low sale prices and the dividend payments for Acuity Brands’ common stock for
the periods indicated.
2012
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2013
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Price per Share
High
Low
Dividends
per Share
$50.27
$64.26
$64.82
$66.66
$69.46
$73.48
$79.16
$89.57
$33.13
$47.82
$49.60
$48.11
$57.42
$62.39
$65.99
$72.34
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
The Company currently plans to pay quarterly dividends for fiscal 2014 on its common stock at an annual rate of $0.52
per share. However, all decisions regarding the declaration and payment of dividends are at the discretion of the Board of
Directors of the Company (the "Board") and will be evaluated regularly in light of the Company’s financial condition, earnings,
growth prospects, funding requirements, applicable law, and any other factors that the Board deems relevant. The information
required by this item with respect to equity compensation plans is included under the caption Equity Compensation Plans in the
Company’s proxy statement for the annual meeting of stockholders to be held January 7, 2014, to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Issuer Purchases of Equity Securities
In September 2011, the Board authorized the repurchase of two million shares of the Company's outstanding common
stock. None of the Company’s outstanding common stock has been repurchased under the current plan; therefore, the maximum
number of shares that may yet be purchased under the program equals two million.
Depending on market conditions, shares may be repurchased from time to time at prevailing market prices through open
market or privately negotiated transactions. No date has been established for the completion of the share repurchase program
and the Company is 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.
Company Stock Performance
The following information in this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed”
with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange
Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except
to the extent specifically incorporated by reference into such filing.
15
The following graph compares the cumulative total return to shareholders on the Company’s outstanding stock during the
five years ended August 31, 2013, with the cumulative total returns of the Standard & Poor’s (“S&P”) MidCap 400 Index, the
Dow Jones U.S. Electrical Components & Equipment Index, and the Dow Jones U.S. Building Materials & Fixtures Index. The
Company is a component of both the S&P Midcap 400 Index and Dow Jones U.S. Building Materials & Fixtures Index. The
Dow Jones U.S. Electrical Components & Equipment Index is also included in the following graph as the parent companies of
several major lighting companies are included in the index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Among Acuity Brands, Inc., the S&P Midcap 400 Index,
the Dow Jones US Electrical Components & Equipment Index,
and the Dow Jones US Building Materials & Fixtures Index
*Assumes $100 invested on August 31, 2008 in stock or index, including reinvestment of dividends.
Acuity Brands, Inc.
S&P Midcap 400 Index
Dow Jones US Electrical Components & Equipment Index
Dow Jones US Building Materials & Fixtures Index
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
$
$
$
$
100 $
100 $
100 $
100 $
75 $
82 $
78 $
75 $
92 $
92 $
82 $
75 $
110 $
113 $
101 $
84 $
155 $
127 $
126 $
126 $
208
157
157
160
16
Item 6.
Selected Financial Data
The following table sets forth certain selected consolidated financial data of Acuity Brands which has been derived from
the Consolidated Financial Statements for each of the five years in the period ended August 31, 2013. The Company completed
the spin-off of its specialty products business (the "Spin-off"), Zep Inc., on October 31, 2007. The Company incurred a $0.6
million gain from discontinued operations during fiscal 2010 due to revisions of estimates of certain legal reserves established
at the time of the Spin-off compared with a fiscal 2009 loss from discontinued operations of $0.3 million related to income tax
adjustments. This historical information may not be indicative of the Company’s future performance. The information set forth
below should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and the notes thereto.
2013(1)
2012(2)
2011
2010(3)
2009(4)
Years Ended August 31,
(In millions, except per-share data)
Net sales
$ 2,089.1
$ 1,933.7
$ 1,795.7
$ 1,626.9
$ 1,657.4
Income from Continuing Operations
Income (loss) from Discontinued Operations
Net Income
Basic earnings per share from Continuing Operations
Basic earnings (loss) per share from Discontinued
Operations
Basic earnings per share
Diluted earnings per share from Continuing Operations
Diluted earnings (loss) per share from Discontinued
Operations
Diluted earnings per share
Cash and cash equivalents
Total assets
Long-term debt
Total debt
Stockholders’ equity
$
$
$
$
$
127.4
—
127.4
116.3
—
116.3
105.5
—
105.5
2.97
$
2.75
$
2.46
$
—
2.97
2.95
—
2.95
359.1
$
$
$
$
—
2.75
2.72
—
2.72
284.5
$
$
$
$
—
2.46
2.42
—
2.42
170.2
$
$
$
$
1,903.8
1,736.9
1,597.4
353.6
353.6
993.5
353.5
353.5
834.0
353.4
353.4
757.0
$
$
$
$
$
79.0
0.6
79.6
1.83
0.01
1.84
1.79
0.01
1.80
191.0
1,503.6
353.3
353.3
694.4
Cash dividends declared per common share
$
0.52
$
0.52
$
0.52
$
0.52
$
_______________________________________
85.2
(0.3)
84.9
2.05
(0.01)
2.04
2.01
(0.01)
2.00
18.7
1,290.6
22.0
231.5
672.2
0.52
(1)
(2)
(3)
(4)
Income from Continuing Operations, Net Income, Basic Earnings per Share from Continuing Operations, and Diluted Earnings per Share from
Continuing Operations for fiscal 2013 include a) pre-tax incremental costs of $8.4 ($5.2 after-tax), or $0.12 per share, incurred due to manufacturing
inefficiencies directly related to the Cochran, GA manufacturing facility closure; b) pre-tax costs of $8.1 ($5.0 after-tax), or $0.12 per share, as a
result of fraud at the Company's former freight payment and audit service provider; and c) a pre-tax special charge of $8.5 ($5.5 after-tax), or $0.12
per share, related to initiatives to simplify and streamline the Company's operations, including the planned closure of certain small production
facilities.
Income from Continuing Operations, Net Income, Basic Earnings per Share from Continuing Operations, and Diluted Earnings per Share from
Continuing Operations for fiscal 2012 include expenses incurred in the closing of the Cochran, GA manufacturing facility and other streamlining
activities. Amounts related to these restructuring charges were comprised of the following: a) $13.3 of pre-tax special charges ($8.8 after-tax), or
$0.21 per share, primarily related to severance and production transfer costs; b) pre-tax non-cash impairments of $1.2 ($0.8 after-tax), or $0.02 per
share, attributable to the abandonment of usable inventory that was not transferred to other facilities; and c) pre-tax incremental costs incurred due to
manufacturing inefficiencies directly related to the Cochran facility closure, which amounted to approximately $3.2 ($2.0 after-tax), or $0.05 per
share.
Income from Continuing Operations, Net Income, Basic Earnings per Share from Continuing Operations, and Diluted Earnings per Share from
Continuing Operations for fiscal 2010 include a pre-tax special charge of $8.4 ($5.5 after-tax), or $0.13 per share, for estimated costs the Company
incurred to simplify and streamline its operations. Net income, Basic Earnings per Share from Continuing Operations, and Diluted Earnings per
Share from Continuing Operations for fiscal 2010 also include a pre-tax loss of $10.5 ($6.8 after-tax), or $0.16 per share, related to the loss on early
debt extinguishment.
Income from Continuing Operations, Net Income, Basic Earnings per Share from Continuing Operations, and Diluted Earnings per Share from
Continuing Operations for fiscal 2009 include a pre-tax special charge of $26.7 ($16.8 after-tax), or $0.40 per share, for estimated costs to simplify
and streamline the Company’s operations.
17
Item 7.
($ in millions, except per-share data and as indicated)
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes
included within this report. References made to years are for fiscal year periods.
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 and its subsidiaries for the
years ended August 31, 2013 and 2012. For a more complete understanding of this discussion, please read the Notes to
Consolidated Financial Statements included in this report.
Overview
Company
Acuity Brands is the parent company of Acuity Brands Lighting, Inc. (“ABL”), and other subsidiaries (collectively
referred to herein as the “Company”). The Company, with its principal office in Atlanta, Georgia, employs approximately
6,500 people worldwide.
The Company designs, produces, and distributes a broad array of lighting solutions, components, and services for
commercial, institutional, industrial, infrastructure, and residential applications for various markets throughout North America
and select international markets. The Company's lighting solutions include devices such as luminaires, lighting controls,
prismatic skylights, light-emitting diode (“LED”) lamps and drivers, and integrated lighting systems for indoor and outdoor
applications utilizing a combination of light sources, including daylight, and other devices controlled by software that monitors
and manages light levels while optimizing energy consumption (collectively referred to herein as “lighting solutions”). The
Company is one of the world's leading producers and distributors of lighting solutions, with a broad, highly configurable
product offering, consisting of a diversified portfolio of lighting, controls, and daylighting brands. The Company integrates
conventional and advanced solid-state lighting fixtures with digital controls and daylighting products to create greater energy
efficiencies and higher quality of light for a broad and diverse customer base. As of August 31, 2013, the Company operates 18
manufacturing facilities and seven distribution facilities along with three warehouses to serve its extensive customer base.
The Company has made several acquisitions to expand and enhance its portfolio of lighting solutions over the last five years,
including the following recent acquisitions:
On March 13, 2013, the Company acquired for cash, including potential additional cash payments that may be paid in future
periods under earn-out provisions, all of the ownership interests in eldoLAB Holding B.V. (“eldoLED”), a leading provider of
high-performance drivers for LED lighting systems based in Eindhoven, The Netherlands. The operating results of eldoLED have
been included in the Company's consolidated financial statements since the date of acquisition.
On December 20, 2012, the Company acquired for cash all of the ownership interests in Adura Technologies ("Adura"), a
leading developer of radio frequency (RF) mesh networking technology that allows individual light fixtures to communicate in a
wireless mesh network with switches, sensors and system management software. The operating results for Adura have been
included in the Company’s consolidated financial statements since the date of acquisition.
On May 12, 2011, the Company acquired for cash all of the ownership interests in Healthcare Lighting, Inc. (“Healthcare
Lighting”), a leading provider of specialized, high-performance lighting solutions for healthcare facilities based in Fairview,
Pennsylvania. The operating results for Healthcare Lighting have been included in the Company's consolidated financial
statements since the date of acquisition.
On February 23, 2011, the Company acquired for cash all of the ownership interests in Washoe Equipment, Inc., d/b/a
Sunoptics Prismatic Skylights, and CBC Plastics LLC (collectively, “Sunoptics”), a premier designer, manufacturer, and
marketer of high-performance, prismatic daylighting solutions based in Sacramento, California. The operating results for
Sunoptics have been included in the Company's consolidated financial statements since the date of acquisition.
On October 14, 2010, the Company acquired for cash all of the outstanding capital stock of Winona Lighting, Inc.
(“Winona Lighting”), a premier provider of architectural and high-performance indoor and outdoor lighting solutions
headquartered in Winona, Minnesota. The operating results for Winona Lighting have been included in the Company's
consolidated financial statements since the date of acquisition.
18
Strategy
The Company's strategy is to extend its leadership position in the lighting market by delivering superior lighting
solutions. As a goal-oriented, customer-centric company, management will continue to align the unique capabilities and
resources of the organization to drive profitable growth through a keen focus on providing comprehensive and differentiated
lighting solutions for its customers, driving world-class cost efficiency, and leveraging a culture of continuous improvement.
Throughout fiscal 2013, the Company believes it made significant progress towards achieving its strategic objectives,
including expanding its access to the market, introducing new lighting solutions, and enhancing its operations to create a
stronger, more effective organization. The strategic objectives were developed to enable the Company to meet or exceed the
following financial goals during an entire business cycle:
• Operating margins in the mid-teens or higher;
• Earnings per share growth in excess of 15% per annum;
• Return on stockholders’ equity of 20% or better per annum; and
• Cash flow from operations, less capital expenditures, that is in excess of net income.
To increase the probability of the Company achieving these financial goals, management will continue to implement
programs to enhance its capabilities at providing unparalleled customer service; creating a globally competitive cost structure;
improving productivity; and introducing new and innovative lighting solutions and services more rapidly and cost effectively.
In addition, the Company has invested considerable resources to teach and train associates to utilize tools and techniques that
accelerate success in these key areas, as well as to create a culture that demands excellence through continuous improvement.
Additionally, the Company promotes a “pay-for-performance” culture that rewards achievement, while closely monitoring
appropriate risk-taking. The expected outcome of these activities will be to better position the Company to deliver on its full
potential, to provide a platform for future growth opportunities, and to allow the Company to achieve its long-term financial
goals. See the Outlook section below for additional information.
Liquidity and Capital Resources
The Company's principle sources of liquidity are operating cash flows generated primarily from its business operations,
cash on hand, and various sources of borrowings. The ability of the Company to generate sufficient cash flow from operations
or to access certain capital markets, including banks, is necessary to fund its operations and capital expenditures, pay dividends,
meet its obligations as they become due, and maintain compliance with covenants contained in its financing agreements.
In recent years, the Company strengthened its liquidity position and extended its debt maturity profile following the
issuance of $350.0 of senior unsecured notes due in fiscal 2020 (the “Notes”) and the execution of a $250.0 revolving credit
facility scheduled to mature in fiscal 2017 (the “Revolving Credit Facility”). See the Capitalization section below and the Debt
and Lines of Credit footnote of the Notes to Consolidated Financial Statements for more information.
Based on its cash on hand, availability under existing financing arrangements and current projections of cash flow from
operations, the Company believes that it will be able to meet its liquidity needs over the next 12 months. Short-term needs are
expected to include funding its operations as currently planned, making anticipated capital investments, funding potential
acquisitions, paying quarterly stockholder dividends as currently anticipated, paying interest on borrowings as currently
scheduled, and making required contributions into its employee benefit plans, as well as potentially repurchasing shares of its
outstanding common stock as authorized by the Board of Directors. Two million shares of the Company’s common stock are
currently authorized and available for repurchase under the existing repurchase program. The Company expects to repurchase
shares on an opportunistic basis. The Company currently expects to invest during fiscal 2014 approximately $50.0 primarily for
equipment, tooling, and new and enhanced information technology capabilities. Additionally, management believes that the
Company's cash flow from operations and sources of funding, including, but not limited to, borrowing capacity, will sufficiently
support the long-term liquidity needs of the Company.
Cash Flow
The Company uses available cash and cash flow from operations, as well as proceeds from the exercise of stock options,
to fund operations and capital expenditures, repurchase Company stock, fund acquisitions, and pay dividends.
The Company’s cash position at August 31, 2013 was $359.1, an increase of $74.6 from August 31, 2012. During the year
ended August 31, 2013, the Company generated net cash from operating activities of $132.3 with additional cash received of
$14.9 from stock issuances primarily in connection with stock option exercises. Cash generated from operating activities, as
well as cash on-hand, was used during the current year for capital expenditures of $40.6 and acquisitions (net of cash assumed)
of $25.5. In addition, the Company paid dividends to stockholders of $22.4. Foreign currency related items had an unfavorable
effect on cash flows of $0.3 during the current year.
19
During fiscal 2013, net cash generated from operating activities decreased $39.9 to $132.3 compared with $172.2
generated in the prior-year period due primarily to higher operating working capital in fiscal 2013 compared with the prior-year
period, partially offset by higher net income. Net cash used by operating working capital (calculated by adding accounts
receivable plus inventories, and subtracting accounts payable-net of acquisitions) increased by approximately $44.8 in fiscal
2013 compared to fiscal 2012, due primarily to an increase in accounts receivable. The increase in accounts receivable was
attributable to the higher level of net sales in fiscal 2013 compared with fiscal 2012 and the timing of payments from
customers. Inventory and accounts payable increased due primarily to greater production and purchases to support the higher
level of net sales in fiscal 2013.
Management believes that investing in assets and programs that will over time increase the overall return on the
Company’s invested capital is a key factor in driving stockholder value. The Company invested $40.6 and $31.4 in fiscal 2013
and 2012, respectively, primarily for new tooling, machinery, equipment, and information technology.
Contractual Obligations
The following table summarizes the Company’s contractual obligations at August 31, 2013:
Debt(1)
Interest Obligations(2)
Operating Leases(3)
Purchase Obligations(4)
Other Long-term Liabilities(5)
Total
___________________________
Payments Due by Period
Total
Less than
One Year
1 to 3 Years
4 to 5
Years
After 5
Years
$
354.0
$
— $
— $
— $
354.0
248.9
61.3
102.5
53.3
31.2
14.3
99.5
18.3
64.0
23.3
3.0
13.4
65.8
14.3
—
4.7
87.9
9.4
—
16.9
$
820.0
$
163.3
$
103.7
$
84.8
$
468.2
(1)
(2)
(3)
(4)
(5)
These amounts (which represent the amounts outstanding at August 31, 2013) are included in the Company’s Consolidated Balance Sheets. See the
Debt and Lines of Credit footnote for additional information regarding debt and other matters.
These amounts represent primarily the expected future interest payments on outstanding debt held by the Company at August 31, 2013 and the
Company’s outstanding loans related to its corporate-owned life insurance policies (“COLI”), which constitute a small portion of the total amounts
shown. COLI-related interest payments included in this table are estimates. These estimates are based on various assumptions, including age at
death, loan interest rate, and tax bracket. The amounts in this table do not include COLI-related payments after ten years due to the difficulty in
calculating a meaningful estimate that far in the future. Note that payments related to debt and the COLI are reflected in the Company’s
Consolidated Statements of Cash Flows.
The Company’s operating lease obligations are described in the Commitments and Contingencies footnote.
Purchase obligations include commitments to purchase goods or services that are enforceable and legally binding and that specify all significant
terms, including open purchase orders.
These amounts are included in the Company’s Consolidated Balance Sheets and largely represent other liabilities for which the Company is
obligated to make future payments under certain long-term employee benefit programs. Estimates of the amounts and timing of these amounts are
based on various assumptions, including expected return on plan assets, interest rates, and other variables. The amounts in this table do not include
amounts related to future funding obligations under the defined benefit pension plans. The amount and timing of these future funding obligations are
subject to many variables and also depend on whether or not the Company elects to make contributions to the pension plans in excess of those
required under ERISA. Such voluntary contributions may reduce or defer the funding obligations. See the Pension and Profit Sharing Plans footnote
for additional information. These amounts exclude $5.0 of unrecognized tax benefits as a reasonable estimate of the period of cash settlement with
the respective taxing authorities that cannot be determined.
Capitalization
The current capital structure of the Company is comprised principally of senior unsecured notes and equity of its
stockholders. As of August 31, 2013, total debt outstanding of $353.6 remained substantially unchanged from August 31, 2012
and consisted primarily of fixed-rate obligations.
On December 8, 2009, ABL issued the Notes in a private placement transaction with an aggregate principle amount of
$350.0. The Notes were subsequently exchanged for SEC-registered notes with substantially identical terms. The Notes bear
interest at a rate of 6% per annum and were issued at a price equal to 99.797% of their face value and for a term of 10 years.
See Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements for more information.
On January 31, 2012, the Company executed the Revolving Credit Facility with a borrowing capacity of $250.0. The
Revolving Credit Facility replaced the Company's prior $250.0 revolving credit facility, which was scheduled to mature on
October 19, 2012. The Company recognized a write-off of less than $0.1 in deferred financing costs in connection with this
replacement. The Revolving Credit Facility will mature and all amounts outstanding thereunder will be due and payable on
January 31, 2017. The Company was compliant with all financial covenants under the Revolving Credit Facility as of
20
August 31, 2013. As of August 31, 2013, the Company had outstanding letters of credit totaling $9.9, primarily for securing
collateral requirements under the casualty insurance programs for Acuity Brands and providing credit support for the
Company's industrial revenue bond. At August 31, 2013, the Company had additional borrowing capacity under the Revolving
Credit Facility of $244.3 under the most restrictive covenant in effect at the time, which represents the full amount of the
Revolving Credit Facility less outstanding letters of credit of $5.7 issued under the Revolving Credit Facility. See the Debt and
Lines of Credit footnote of the Notes to Consolidated Financial Statements.
During fiscal 2013, the Company’s consolidated stockholders’ equity increased $159.5 to $993.5 at August 31, 2013 from
$834.0 at August 31, 2012. The increase was due primarily to net income earned in the period, as well as amortization of stock-
based compensation, stock issuances resulting primarily from the exercise of stock options, and pension plan adjustments,
partially offset by payment of dividends and foreign currency translation adjustments. The Company’s debt to total
capitalization ratio (calculated by dividing total debt by the sum of total debt and total stockholders’ equity) was 26.2% and
29.8% at August 31, 2013 and August 31, 2012, respectively. The ratio of debt, net of cash, to total capitalization, net of cash,
decreased to (0.6)% at August 31, 2013 from 7.6% at August 31, 2012 due primarily to the substantial increase in the
Company’s cash balance and stockholders' equity in the current year.
Dividends
Acuity Brands paid dividends on its common stock of $22.4 ($0.52 per share) in fiscal 2013 and $22.0 ($0.52 per share)
in fiscal 2012. Acuity Brands currently plans to pay quarterly dividends at a rate of $0.13 per share. However, all decisions
regarding the declaration and payment of dividends by Acuity Brands are at the discretion of the Company’s Board of Directors
and are evaluated regularly in light of the Company’s financial condition, earnings, growth prospects, funding requirements,
applicable law, and any other factors the Company’s Board of Directors deems relevant.
Results of Operations
Fiscal 2013 Compared with Fiscal 2012
The following table sets forth information comparing the components of net income for the year ended August 31, 2013
with the year ended August 31, 2012:
Net Sales
Cost of Products Sold
Gross Profit
Percent of net sales
Selling, Distribution, and Administrative Expenses
Special Charge
Operating Profit
Percent of net sales
Other Expense (Income):
Interest Expense, net
Miscellaneous (Income) Expense, net
Total Other Expense
Income before Provision for Income Taxes
Percent of net sales
Provision for Income Taxes
Effective tax rate
Net Income
Diluted Earnings per Share
Years Ended August 31,
2013
2012
Increase
(Decrease)
Percent
Change
$ 2,089.1
$ 1,933.7
$
1,251.5
1,145.7
155.4
105.8
837.6
40.1%
607.6
8.5
221.5
10.6%
31.2
(2.8)
28.4
193.1
9.2%
65.7
34.0%
788.0
40.8%
566.7
13.3
208.0
10.8%
30.7
(1.7)
29.0
179.0
9.3%
62.7
35.0%
$
$
127.4
2.95
$
$
116.3
2.72
$
$
49.6
(70) bps
40.9
(4.8)
13.5
(20) bps
0.5
(1.1)
(0.6)
14.1
(10) bps
3.0
11.1
0.23
8.0 %
9.2 %
6.3 %
7.2 %
(36.1)%
6.5 %
1.6 %
(64.7)%
(2.1)%
7.9 %
4.8 %
9.5 %
8.5 %
Net sales increased $155.4, or 8.0%, to $2,089.1 for the year ended August 31, 2013 compared with $1,933.7 reported for
the year ended August 31, 2012. For the year ended August 31, 2013, the Company reported net income of $127.4 compared
with $116.3 for the year ended August 31, 2012, an increase of $11.1, or 9.5%. For fiscal 2013, diluted earnings per share
increased 8.5% to $2.95 from $2.72 for the prior-year period.
21
The table below reconciles certain U.S. GAAP financial measures to the corresponding non-U.S. GAAP measures referred
to in the discussion of the Company’s results of operations, which exclude restructuring charges associated primarily with
continued efforts to streamline the organization through the planned closing of certain manufacturing facilities and by
realigning responsibilities primarily within various SD&A departments, other costs associated with manufacturing
inefficiencies and abandoned inventory directly related to the Cochran manufacturing facility closure, and a loss due to fraud at
a freight service company. Although special charges related to efforts to improve overall Company efficiency have been
recognized in prior periods and could recur in future periods, management typically excludes the impact of special charges
during internal reviews of performance and uses 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 margin,
adjusted selling, distribution, and administrative expenses and percent of net sales, adjusted operating profit and margin,
adjusted net income, and adjusted diluted earnings per share, are provided to enhance the user’s overall understanding of the
Company’s current financial performance. Specifically, the Company believes these non-U.S. GAAP measures provide greater
comparability and enhanced visibility into the results of operations, excluding the impact of special charges and certain other
expenses. The 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.
Gross Profit
Add-back: Manufacturing inefficiencies
Add-back: Abandonment of inventory
Adjusted Gross Profit
Percent of net sales
Selling, Distribution, and Administrative Expenses
Less: Freight service provider fraud-related expense
Adjusted Selling, Distribution, and Administrative Expenses
Percent of net sales
Operating Profit
Add-back: Manufacturing inefficiencies
Add-back: Abandonment of inventory
Add-back: Freight service provider fraud-related expense
Add-back: Special Charge
Adjusted Operating Profit
Percent of net sales
Net Income
Add-back: Manufacturing inefficiencies, net of tax
Add-back: Abandonment of inventory, net of tax
Add-back: Freight service provider fraud-related expense, net of tax
Add-back: Special Charge, net of tax
Adjusted Net Income
Diluted Earnings per Share
Add-back: Manufacturing inefficiencies, net of tax
Add-back: Abandonment of inventory, net of tax
Add-back: Freight service provider fraud-related expense, net of tax
Add-back: Special Charge, net of tax
Adjusted Diluted Earnings per Share
Net Sales
$
$
$
$
$
$
$
$
$
$
Years Ended August 31,
2013
2012
837.6
$
788.0
Increase
(Decrease)
Percent
Change
8.4
—
846.0
40.5%
607.6
8.1
599.5
28.7%
221.5
$
$
$
$
8.4
—
8.1
8.5
246.5
11.8%
127.4
$
$
5.2
—
5.0
5.5
143.1
2.95
0.12
—
0.12
0.12
3.31
$
$
$
53.6
(50) bps
6.8%
$
32.8
(60) bps
5.8%
3.2
1.2
792.4
$
41.0%
566.7
—
566.7
29.3%
208.0
3.2
1.2
—
13.3
225.7
$
20.8
9.2%
10 bps
11.7%
116.3
2.0
0.8
—
8.8
127.9
$
15.2
11.9%
2.72
0.05
0.02
—
0.21
3.00
$
0.31
10.3%
Net sales for the year ended August 31, 2013 increased by 8.0% compared with the prior-year period due primarily to an
increase in sales volumes of approximately 10%, partially offset by the impact of an unfavorable change in product prices and
the mix of products sold ("price/mix"). The impact on net sales from foreign currency and acquisitions was not material. Sales
volume was higher across most product categories and key sales channels which reflects growth in the North American lighting
22
market, particularly for renovation and retrofit applications. Additionally, greater demand for LED luminaires continued in
fiscal 2013 as sales of these products more than doubled compared with the year-ago period. The Company estimates that the
unfavorable price/mix in the current year compared with the year-ago period was due primarily to greater sales of less featured,
value-oriented products sold through certain sales channels, including an increase in the number of large renovation projects,
particularly for national retailers. In addition, price/mix was influenced by a reduction in the sales price of certain LED
luminaries reflecting the continued decline in the cost of purchased LED components. Because of the changing dynamics of
the Company's extensive product portfolio, including the increase of integrated lighting solutions as well as the proliferation of
new products due to the adoption of solid-state lighting, it is not possible to precisely quantify volume as well as accurately
differentiate the individual components of price/mix.
Gross Profit
Gross profit for fiscal 2013 increased $49.6, or 6.3%, to $837.6 compared with $788.0 for the prior year. The increase was
due primarily to higher sales volumes, net benefits recognized from productivity improvements attributable to streamlining
activities, and lower materials and component costs. These improvements were partially offset by unfavorable price/mix and
$8.4 of temporary manufacturing inefficiencies associated with the closure of the Company's Cochran facility as well as
increased costs associated with new product introductions particularly in the first three months of fiscal 2013 compared with the
year-ago period. As a result of these factors, gross profit margin decreased 70 basis points to 40.1% for the year ended
August 31, 2013 compared with 40.8% for the year ended August 31, 2012.
Excluding the impact of expenses associated with the closure of the Cochran facility, adjusted gross profit was $846.0 in
fiscal 2013 compared to adjusted gross profit of $792.4 in fiscal 2012, which amounted to an increase of $53.6, or 6.8%.
Adjusted gross profit margin (excluding the expenses associated with the Cochran facility closure in Cost of Products Sold)
decreased 50 basis points to 40.5% in fiscal 2013 compared to 41.0% reported in the prior-year period.
Operating Profit
Selling, Distribution, and Administrative (“SD&A”) expenses for the year ended August 31, 2013 increased $40.9, or
7.2%, to $607.6 compared with $566.7 in the prior year. The increase in SD&A expenses was due primarily to higher costs to
support the greater sales volume, including freight and commissions, greater spending on activities to enhance sales, service,
and customer support capabilities, and acquisitions. In addition, during the third quarter of fiscal 2013, management was
notified by a freight payment and audit service provider (“freight service provider”) that all freight payment services would
immediately cease as a result of internal fraud issues at the freight service provider. Management was informed that the
Company may have incurred a loss to the extent that funds remitted to the freight service provider were not subsequently
remitted to the Company's freight carriers. The estimated loss recorded during fiscal 2013 of $8.1, including recovery costs, is
included in Selling, Distribution, and Administrative Expenses in the Consolidated Statements of Comprehensive Income.
Further details regarding the fraud at a freight service provider are included in the Commitment and Contingencies footnote of
the Notes to Consolidated Financial Statements. Compared with the prior-year period, SD&A expenses as a percent of sales
declined 20 basis points to 29.1% for fiscal 2013 from 29.3% in fiscal 2012, as a result of relatively slower growth in SD&A
expenses to support the increased level of sales. Adjusted SD&A expenses (excluding freight service provider fraud-related
expenses) were $599.5 or 28.7% of net sales.
During the year ended August 31, 2013, the Company recorded a pre-tax special charge of $8.5 related to initiatives to
streamline and simplify operations. The special charge was related primarily to streamlining efforts initiated during the third
quarter of fiscal 2013 associated with a reduction in various selling, distribution, and administrative positions and the planned
closure of two small production facilities. In addition, the Company incurred approximately $8.4 of costs due to production
inefficiencies directly attributable to the closure of the Cochran facility reported in Cost of Products Sold. Further details
regarding the Company's special charges are included in the Special Charge footnote of the Notes to Consolidated Financial
Statements.
Operating profit for fiscal 2013 was $221.5 compared with $208.0 reported for the prior-year period, an increase of $13.5,
or 6.5%. Operating profit margin decreased 20 basis points to 10.6% for fiscal 2013 compared with 10.8% for fiscal 2012 due
primarily to unfavorable price/mix, temporary manufacturing inefficiencies directly attributable to the Cochran facility closure,
incremental costs associated with the fraud at a freight service provider noted above, unfavorable operating performance of the
Company's European operations, and higher costs to support greater sales volume. These items were partially offset primarily
by the favorable impact of higher net sales, lower material and component costs, and the benefits of prior streamlining actions
and manufacturing facility consolidations.
Adjusted operating profit (excluding special charges, incremental costs associated with the fraud at a freight service
provider noted above, and the impact of temporary manufacturing inefficiencies directly attributable to the Cochran facility
closure) increased $20.8, or 9.2%, to $246.5 compared with $225.7 (excluding the impact of special charges and other charges
directly attributable to the Cochran facility closure) for fiscal 2012. The period-over-period increase was due primarily to the
favorable impact of higher net sales, benefits associated with prior streamlining actions and manufacturing facility
23
consolidations (excluding the temporary manufacturing inefficiencies related to the Cochran facility noted above), and lower
material and component costs, partially offset by unfavorable price/mix, higher costs to support greater sales volumes, and
unfavorable operating performance of the Company's European operations. Adjusted operating profit margin (excluding special
charges, incremental costs associated with the fraud at a freight service provider noted above, and the impact of temporary
manufacturing inefficiencies directly attributable to the Cochran facility closure) increased 10 basis points to 11.8% compared
with adjusted operating profit margin (excluding the impact of special charges and other charges directly attributable to the
Cochran facility closure) of 11.7% in the year-ago period.
Other Expense (Income)
Other expense (income) for the Company consists principally of net interest expense and net miscellaneous expense
(income) due primarily to gains and losses related to foreign exchange rate changes. Interest expense, net, was $31.2 and $30.7
for the years ended August 31, 2013 and 2012, respectively. The increase in interest expense, net, was due primarily to higher
interest related to obligations associated with non-qualified retirement plans. The Company reported net miscellaneous income
of $2.8 in fiscal 2013 compared with $1.7 in fiscal 2012.
Provision for Income Taxes and Net Income
The effective income tax rate was 34.0% and 35.0% for the years ended August 31, 2013 and 2012, respectively. The
decrease in the effective tax rate was due primarily to the favorable impact of a reduction in certain income tax reserves and the
retroactive application of the research and development tax credit included in the “American Taxpayer Relief Act of 2012"
which became law in the second quarter of fiscal 2013. These benefits were partially offset by the impact of the United
Kingdom reducing its corporate tax rate which required a fourth quarter reduction in the related deferred tax assets. The
Company estimates that its effective tax rate for fiscal 2014 will be approximately 35.5% before any discrete items and if the
rates in its taxing jurisdictions remain generally consistent throughout the year.
Net income for fiscal 2013 increased $11.1, or 9.5%, to $127.4 from $116.3 reported for the prior year. The increase in net
income resulted primarily from higher operating profit and higher net miscellaneous income, partially offset by higher tax
expense.
Adjusted net income (excluding special charges, incremental costs associated with the fraud at a freight service provider
noted above, and the impact of temporary manufacturing inefficiencies directly attributable to the Cochran facility closure) for
fiscal 2013 increased approximately 11.9% to $143.1 compared with $127.9 of adjusted net income (excluding the impact of
special charges and other charges directly attributable to the Cochran facility closure) in the year-ago period. Adjusted diluted
earnings per share for fiscal 2013 were $3.31 (excluding the impact of temporary manufacturing inefficiencies directly
attributable to the Cochran facility closure, incremental costs associated with the fraud at a freight service provider noted above,
and the special charge) compared with adjusted diluted earnings per share (excluding the impact of special charges and other
charges directly attributable to the Cochran facility closure) of $3.00 for the prior-year period, which represented an increase of
$0.31, or approximately 10.3%.
24
Fiscal 2012 Compared with Fiscal 2011
The following table sets forth information comparing the components of net income for the year ended August 31, 2012
with the year ended August 31, 2011:
Net Sales
Cost of Products Sold
Gross Profit
Percent of net sales
Selling, Distribution, and Administrative Expenses
Special Charge
Operating Profit
Percent of net sales
Other Expense (Income):
Interest Expense, net
Miscellaneous (Income) Expense, net
Total Other Expense
Income before Provision for Income Taxes
Percent of net sales
Provision for Income Taxes
Effective tax rate
Net Income
Diluted Earnings per Share
NM - not meaningful
Years Ended August 31,
2012
2011
Increase
(Decrease)
Percent
Change
$ 1,933.7
$ 1,795.7
$
138.0
1,145.7
1,065.7
788.0
40.8%
566.7
13.3
208.0
10.8%
30.7
(1.7)
29.0
179.0
9.3%
62.7
35.0%
730.0
40.7%
541.3
—
188.7
10.5%
29.9
1.2
31.1
157.6
8.8%
52.1
33.1%
$
$
116.3
2.72
$
$
105.5
2.42
$
$
80.0
58.0
10 bps
25.4
13.3
19.3
30 bps
0.8
(2.9)
(2.1)
21.4
50 bps
10.6
10.8
0.30
7.7 %
7.5 %
7.9 %
4.7 %
100.0 %
10.2 %
2.7 %
NM
(6.8)%
13.6 %
20.3 %
10.2 %
12.4 %
Net sales increased $138.0, or 7.7%, to $1,933.7 for the year ended August 31, 2012 compared with $1,795.7 reported in
the year ended August 31, 2011. For the year ended August 31, 2012, the Company reported net income of $116.3 compared
with $105.5 for the year ended August 31, 2011, an increase of $10.8, or slightly more than 10%. For fiscal 2012, diluted
earnings per share increased more than 12% to $2.72 from $2.42 for the prior-year period. The Company recognized
approximately $8.8, or $0.21 per share, in after-tax special charges related to the closure of the Cochran facility and other
streamlining efforts in fiscal 2012 with no comparative charges recognized in the same period for fiscal 2011. More information
on the impact of the streamlining efforts on fiscal 2012 results is below.
The table below reconciles certain U.S. GAAP financial measures to the corresponding non-U.S. GAAP measures referred
to in the discussion of the Company’s results of operations, which exclude restructuring charges associated primarily with
continued efforts to streamline the organization through the planned closing of a manufacturing facility, other costs associated
with manufacturing inefficiencies and abandoned inventory directly related to the manufacturing facility closure, the reduction
in workforce, and by realigning responsibilities primarily within various SD&A departments. Although restructuring charges
related to other efforts to improve overall Company efficiency have been recognized in prior periods and could recur in future
periods, management typically excludes the impact of restructuring charges during internal reviews of performance and uses
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 margin, adjusted operating profit and margin, adjusted
net income, and adjusted diluted earnings per share, are provided to enhance the user’s overall understanding of the Company’s
current financial performance. Specifically, the Company believes these non-U.S. GAAP measures provide greater
comparability and enhanced visibility into the results of operations, excluding the impact of special charges and certain other
expenses. The 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.
25
Gross Profit
Add-back: Manufacturing inefficiencies
Add-back: Abandonment of inventory
Adjusted Gross Profit
Percent of net sales
Operating Profit
Add-back: Special Charge
Add-back: Manufacturing inefficiencies
Add-back: Abandonment of inventory
Adjusted Operating Profit
Percent of net sales
Net Income
Add-back: Special Charge, net of tax
Add-back: Manufacturing inefficiencies, net of tax
Add-back: Abandonment of inventory, net of tax
Adjusted Net Income
Diluted Earnings per Share
Add-back: Special Charge, net of tax
Add-back: Manufacturing inefficiencies, net of tax
Add-back: Abandonment of inventory, net of tax
Adjusted Diluted Earnings per Share
Years Ended August 31,
2012
2011
788.0
$
730.0
3.2
1.2
792.4
41.0%
208.0
13.3
3.2
1.2
225.7
11.7%
116.3
8.8
2.0
0.8
127.9
2.72
0.21
0.05
0.02
3.00
$
$
$
$
$
$
$
—
—
730.0
40.7%
188.7
—
—
—
188.7
10.5%
105.5
—
—
—
105.5
2.42
—
—
—
2.42
$
$
$
$
$
$
$
$
Net sales for the year ended August 31, 2012, increased by 7.7% compared with the prior-year period. Excluding the
impact from acquisitions during the comparable period, net sales for fiscal 2012 rose 6.5% over the prior-year period. Volumes
increased approximately 5% year-over-year due to increased shipments of lighting solutions across most product groups.
Although it is not possible to precisely quantify the separate impact of changes in price/mix, favorable changes in price/mix
contributed slightly less than two percentage points to the year-over-year increase in net sales. The Company experienced
higher volumes across a number of sales channels, particularly in the non-residential commercial and industrial channel and
home center channel. Revenue derived from the sale of LED-based luminaires more than doubled compared with the year-ago
period. The impact on the Company’s net sales from acquisitions and foreign currency items was not significant.
Gross Profit
Gross profit for fiscal 2012 increased $58.0, or 7.9%, to $788.0 compared with $730.0 for the prior year. The increase was
due primarily to improvements in price/mix, higher sales volumes, and net benefits recognized from productivity improvements
attributable to streamlining activities. These benefits were partially offset by the impact of higher material and component costs
that were not fully recovered through implemented price increases and higher freight costs to support the higher level of sales in
fiscal 2012. The recent relatively lower material and component costs did not have an immediate effect on the Company’s
results due to the first-in, first-out (FIFO) accounting method for inventoriable costs, which creates a lag in expense recognition
until such time the products are manufactured and sold. Gross profit margin improved 10 basis points to 40.8% for the year
ended August 31, 2012 compared with 40.7% for the year ended August 31, 2011.
Excluding the impact of expenses associated with the closure of the Cochran facility, adjusted gross profit was $792.4 in
fiscal 2012 compared to gross profit (with no corresponding restructuring charges in Cost of Products Sold) of $730.0 in fiscal
2011, which amounted to an increase of $62.4, or 8.5%. Adjusted gross profit margin (excluding the expenses associated with
the Cochran facility closure in Cost of Products Sold) increased 30 basis points to 41.0% in fiscal 2012 compared to 40.7%
(with no corresponding charges) reported in the prior-year period.
26
Operating Profit
Selling, Distribution, and Administrative (“SD&A”) expenses for the year ended August 31, 2012 increased $25.4, or
4.7%, to $566.7 compared with $541.3 in the prior year. The increase in SD&A expenses was due primarily to higher
commission and freight costs in support of higher sales, higher employee incentive compensation, and selected spending for
long-term growth opportunities, including investments in innovation and technology. Compared with the prior-year period,
SD&A expenses as a percent of sales improved 80 basis points to 29.3% for fiscal 2012 from 30.1% in fiscal 2011, as a result
of relatively slower growth in SD&A expenses to support the increased level of sales.
During the year ended August 31, 2012, the Company recorded a pre-tax charge of $13.3 related to the initiatives to
streamline and simplify operations. The special charge was related primarily to severance and related employee benefit costs
and production transfer expenses associated with the closure of a manufacturing facility in Cochran, Georgia, workforce
reductions in the Company’s operations in Spain, and realignment of responsibilities within certain SD&A departments. In
addition, the Company recognized other charges directly related to these streamlining efforts, specifically non-cash charges of
$1.2 attributable to the abandonment of usable inventory that was not transferred to other facilities and approximately $3.2 of
costs incurred due to production inefficiencies directly attributable to the closure of the Cochran facility reported in Cost of
Products Sold.
Operating profit for fiscal 2012 was $208.0 compared with $188.7 reported for the prior-year period, an increase of $19.3,
or 10.2%. The year-over-year increase was due primarily to the growth in net sales and net benefits recognized from
streamlining activities, which were partially offset by increases in material and component costs, incremental charges to
facilitate the closure of the Cochran facility and the transfer of production to other locations, and higher SD&A expenses
necessary to support the higher net sales as discussed above. Operating profit margin increased to 10.8% compared with 10.5%
in the prior-year period.
Adjusted operating profit (excluding the special charge and expenses associated with the Cochran facility closure) for
fiscal 2012 increased by $37.0, or 19.6%, to $225.7 compared to operating profit (with no corresponding charges) of $188.7 for
fiscal 2011. Adjusted operating profit margin (excluding the special charge and expenses associated with the Cochran facility
closure) increased 120 basis points to 11.7% compared with operating profit margin (with no corresponding charges) of 10.5%
in the year-ago period.
Other Expense (Income)
Other expense (income) for the Company consists principally of net interest expense and net miscellaneous expense
(income) due primarily to foreign exchange related gains and losses. Interest expense, net, was $30.7 and $29.9 for the years
ended August 31, 2012 and 2011, respectively. The increase in interest expense, net, was due primarily to higher interest related
to obligations associated with non-qualified retirement plans. The change in net miscellaneous income of $1.7 in fiscal 2012
compared with $1.2 of net miscellaneous expense in fiscal 2011 was due primarily to the favorable impact of exchange rate
changes on foreign currency exposures, primarily those associated with the Mexican peso.
Provision for Income Taxes and Net Income
The effective income tax rate was 35.0% and 33.1% for the years ended August 31, 2012 and 2011, respectively. The
increase in the effective tax rate was due primarily to the reduced impact of favorable permanent tax items on higher taxable
income, unrecognizable tax benefits for losses in Spain, and the expiration of the research and development tax credit, which
occurred at the end of calendar year 2011.
Net income for fiscal 2012 increased $10.8, or 10.2%, to $116.3 from $105.5 reported for the prior year. The increase in
net income resulted primarily from higher operating profit and gains on foreign currency items, partially offset by higher tax
expense.
Adjusted net income (excluding the special charge and expenses associated with the Cochran facility closure) for fiscal
2012 increased approximately 21% to $127.9 compared with $105.5 of net income (with no corresponding charges) in the year-
ago period. Adjusted diluted earnings per share for fiscal 2012 were $3.00 (excluding the special charge and expenses
associated with the Cochran facility closure) compared with diluted earnings per share (with no corresponding charges) of
$2.42 for the prior-year period, which represented an increase of $0.58, or approximately 24%.
27
Outlook
Management believes that the execution of the Company's strategy will provide opportunities for continued future
profitable growth. The Company's strategy is to capitalize on market growth opportunities by continuing to expand and
leverage its industry-leading product and solutions portfolio combined with its extensive market presence and financial
strength. Management continues to position the Company to optimize short-term performance while investing in and deploying
resources for long-term profitable growth opportunities.
During the third quarter of fiscal 2013, the Company continued efforts to streamline the organization through the
realignment of responsibilities primarily within various SD&A departments as well as the planned closure of certain small
production facilities. The Company recorded a pre-tax special charge of $7.6 in the second half of fiscal 2013 associated with
these streamlining activities. The special charge consisted primarily of severance and employee-related costs. Management
expects to incur production transfer expenses and additional costs associated with these streamlining actions totaling
approximately $2.0 during the next two fiscal quarters. Management estimates that the total annualized pre-tax savings
associated with the streamlining activities initiated in 2013 to be approximately $15.0, of which approximately $2.0 was
realized in the fourth quarter of fiscal 2013. Management expects to be at the total annualized savings run rate from the
streamlining activities by the end of calendar year 2013 following the completion of the transfer of production and closure of
the facilities.
The growth rate for the North American lighting market, which typically benefits from new construction as well as
renovation and retrofit activity, is projected to be in the mid-single digit range for the remainder of calendar 2013 and into 2014.
While management still expects to see some volatility in demand among certain sales channels and geographies, management's
expectation for fiscal 2014 is that overall demand in the Company's end markets will continue to improve and be more
consistent and broad-based. Management currently believes that the Company will benefit from growing renovation and tenant
improvement projects, further expansion in underpenetrated geographies and channels, and growth from the introduction of
new products and lighting solutions.
Additionally, the lighting industry continues to experience volatility with respect to input costs. While some
commodity costs have waned recently, others continue to rise. Management currently expects material input costs to be
relatively flat, except for certain LED components which should continue to decline. Further, while management expects
employee-related costs will continue to rise due to wage inflation and rising health care costs, management will continue to be
vigilant in its pricing posture and productivity efforts to help offset rising costs. Management remains cautiously optimistic
about the opportunities for solid profitable growth for fiscal 2014 and expects that the Company will be able to outperform the
markets it serves while delivering performance more consistent with management's long-term financial objectives.
From a longer term perspective, management expects that its addressable markets will experience solid growth over
the next decade, particularly as energy and environmental concerns come to the forefront. Management remains positive about
the future prospects of the Company and its ability to continue to outperform the markets it serves.
Accounting Standards Adopted in Fiscal 2013 and Accounting Standards Yet to Be Adopted
See the New Accounting Pronouncements footnote of the Notes to Consolidated Financial Statements for information on
recently adopted and upcoming standards.
Critical Accounting Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses the financial
condition and results of operations as reflected in the Company’s Consolidated Financial Statements, which have been prepared
in accordance with U.S. GAAP. As discussed in the Description of Business and Basis of Presentation footnote of the Notes to
Consolidated Financial Statements, the preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expense during the
reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue
recognition; accounts receivable; inventory valuation; depreciation, amortization and the recoverability of long-lived assets,
including goodwill and intangible assets; share-based compensation expense; medical, product warranty, and other reserves;
income taxes; retirement benefits; litigation; and environmental matters. Management bases its estimates and judgments on its
substantial historical experience and other relevant factors, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those
estimates. Management discusses the development of accounting estimates with the Company’s Audit Committee. See the
Summary of Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements for a summary of the
accounting policies of Acuity Brands.
28
The management of Acuity Brands believes the following represent the Company’s critical accounting policies and
estimates:
Revenue Recognition
The Company records revenue when the following criteria are met: persuasive evidence of a sales arrangement exists,
delivery has occurred, the Company’s price to the customer is fixed and determinable, and collectability is reasonably assured.
In the period of revenue recognition, provisions for certain rebates, sales incentives, product returns, and discounts to customers
are estimated and recorded, in most instances, as a reduction of revenue. The Company also maintains one-time or on-going
marketing and trade-promotion programs with certain customers that require the Company to estimate and accrue the expected
costs of such programs. These items are estimated based on customer agreements, historical trends, and expected demand.
Actual results could differ from estimates, which would require adjustments to accrued amounts.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an allowance for estimated
uncollectible accounts to reflect losses anticipated on accounts receivable balances. The allowance is based on historical write-
offs, an analysis of past due accounts based on the contractual terms of the receivables, and economic status of customers, if
known. Management believes that the allowance is sufficient to cover uncollectible amounts; however, there can be no
assurance that unanticipated future business conditions of customers will not have a negative impact on the Company’s results
of operations.
Inventories
Inventories include materials, direct labor, in-bound freight, and related manufacturing overhead, and are stated at the
lower of cost (on a first-in, first-out or average-cost basis) or market. Management reviews inventory quantities on hand and
records 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 thus could have a
material adverse impact on the Company’s operating results in the period the change occurs.
Goodwill and Indefinite Lived Intangible Assets
The Company reviews goodwill and indefinite lived intangible assets for impairment on an annual basis in the fiscal
fourth quarter or on an interim basis, if an event occurs or circumstances change that would more likely than not indicate that
the fair value of the goodwill and indefinite lived asset is below its carrying value. All other long-lived and intangible assets are
reviewed for impairment whenever events or circumstances indicate that the carrying amount of the asset may not be
recoverable. An impairment loss for goodwill and indefinite lived intangibles would be recognized based on the difference
between the carrying value of the asset and its estimated fair value, which would be determined based on either discounted
future cash flows or other appropriate fair value methods. The evaluation of goodwill and indefinite lived intangibles for
impairment requires management to use significant judgments and estimates in accordance with U.S. GAAP including, but not
limited to, economic, industry, and company-specific qualitative factors, projected future net sales, operating results, and cash
flows.
Although management currently believes that the estimates used in the evaluation of goodwill and indefinite lived
intangibles are reasonable, differences between actual and expected net sales, operating results, and cash flows and/or changes
in the discount rate or theoretical royalty rate could cause these assets to be deemed impaired. If this were to occur, the
Company would be required to record a non-cash charge to earnings for the write-down in value of such assets, which could
have a material adverse effect on the Company’s results of operations and financial position, but not its cash flows from
operations.
Goodwill
The Company is comprised of one reporting unit with a goodwill balance of $568.2. The Company utilized a qualitative
assessment to determine the likelihood of impairment of goodwill as of June 1, 2013. To do this, the Company identified and
analyzed macroeconomic, industry, and company-specific factors. Additionally, factors that most affect the fair value of the
Company were compared to those used in the previous quantitative impairment test to identify potentially significant variances
to further support the reasonableness of the assumptions.
Taking into consideration these factors, the Company estimated the potential change in the fair value of goodwill
compared with the previous quantitative impairment test. As a result of this analysis, management believes the estimated fair
value of the reporting unit continues to exceed its carrying value by a substantial margin and does not represent a more likely
than not possibility of potential impairment. The goodwill analysis did not result in an impairment charge.
29
Indefinite Lived Intangible Assets
The Company’s indefinite lived intangible assets consist of five unamortized trade names with an aggregate carrying
value of approximately $100.0. Management utilized significant assumptions to estimate the fair value of these unamortized
trade names using a fair value model based on discounted future cash flows (“fair value model”) in accordance with
U.S. GAAP. Future cash flows associated with each of the Company’s unamortized trade names are calculated by applying a
theoretical royalty rate a willing third party would pay for use of the particular trade name to estimated future net sales. The
present value of the resulting after-tax cash flow is management’s current estimate of the fair value of the trade names. This fair
value model requires management to make several significant assumptions, including estimated future net sales (including short
and long term growth rates), the royalty rate, and the discount rate.
Future net sales and short-term growth rates are estimated for each particular trade name based on management’s
financial forecasts, which consider key business drivers, such as specific revenue growth initiatives, market share changes,
expected growth in non-residential and residential construction markets, and general economic factors, such as credit
availability and interest rates. The long-term growth rate used in determining terminal value is estimated at 3.5% for the
Company and is based primarily on the Company’s understanding of projections for expected long-term growth in non-
residential construction, the Company’s key market, and historical long-term performance. The theoretical royalty rate is
estimated primarily using management’s assumptions regarding the amount a willing third party would pay to use the particular
trade name and is compared with market information for similar intellectual property within and outside of the industry.
Differences between expected and actual results can result in significantly different valuations. If future operating results are
unfavorable compared with forecasted amounts, the Company may be required to reduce the theoretical royalty rate used in the
fair value model. A reduction in the theoretical royalty rate would result in lower expected future after-tax cash flows in the
valuation model. The Company utilized a range of estimated discount rates between 11% and 13% as of June 1, 2013, based on
the Capital Asset Pricing Model, which considers the updated risk-free interest rate, beta, market risk premium, and entity
specific size premium.
During fiscal 2013, the Company performed an evaluation of the fair value of its five unamortized trade names. The
Company’s expected revenues are based on the Company’s fiscal 2014 expectations and recent lighting market growth
estimates for fiscal 2015 through 2018. The Company also included revenue growth estimates based on current initiatives
expected to help the Company improve performance. During fiscal 2013, estimated theoretical royalty rates ranged between 1%
and 4%. The indefinite lived intangible asset analysis did not result in an impairment charge, as the fair values exceeded the
carrying values for each trade name. The estimated fair values of the indefinite lived intangible assets exceed the carrying
values by such a significant amount that any reasonably likely change in the assumptions used in the analyses, including
revenue growth rates, royalty rates, and discount rates, would not cause the carrying values to exceed the estimated fair values
as determined by the fair value analyses. However, the estimated fair value of one trade name, Lighting Controls & Design
("LC&D") exceeded its carrying value by the smallest margin. Management believes the assumptions used to estimate the fair
value of this trade name were reasonable and sensitivity analysis indicated that the LC&D trade name would likely not be
impaired by a material amount if reasonably differing assumptions had been used. The Company determined that any estimated
potential impairment related to the other trade names based on changes in the assumptions, which would be less likely to occur,
would not be material to the Company’s financial condition or results of operations.
Self-Insurance
The Company self-insures, up to certain limits, traditional risks including workers’ compensation, comprehensive general
liability, and auto liability. A provision for claims under this self-insured program, based on the Company’s estimate of the
aggregate liability for claims incurred, is revised and recorded annually. The estimate is derived from both internal and external
sources including, but not limited to, the Company’s independent actuary. The actuarial estimates are subject to uncertainty
from various sources including, among others, changes in claim reporting patterns, claim settlement patterns, judicial decisions,
legislation, and economic conditions. Although the Company believes that the actuarial estimates are reasonable, significant
differences related to the items noted above could materially affect the Company’s self-insurance obligations, future expense,
and cash flow. The Company is also self-insured up to certain limits for certain other insurable risks, primarily physical loss to
property and business interruptions resulting from such loss lasting two days or more in duration. Insurance coverage is
maintained for catastrophic property and casualty exposures as well as those risks required to be insured by law or contract. The
Company is fully self-insured for certain other types of liabilities, including environmental, product recall, warranty, and patent
infringement.
The Company is also self-insured for the majority of its medical benefit plans. The Company estimates its aggregate
liability for claims incurred by applying a lag factor to the Company’s historical claims and administrative cost experience. The
appropriateness of the Company’s lag factor is evaluated and revised, if necessary, annually. Although management believes
that the current estimates are reasonable, significant differences related to claim reporting patterns, plan design, legislation, and
general economic conditions could materially affect the Company’s medical benefit plan liabilities, future expense, and cash
flow.
30
Income Taxes
The Company uses certain assumptions and estimates in determining the income taxes payable or refundable for the
current year, income tax expense, and deferred income tax liabilities and assets, which represent temporary and permanent
differences between amounts within the financial statements and the income tax basis. Accounting Standards Codification
(“ASC”) Topic 740, Income Taxes (“ASC 740”), requires the evaluation and testing of the recoverability of deferred tax assets.
Deferred tax assets are reduced by a valuation allowance if, based on the relevant factors, it is more likely than not that all or
some portion of the deferred tax assets will not be realized. Reasonable judgment and estimates are required in determining
whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a
valuation allowance, the Company considers a number of factors, including, but not limited to: the nature and character of the
deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of existing temporary differences;
and the length of time carryovers can be utilized.
In light of the multiple tax jurisdictions in which the Company operates, the Company’s tax returns are subject to routine
audit by the Internal Revenue Service (“IRS”) and other taxation authorities. The results of these audits at times produce
uncertainty regarding particular tax positions taken in the year(s) of review. The Company records uncertain tax positions as
prescribed by ASC 740, which requires recognition at the time when it is more likely than not that the position in question will
be upheld. Although management believes that the judgment and estimates involved are reasonable and that the necessary
provisions have been recorded, changes in circumstances or unexpected events could adversely or positively effect the
Company’s financial position, results of operations, and cash flows.
Retirement Benefits
The Company sponsors domestic and international defined benefit pension plans and defined contribution plans and other
postretirement plans. Assumptions are used to determine the estimated fair value of plan assets, the actuarial value of plan
liabilities, and the current and projected costs for these employee benefit plans and include, among other factors, estimated
discount rates, expected returns on the pension fund assets, estimated mortality rates, the rates of increase in employee
compensation levels, and, for one international plan, retroactive inflationary adjustments. These assumptions are determined
based on Company and market data and are evaluated annually as of the plans’ measurement date. See the Pensions and
Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements for further information on the
Company’s plans.
Share-Based Compensation Expense
The Company recognizes compensation cost relating to share-based payment transactions in the financial statements
based on the estimated fair value of the equity instrument issued. The Company accounts for stock options, restricted shares,
and share units representing certain deferrals into the Director Deferred Compensation Plan or the Supplemental Deferred
Savings Plan (both of which are discussed further in the Share-Based Payments footnote of the Notes to Consolidated Financial
Statements) based on the grant-date fair value estimated under the current provisions of ASC Topic 718, Compensation — Stock
Compensation (“ASC 718”).
The Company employs the Black-Scholes model in deriving the fair value estimates of certain share-based awards and
estimates forfeitures of all share-based awards at the time of grant, which are revised in subsequent periods if actual forfeitures
differ from initial estimates. Forfeitures are estimated based on historical experience. If factors change causing different
assumptions to be made in future periods, estimated compensation expense may differ significantly from that recorded in the
current period. See the Summary of Significant Accounting Policies and Share-Based Payments footnotes of the Notes to
Consolidated Financial Statements for more information regarding the assumptions used in estimating the fair value of stock
options.
Product Warranty and Recall Costs
The Company records an allowance for the estimated amount of future warranty or recall costs when the related revenue
is recognized, primarily based on historical experience of identified warranty claims. The Company is fully self-insured for
product warranty and recall costs. Historical warranty costs have been within expectations; however, there can be no assurance
that future warranty costs will not exceed historical amounts or that using new technologies such as those used in LED products
may not generate unexpected costs. If actual future warranty or recall costs exceed historical amounts, additional allowances
may be required, which could have a material adverse impact on the Company’s results of operations and cash flow.
31
Litigation
The Company recognizes expense for legal claims when payments associated with the claims become probable and can
be reasonably estimated. Due to the difficulty in estimating costs of resolving legal claims, actual costs may be substantially
higher or lower than the amounts reserved.
Environmental Matters
The Company recognizes expense for known environmental claims when payments associated with the claims become
probable and the costs can be reasonably estimated. The actual cost of resolving environmental issues may be higher than that
reserved primarily due to difficulty in estimating such costs and potential changes in the status of government regulations. The
Company is self-insured for environmental matters.
Cautionary Statement Regarding Forward-Looking Information
This filing contains forward-looking statements within the meaning of the federal securities laws. Statements made herein
that may be considered forward-looking include statements incorporating terms such as “expects”, “believes”, “intends”,
“anticipates” and similar terms that relate to future events, performance, or results of the Company. In addition, the Company,
or the executive officers on the Company’s behalf, may from time to time make forward-looking statements in reports and other
documents the Company files with the SEC or in connection with oral statements made to the press, current and potential
investors, or others. Forward-looking statements include, without limitation: (a) the Company’s projections regarding financial
performance, liquidity, capital structure, capital expenditures, and dividends; (b) expectations about the impact of volatility and
uncertainty in general economic conditions; (c) external forecasts projecting industry unit volumes; (d) expectations about the
impact of volatility and uncertainty in component and commodity costs and availability, and the Company's ability to manage
those challenges, as well as the Company’s response with pricing of its products; (e) the Company's ability to execute and
realize benefits from initiatives related to streamlining its operations, capitalizing on growth opportunities, expanding in key
markets, enhancing service to the customer, and investing in product innovation; (f) the Company’s estimate of its fiscal 2014
annual tax rate; (g) the Company’s expectations regarding the timing, costs, and savings of streamlining events, and the
Company’s ability to effectively execute the announced changes, including, but not limited to, transition of manufacturing
capacity, labor negotiations, and disposition of property; (h) the Company’s future amortization expense; and (i) the Company’s
ability to achieve its long-term financial goals and measures. You are cautioned not to place undue reliance on any forward-
looking statements, which speak only as of the date of this annual report. Except as required by law, the Company undertakes
no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or
circumstances after the date of this annual report or to reflect the occurrence of unanticipated events. The Company’s forward-
looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the
historical experience of the Company and management’s present expectations or projections. These risks and uncertainties
include, but are not limited to, customer and supplier relationships and prices; competition; ability to realize anticipated benefits
from initiatives taken and timing of benefits; market demand; litigation and other contingent liabilities; and economic, political,
governmental, and technological factors affecting the Company. Also, additional risks that could cause the Company’s actual
results to differ materially from those expressed in the Company’s forward-looking statements are discussed in Part I, “Item 1a.
Risk Factors” of this Annual Report on Form 10-K, and are specifically incorporated herein by reference.
Item 7a.
($ in millions)
Quantitative and Qualitative Disclosures about Market Risk
General. The Company is exposed to worldwide market risks that may impact the Consolidated Balance Sheets,
Consolidated Statements of Comprehensive Income, and Consolidated Statements of Cash Flows due primarily to changing
interest and foreign exchange rates as well as volatility in commodity prices. The following discussion provides additional
information regarding the market risks of Acuity Brands.
Interest Rates. Interest rate fluctuations expose the variable-rate debt of the Company to changes in interest expense and
cash flows. At August 31, 2013, the variable-rate debt of the Company was solely comprised of the $4.0 long-term industrial
revenue bond. A 10% increase in market interest rates at August 31, 2013, would have resulted in a de minimus 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 the $350.0 publicly-traded fixed-rate notes. A 10% increase in market interest
rates at August 31, 2013 would have decreased the estimated fair value of these debt obligations by approximately $8.6. See the
Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements contained in this Form 10-K for additional
information regarding the Company’s debt.
Foreign Exchange Rates. The majority of net sales, expense, and capital purchases of the Company are transacted in
U.S. dollars. However, exposure with respect to foreign exchange rate fluctuation exists due to the Company’s operations in
Mexico and Canada, where a significant portion of products sold are sourced from the United States, and, to a lesser extent, in
32
Europe. Based on fiscal 2013 performance, a hypothetical decline in the value of the Canadian dollar in relation to the U.S.
dollar of 10% would negatively impact operating profit by approximately $11, while a hypothetical appreciation of 10% in the
value of the Canadian dollar in relation to the U.S. dollar would favorably impact operating profit by approximately $13. In
addition to products and services sold in Mexico, a significant portion of the goods sold in the United States are manufactured
in Mexico. A hypothetical 10% increase in the value of the Mexican peso in relation to the U.S. dollar would negatively impact
operating profits by approximately $7, while a hypothetical decrease of 10% in the value of the Mexican peso in relation to the
U.S. dollar would favorably impact operating profit by approximately $6. The individual impacts to the operating profit of the
Company of hypothetical currency fluctuations in the Canadian dollar and Mexican peso have been calculated in isolation from
any potential responses to address such exchange rate changes in the Company’s foreign markets.
The Company’s exposure to foreign currency risk related to its operations in Europe is immaterial and has been excluded
from this analysis.
Commodity Prices. The Company utilizes a variety of raw materials and components in its production process including
petroleum-based products, steel, and aluminum. In fiscal 2013, the Company purchased approximately 95,000 tons of steel and
aluminum. The Company estimates that approximately 8% of raw materials purchased are petroleum-based and that
approximately four million gallons of diesel fuel were consumed in fiscal 2013. Failure to effectively manage future increases
in the costs of these items could adversely affect the Company's ability to maintain or increase operating margins.
33
Item 8.
Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Management’s Report on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of August 31, 2013 and 2012
Consolidated Statements of Comprehensive Income for the years ended August 31, 2013, 2012, and 2011
Consolidated Statements of Cash Flows for the years ended August 31, 2013, 2012, and 2011
Consolidated Statements of Stockholders’ Equity for the years ended August 31, 2013, 2012, and 2011
Notes to Consolidated Financial Statements
Schedule II — Valuation and Qualifying Accounts
Page
35
36
38
39
40
41
42
91
34
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
ACUITY BRANDS, INC.
The management of Acuity Brands, Inc. is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the
Securities Exchange Act of 1934. Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of
August 31, 2013. In making this assessment, the Company’s management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on this
assessment, management believes that, as of August 31, 2013, the Company’s internal control over financial reporting is
effective.
The Company’s independent registered public accounting firm has issued an audit report on their audit of the Company’s
internal control over financial reporting. This report dated October 29, 2013 is included within this Form 10-K.
/s/ VERNON J. NAGEL
Vernon J. Nagel
Chairman, President, and
Chief Executive Officer
/s/ RICHARD K. REECE
Richard K. Reece
Executive Vice President and
Chief Financial Officer
35
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Acuity Brands, Inc.
We have audited the accompanying consolidated balance sheets of Acuity Brands, Inc. as of August 31, 2013 and 2012,
and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three
years in the period ended August 31, 2013. Our audits also included the financial statement schedule listed in the Index at
Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Acuity Brands, Inc. at August 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended August 31, 2013, in conformity with U.S. generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), Acuity Brands, Inc.’s internal control over financial reporting as of August 31, 2013, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(1992 Framework) and our report dated October 29, 2013 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Atlanta, Georgia
October 29, 2013
36
Report of Independent Registered Public Accounting Firm on Internal Control
Over Financial Reporting
The Board of Directors and Stockholders
Acuity Brands, Inc.
We have audited Acuity Brands, Inc.’s internal control over financial reporting as of August 31, 2013, based on criteria
established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (1992 Framework) (the COSO criteria). Acuity Brands, Inc.’s management is responsible for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting
included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Acuity Brands, Inc. maintained, in all material respects, effective internal control over financial reporting
as of August 31, 2013, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Acuity Brands, Inc. as of August 31, 2013 and 2012, and the related consolidated
statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended
August 31, 2013 of Acuity Brands, Inc. and our report dated October 29, 2013 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Atlanta, Georgia
October 29, 2013
37
ACUITY BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
Current Assets:
Cash and cash equivalents
ASSETS
Accounts receivable, less reserve for doubtful accounts of $1.5 and $1.4 as of August 31, 2013 and 2012,
respectively
Inventories
Deferred income taxes
Prepayments and other current assets
Total Current Assets
Property, Plant, and Equipment, at cost:
Land
Buildings and leasehold improvements
Machinery and equipment
Total Property, Plant, and Equipment
Less — Accumulated depreciation and amortization
Property, Plant, and Equipment, net
Other Assets:
Goodwill
Intangible assets
Deferred income taxes
Other long-term assets
Total Other Assets
Total Assets
Current Liabilities:
Accounts payable
Accrued compensation
Accrued pension liabilities, current
Other accrued liabilities
Total Current Liabilities
LIABILITIES AND STOCKHOLDERS’ EQUITY
Long-Term Debt
Accrued Pension Liabilities, less current portion
Deferred Income Taxes
Self-Insurance Reserves, less current portion
Other Long-Term Liabilities
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; 52,205,933 issued and 42,486,678
outstanding at August 31, 2013; 51,508,358 issued and 41,789,103 outstanding at August 31, 2012
Paid-in capital
Retained earnings
Accumulated other comprehensive loss items
Treasury stock, at cost, 9,719,255 shares at August 31, 2013 and 2012
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
August 31,
2013
2012
(In millions, except share data)
$
359.1
$
284.5
318.3
203.0
13.6
19.5
913.5
7.2
109.6
354.5
471.3
323.4
147.9
568.2
245.1
1.7
27.4
842.4
1,903.8
249.5
28.0
1.2
107.5
386.2
353.6
54.7
53.9
7.0
54.9
$
$
263.8
194.1
13.0
23.6
779.0
7.3
115.5
345.7
468.5
329.3
139.2
554.9
230.8
4.1
28.9
818.7
1,736.9
232.7
44.9
1.2
86.0
364.8
353.5
90.1
33.4
6.6
54.5
—
—
0.5
735.5
740.3
(62.6)
(420.2)
993.5
1,903.8
$
0.5
703.1
635.3
(84.7)
(420.2)
834.0
1,736.9
$
$
$
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
38
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Sales
Cost of Products Sold
Gross Profit
Selling, Distribution, and Administrative Expenses
Special Charge
Operating Profit
Other Expense (Income):
Interest expense, net
Miscellaneous (income) expense, net
Total Other Expense
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Earnings Per Share:
Basic Earnings per Share
Basic Weighted Average Number of Shares Outstanding
Diluted Earnings per Share
Diluted Weighted Average Number of Shares Outstanding
Dividends Declared per Share
Comprehensive Income:
Net income
Other Comprehensive Income/(Expense) Items:
Foreign currency translation adjustments
Defined benefit plans, net
Other Comprehensive Income/(Expense) Items, net of tax
Comprehensive Income
Years Ended August 31,
2013
2012
2011
(In millions, except per-share data)
$
2,089.1
$
1,933.7
$
1,251.5
1,145.7
1,795.7
1,065.7
837.6
607.6
8.5
221.5
31.2
(2.8)
28.4
193.1
65.7
788.0
566.7
13.3
208.0
30.7
(1.7)
29.0
179.0
62.7
127.4
$
116.3
$
$
$
2.97
42.2
2.95
42.5
$
$
2.75
41.4
2.72
41.9
730.0
541.3
—
188.7
29.9
1.2
31.1
157.6
52.1
105.5
2.46
42.2
2.42
42.8
0.52
$
0.52
$
0.52
127.4
$
116.3
$
105.5
$
$
$
$
$
(1.9)
24.0
22.1
$
149.5
$
(8.2)
(22.7)
(30.9)
85.4
$
9.9
7.6
17.5
123.0
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
39
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Provided by (Used for) Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
$
127.4
$
116.3
$
105.5
Years Ended August 31,
2013
2012
2011
(In millions)
Depreciation and amortization
Share-based compensation expense
Excess tax benefits from share-based payments
(Gain) loss on the sale or disposal of property, plant, and equipment
Asset impairments
Deferred income taxes
Other non-cash items
Change in assets and liabilities, net of effect of acquisitions, divestitures and effect of
exchange rate changes:
Accounts receivable
Inventories
Prepayments and other current assets
Accounts payable
Other current liabilities
Other
Net Cash Provided by Operating Activities
Cash Provided by (Used for) Investing Activities:
Purchases of property, plant, and equipment
Proceeds from sale of property, plant, and equipment
Acquisitions of businesses and intangible assets, net of cash acquired
Net Cash Used for Investing Activities
Cash Provided by (Used for) Financing Activities:
Repurchases of common stock
Proceeds from stock option exercises and other
Excess tax benefits from share-based payments
Dividends paid
Net Cash Provided by (Used for) Financing Activities
Effect of Exchange Rate Changes on Cash
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period
Supplemental Cash Flow Information:
Income taxes paid during the period
Interest paid during the period
40.8
16.5
(8.6)
(2.5)
0.3
6.5
—
(54.8)
(6.5)
1.9
15.2
7.7
(11.6)
132.3
(40.6)
7.6
(25.5)
(58.5)
—
14.9
8.6
(22.4)
1.1
(0.3)
74.6
284.5
359.1
46.8
31.3
$
$
$
39.8
15.9
(4.9)
0.5
0.3
6.2
0.1
(2.3)
(28.6)
(2.2)
29.6
9.7
(8.2)
172.2
(31.4)
0.1
(3.8)
(35.1)
(9.2)
7.6
4.9
(22.0)
(18.7)
(4.1)
114.3
170.2
284.5
50.7
31.6
$
$
$
40.1
14.2
(5.3)
0.4
0.3
10.3
0.1
2.9
(5.3)
0.7
5.5
0.5
(8.8)
161.1
(23.3)
1.2
(90.4)
(112.5)
(61.0)
6.5
5.3
(22.6)
(71.8)
2.4
(20.8)
191.0
170.2
34.2
29.9
$
$
$
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
40
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Balance, August 31, 2010
Net income
Other comprehensive income
Common Stock reissued from Treasury Shares for acquisition of
businesses
Amortization, issuance, and forfeitures of restricted stock grants
Employee Stock Purchase Plan issuances
Cash dividends of $0.52 per share paid on common stock
Stock options exercised
Repurchases of common stock
Tax effect on stock options and restricted stock
Balance, August 31, 2011
Net income
Other comprehensive loss
Amortization, issuance, and forfeitures of restricted stock grants
Employee Stock Purchase Plan issuances
Cash dividends of $0.52 per share paid on common stock
Stock options exercised
Repurchases of common stock
Tax effect on stock options and restricted stock
Balance, August 31, 2012
Net income
Other comprehensive income
Amortization, issuance, and forfeitures of restricted stock grants
Employee Stock Purchase Plan issuances
Cash dividends of $0.52 per share paid on common stock
Stock options exercised
Tax effect on stock options and restricted stock
Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
$
0.5
$
661.9
$
459.0
$
(71.3) $ (355.7) $ 694.4
(In millions)
—
—
105.5
—
(1.8)
(0.9)
—
—
—
—
—
—
—
—
—
8.4
0.3
—
6.2
—
5.3
0.5
680.3
—
—
—
—
—
—
—
—
—
—
10.3
0.3
—
7.3
—
4.9
0.5
703.1
—
—
—
—
—
—
—
—
—
8.9
0.4
—
14.5
8.6
—
—
(22.6)
—
—
—
541.0
116.3
—
—
—
(22.0)
—
—
—
635.3
127.4
—
—
—
(22.4)
—
—
—
17.5
—
—
—
—
—
—
—
— 105.5
—
2.7
—
—
—
—
17.5
—
8.4
0.3
(22.6)
6.2
(58.0)
(58.0)
—
5.3
(53.8)
(411.0)
757.0
—
(30.9)
—
—
—
—
—
—
— 116.3
—
—
—
—
—
(9.2)
—
(30.9)
10.3
0.3
(22.0)
7.3
(9.2)
4.9
(84.7)
(420.2)
834.0
—
22.1
—
—
—
—
—
— 127.4
—
—
—
—
—
—
22.1
8.9
0.4
(22.4)
14.5
8.6
Balance, August 31, 2013
$
0.5
$
735.5
$
740.3
$
(62.6) $ (420.2) $ 993.5
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
41
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in millions, except per-share data and as indicated)
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
subsidiaries (collectively referred to herein as “the Company”). The Company designs, produces, and distributes a broad array
of lighting solutions and services for commercial, institutional, industrial, infrastructure, and residential applications for various
markets throughout North America and select international markets. The Company's lighting solutions include devices such as
luminaires, lighting controls, power supplies, prismatic skylights, light-emitting diode (“LED”) lamps, and integrated lighting
systems for indoor and outdoor applications utilizing a combination of light sources, including daylight, and other devices
controlled by software that monitors and manages light levels while optimizing energy consumption (collectively referred to
herein as “lighting solutions”). The Company has one operating segment serving the North American lighting market and select
international markets.
The Company has made several acquisitions over the last five years to expand and enhance its portfolio of lighting
solutions, including the following recent acquisitions:
On March 13, 2013, the Company acquired for cash , including potential additional cash payments that may be paid in future
periods under earn-out provisions, all of the ownership interests in eldoLAB Holding B.V. (“eldoLED”), a leading provider of
high-performance drivers for LED lighting systems based in Eindhoven, The Netherlands. The operating results of eldoLED
have been included in the Company's consolidated financial statements since the date of acquisition.
On December 20, 2012, the Company acquired for cash all of the ownership interests in Adura Technologies ("Adura"), a
leading developer of radio frequency (RF) mesh networking technology that allows individual light fixtures to communicate in a
wireless mesh network with switches, sensors and system management software. The operating results for Adura have been
included in the Company’s consolidated financial statements since the date of acquisition.
On May 12, 2011, the Company acquired for cash all of the ownership interests in Healthcare Lighting, Inc. (“Healthcare
Lighting”), a leading provider of specialized, high-performance lighting solutions for healthcare facilities based in Fairview,
Pennsylvania. The operating results for Healthcare Lighting have been included in the Company's consolidated financial
statements since the date of acquisition.
On February 23, 2011, the Company acquired for cash all of the ownership interests in Washoe Equipment, Inc., d/b/a
Sunoptics Prismatic Skylights, and CBC Plastics LLC (collectively, “Sunoptics”), a premier designer, manufacturer, and
marketer of high-performance, prismatic daylighting solutions based in Sacramento, California. The operating results for
Sunoptics have been included in the Company's consolidated financial statements since the date of acquisition.
On October 14, 2010, the Company acquired for cash all of the outstanding capital stock of Winona Lighting, Inc.
(“Winona Lighting”), a premier provider of architectural and high-performance indoor and outdoor lighting solutions
headquartered in Winona, Minnesota. The operating results for Winona Lighting have been included in the Company's
consolidated financial statements since the date of acquisition.
The Consolidated Financial Statements have been prepared by the Company in accordance with U.S. generally accepted
accounting principles (“U.S. GAAP”) and present the financial position, results of operations, and cash flows of Acuity Brands
and its wholly-owned subsidiaries. References made to years are for fiscal year periods, unless noted otherwise.
2.
Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Acuity Brands and its wholly-owned subsidiaries after
elimination of significant intercompany transactions and accounts.
Revenue Recognition
The Company records revenue when the following criteria are met: persuasive evidence of an arrangement exists,
delivery has occurred, the Company’s price to the customer is fixed and determinable, and collectability is reasonably assured.
Delivery is not considered to have occurred until the customer assumes the risks and rewards of ownership. Customers take
delivery at the time of shipment for terms designated free on board shipping point. For sales designated free on board
42
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
destination, customers take delivery when the product is delivered to the customer’s delivery site. Provisions for certain rebates,
sales incentives, product returns, and discounts to customers are recorded in the same period the related revenue is recorded.
The Company also maintains one-time or on-going marketing and trade-promotion programs with certain customers that
require the Company to estimate and accrue the expected costs of such programs. These arrangements include cooperative
marketing programs, merchandising of the Company’s products, introductory marketing funds for new products, and other
trade-promotion activities conducted by the customer. Costs associated with these programs are reflected within the Company’s
Consolidated Statements of Comprehensive Income in accordance with the Accounting Standards Codification (“ASC”) Topic
605, Revenue Recognition (“ASC 605”), which in most instances requires such costs be recorded as a reduction of revenue.
The Company provides for limited product return rights to certain distributors and customers primarily for slow moving
or damaged items subject to certain defined criteria. The Company monitors product returns and, at the time revenue is
recognized, records a provision for the estimated amount of future returns based primarily on historical experience and specific
notification of pending returns. Although historical product returns generally have been within expectations, there can be no
assurance that future product returns will not exceed historical amounts. A significant increase in product returns could have a
material impact on the Company’s operating results in future periods.
Revenue is earned on services and the sale of products. Revenue is recognized for the sale of products when the above
criteria are met and for services rendered in the period of performance.
Revenue Recognition for Arrangements with Multiple Deliverables
A small portion of the Company's revenues are derived from the combination of any or all of: (i) the sale and license of its
products, (ii) fees associated with training, installation, and technical support services, and (iii) monitoring and lighting control
services. Certain agreements, particularly related to lighting controls systems, represent multiple-element arrangements that
include tangible products that contain software that is essential to the functionality of the systems and undelivered elements that
primarily relate to installation, monitoring, and lighting control services. The undelivered elements associated with installation,
monitoring, and lighting control services are reviewed and analyzed to determine separability in relation to the delivered
elements and appropriate pricing treatment based on (a) vendor-specific objective evidence, (b) third-party evidence, or (c)
management estimates. If deemed separate units of accounting, the revenue and associated cost of sales related to the delivered
elements are recognized at the time of delivery, while those related to the undelivered elements are recognized appropriately
based on the period of performance. If the separation criterion for the undelivered elements is not met because the undelivered
elements are essential to the functionality of the lighting controls systems, all revenue and cost of sales attributable to the
contract are deferred at the time of sale and are both generally recognized on a straight-line basis over the respective contract
periods.
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.
Cash and Cash Equivalents
Cash in excess of daily requirements is invested in time deposits and marketable securities and is included in the
accompanying balance sheets at fair value. Acuity Brands considers time deposits and marketable securities with an original
maturity of three months or less when purchased to be cash equivalents.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an allowance for estimated
uncollectible accounts to reflect losses anticipated on accounts receivable balances. The allowance is based on historical write-
offs, an analysis of past due accounts based on the contractual terms of the receivables, and economic status of customers, if
known. Management believes that the allowance is sufficient to cover uncollectible amounts; however, there can be no
assurance that unanticipated future business conditions of customers will not have a negative impact on the Company’s results
of operations.
43
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Concentrations of Credit Risk
Concentrations of credit risk with respect to receivables, which are typically unsecured, are generally limited due to the
wide variety of customers and markets using the Company’s lighting solutions as well as their dispersion across many different
geographic areas. Receivables from The Home Depot were approximately $53.7 and $39.7 at August 31, 2013 and 2012,
respectively. No other single customer accounted for more than 10% of consolidated receivables at August 31, 2013 or 2012.
Additionally, net sales to The Home Depot accounted for approximately 13% of net sales of the Company in fiscal 2013, and
10% of net sales of the Company in fiscal 2012 and 2011.
Reclassifications
Certain prior-period amounts have been reclassified to conform to the current year presentation.
Subsequent Events
The Company has evaluated subsequent events for recognition and disclosure for occurrences and transactions after the
date of the consolidated financial statements as of August 31, 2013.
Inventories
Inventories include materials, direct labor, in-bound freight, and related manufacturing overhead, are stated at the lower
of cost (on a first-in, first-out or average cost basis) or market, and consist of the following:
Raw materials, supplies, and work in process(1)
Finished goods
Less: Reserves
Total Inventory
August 31,
2013
2012
$
$
122.6
$
90.9
213.5
(10.5)
203.0
$
120.2
84.6
204.8
(10.7)
194.1
_______________________________________
(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, the
Company does not believe the segregation of raw materials and work in process to be meaningful information.
Management reviews inventory quantities on hand and records 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 thus could have a material adverse impact on the Company’s operating
results in the period the change occurs.
Goodwill and Other Intangibles
The changes in the carrying amount of goodwill during the year are summarized as follows:
Goodwill:
Balance as of August 31, 2012
Acquisitions
Currency translation adjustments
Balance as of August 31, 2013
$
$
554.9
13.6
(0.3)
568.2
The current year increase in the gross carrying amount for goodwill was due primarily to the acquisitions of Adura and
eldoLED, partially offset by the impact of foreign currency changes during the period. As of August 31, 2013, the acquisition
accounting adjustments for Adura and eldoLED are preliminary as the Company continues to gather information needed in the
evaluation. Future adjustments are not expected to have a material impact on the Company’s financial statements as a result of
the finalization.
44
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Summarized information for the Company’s acquired intangible assets is as follows:
Amortized intangible assets:
Patents and patented technology
Trademarks and trade names
Distribution network
Customer relationships
Other
Total
Unamortized trade names
August 31,
2013
2012
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
$
$
$
$
71.3
25.4
61.8
55.2
5.5
219.2
$
100.0
(22.2) $
(6.9)
(27.4)
(13.9)
(3.7)
(74.1) $
$
$
50.7
25.4
61.8
54.3
5.7
197.9
$
96.1
(18.2)
(6.2)
(25.0)
(10.7)
(3.1)
(63.2)
Through multiple acquisitions, the Company acquired intangible assets consisting primarily of trademarks and trade
names associated with specific products with finite lives, definite-lived distribution networks, patented technology, non-
compete agreements, and customer relationships, which are amortized over their estimated useful lives. Indefinite lived
intangible assets consist of trade names that are expected to generate cash flows indefinitely. Significant estimates and
assumptions were used to determine the fair value of these acquired intangible assets, including estimated future net sales,
customer attrition rates, royalty rates, and discount rates. The current year increases in the gross carrying amounts for the
acquired intangible assets were due primarily to recording the estimated values of intangible assets associated with the
acquisitions of Adura and eldoLED (refer to the Acquisitions footnote).
The Company recorded amortization expense of $10.9, $11.2, and $10.2 related to intangible assets with finite lives
during fiscal 2013, 2012, and 2011, respectively. Amortization expense is generally recorded on a straight-line basis and is
expected to be approximately $11.6 in fiscal 2014, $11.3 in fiscal 2015, $10.7 in fiscal 2016, $10.4 in fiscal 2017, and $10.4 in
fiscal 2018.
The Company tests indefinite lived intangible assets and goodwill for impairment on an annual basis or more frequently
as facts and circumstances change, as required by ASC Topic 350, Intangibles — Goodwill and Other (“ASC 350”). The
goodwill impairment test has three steps: a qualitative review and a two-step quantitative method. The preliminary step (“Step
0”) allows for a qualitative analysis to determine the likelihood of impairment. If the qualitative review results in a more likely
than not probability of impairment, the first quantitative step is required. The first step identifies potential impairments by
comparing the fair value of a reporting unit with its carrying value, including goodwill. The fair values are determined based on
a combination of valuation techniques including the expected present value of future cash flows, a market multiple approach,
and a comparable transaction approach. If the fair value of a reporting unit exceeds the carrying value, goodwill is not
considered impaired and the second step is not necessary. If the carrying value of a reporting unit exceeds the fair value, the
second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying value. If
the implied fair value of the goodwill is less than the carrying value, an impairment charge is recorded. The impairment test for
unamortized trade names consists of comparing the fair value of the asset with its carrying value. The Company estimates the
fair value of unamortized trade names using a fair value model based on discounted future cash flows. If the carrying amount
exceeds the estimated fair value, an impairment loss would be recorded in the amount of the excess. Significant assumptions,
including estimated future net sales, royalty rates, and discount rates, are used in the determination of estimated fair value for
unamortized trade names. In fiscal 2013, a qualitative analysis was used to determine the likelihood of goodwill impairment for
the Company’s one reporting unit. None of the analyses for goodwill or unamortized trade names resulted in an impairment
charge during fiscal 2013, 2012, or 2011.
45
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other Long-Term Assets
Other long-term assets consist of the following:
Assets held for sale
Deferred debt issuance costs
Capitalized software costs (1)
Deferred contract costs
Miscellaneous
Total
August 31,
2013
2012
2.8
2.2
2.7
13.5
6.2
$
27.4
$
2.8
2.7
3.8
14.8
4.8
28.9
_______________________________________
(1) The Company recorded amortization expense of $0.9 related to capitalized software costs during fiscal 2013, and $1.1 in fiscal 2012 and 2011.
The Company classifies long-lived assets as held for sale upon the development of a plan for disposal and in accordance
with applicable U.S. GAAP and ceases the depreciation and amortization of the assets at that date. During the second quarter of
fiscal 2013, the Company ceased operations at a manufacturing facility and classified the remaining assets as held for sale at
that time. The Company is actively marketing the properties classified as held for sale. As of August 31, 2013, the carrying
value of the properties held for sale was $5.4, of which $2.6 is included in Prepayments and other current assets and $2.8 is
included in Other long-term assets on the Consolidated Balance Sheets.
Other Long-Term Liabilities
Other long-term liabilities consist of the following:
Deferred compensation and postretirement benefits other than pensions(1)
Uncertain tax positions liability, including interest(2)
Acquisition-related liabilities(3)
Deferred revenue
Deferred rent
Miscellaneous
Total
_______________________________________
August 31,
2013
2012
$
31.9
$
32.3
5.7
9.0
4.9
1.9
1.5
7.5
5.2
5.3
1.1
3.1
$
54.9
$
54.5
(1) Deferred compensation and postretirement benefits other than pensions — The Company maintains several non-qualified retirement plans for the
benefit of eligible employees, primarily deferred compensation plans. The deferred compensation plans provide for elective deferrals of an eligible
employee’s compensation and, in some cases, matching contributions by the Company. In addition, one plan provides for an automatic contribution
by the Company of 3% of an eligible employee’s compensation. The Company maintains certain long-term investments that offset a portion of the
deferred compensation liability. The Company maintains life insurance policies on certain current and former officers and other key employees as a
means of satisfying a portion of these obligations.
See the Income Taxes footnote for more information.
Acquisition-related liabilities - Amounts represent contingent payments and other obligations, including holdback liabilities, related to recent
acquisitions.
(2)
(3)
Shipping and Handling Fees and Costs
The Company includes shipping and handling fees billed to customers in Net Sales. Shipping and handling costs
associated with inbound freight and freight between manufacturing facilities and distribution centers are generally recorded in
Cost of Products Sold. Other shipping and handling costs are included in Selling, Distribution, and Administrative Expenses
and totaled $86.4, $81.5, and $78.7 in fiscal 2013, 2012, and 2011, respectively.
46
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Share-Based Compensation
The Company recognizes compensation cost relating to share-based payment transactions in the financial statements
based on the estimated fair value of the equity or liability instrument issued. The Company accounts for stock options,
restricted shares, and share units representing certain deferrals into the Director Deferred Compensation Plan or the
Supplemental Deferred Savings Plan (both of which are discussed further in the Share-Based Payments footnote) based on the
grant-date fair value estimated under the current provisions of ASC Topic 718, Compensation — Stock Compensation (“ASC
718”).
Share-based expense includes expense related to restricted stock and options issued, as well as share units deferred into
either the Director Deferred Compensation Plan or the Supplemental Deferred Savings Plan. The Company recorded $16.5,
$15.9, and $14.2 of share-based expense for the years ending August 31, 2013, 2012, and 2011, respectively. The total income
tax benefit recognized for share-based compensation arrangements was $5.6, $5.6, and $4.7 for the years ended August 31,
2013, 2012, and 2011, respectively. The Company accounts for any awards with graded vesting on a straight-line basis.
Additionally, forfeitures of share-based awards are estimated based on historical experience at the time of grant and are revised
in subsequent periods if actual forfeitures differ from initial estimates. The Company did not capitalize any expense related to
share-based payments and has recorded share-based expense, net of estimated forfeitures, in Selling, Distribution, and
Administrative Expenses.
Benefits of tax deductions in excess of recognized share-based compensation cost are reported as a financing cash
flow, rather than as an operating cash flow, in the Company’s Statements of Cash Flows and amounted to $8.6, $4.9, and $5.3
for fiscal 2013, 2012, and 2011, respectively.
See the Share-Based Payments footnote for more information.
Depreciation
For financial reporting purposes, depreciation is determined principally on a straight-line basis using estimated useful
lives of plant and equipment (10 to 40 years for buildings and related improvements and 3 to 15 years for machinery and
equipment), while accelerated depreciation methods are used for income tax purposes. Leasehold improvements are amortized
over the shorter of the life of the lease or the estimated useful life of the improvement. Depreciation expense amounted to
$29.0, $27.5, and $28.8 during fiscal 2013, 2012, and 2011, respectively.
Research and Development
Research and development (“R&D”) expense, which is included in Selling, Distribution, and Administrative Expenses in
the Company’s Consolidated Statements of Comprehensive Income, is expensed as incurred. R&D expense amounted to $32.7,
$34.7, and $31.3 during fiscal 2013, 2012, and 2011, respectively.
Advertising
Advertising costs are expensed as incurred and are included within Selling, Distribution, and Administrative Expenses in
the Company’s Consolidated Statements of Comprehensive Income. These costs totaled $12.1, $12.6, and $13.4 during fiscal
2013, 2012, and 2011, respectively.
Service Arrangements with Customers
The Company maintains a service program with one of its retail customers that affords the Company certain in-store
benefits, including lighting display maintenance. Costs associated with this program totaled $5.7, $5.7, and $5.2 in fiscal 2013,
2012, and 2011, respectively. These costs have been included within Selling, Distribution, and Administrative Expenses in the
Company’s Consolidated Statements of Comprehensive Income.
47
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Interest Expense, Net
Interest expense, net, is comprised primarily of interest expense on long-term debt, revolving credit facility borrowings,
and loans collateralized by assets related to a company-owned life insurance program, partially offset by interest income on
cash and cash equivalents.
The following table summarizes the components of interest expense, net:
Interest expense
Interest income
Interest expense, net
Foreign Currency Translation
Years Ended August 31,
2013
2012
2011
$
$
31.9
(0.7)
31.2
$
$
31.3
(0.6)
30.7
$
$
30.4
(0.5)
29.9
The functional currency for the foreign operations of the Company is the local currency. The translation of foreign
currencies into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet dates and
for revenue and expense accounts using a weighted average exchange rate each month during the year. The gains or losses
resulting from the balance sheet translation are included in Foreign currency translation adjustments in the Consolidated
Statements of Comprehensive Income and are excluded from net income.
Miscellaneous (Income) Expense, Net
Miscellaneous (income) expense, net, is composed primarily of gains or losses on foreign currency items and other non-
operating items. Gains or losses relating to foreign currency items consisted of expense of $0.2 in fiscal 2013, income of $1.2
in fiscal 2012, and expense of $1.5 in fiscal 2011.
Income Taxes
The Company is taxed at regular corporate rates after adjusting income reported for financial statement purposes for
certain items that are treated differently for income tax purposes. Deferred income tax expenses or benefits result from changes
during the year in cumulative temporary differences between the tax basis and book basis of assets and liabilities.
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 for the
Company includes foreign currency translation and pension adjustments.
The following table presents the changes in each component of Accumulated Other Comprehensive Income/Loss Items, net
of tax.
Balance at August 31, 2012
Other Comprehensive Income/(Expense) before reclassifications
Amounts reclassified from accumulated other comprehensive income
Net current-period Other Comprehensive Income/(Expense)
Balance at August 31, 2013
Foreign
Currency Items
Defined
Benefit Pension
Plans
Accumulated
Other
Comprehensive
Loss Items
$
$
(16.9) $
(67.8) $
(84.7)
(1.9)
—
(1.9)
19.5
4.5
24.0
17.6
4.5
22.1
(18.8) $
(43.8) $
(62.6)
48
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents the tax (expense)/benefit allocated to each component of Other Comprehensive Income
(Expense).
2013
Years Ended August 31,
2012
2011
Before
Tax
Amount
Tax
(Expense)
or Benefit
Net of
Tax
Amount
Before
Tax
Amount
Tax
(Expense)
or Benefit
Net of
Tax
Amount
Before
Tax
Amount
Tax
(Expense)
or Benefit
Net of
Tax
Amount
$
(1.9) $
— $
(1.9) $
(8.2) $
— $
(8.2) $
9.9
$
— $
9.9
(5.5)
34.5
2.2
(11.7)
(3.3)
22.8
—
(38.3)
0.7
6.2
(0.3)
(2.1)
0.4
4.1
0.1
4.1
—
12.9
—
(1.5)
—
(25.4)
0.1
2.6
—
6.9
0.1
4.8
35.9
(11.9)
24.0
(34.1)
11.4
(22.7)
11.8
—
(2.5)
—
(1.7)
(4.2)
—
4.4
0.1
3.1
7.6
$
34.0
$
(11.9) $
22.1
$
(42.3) $
11.4
$
(30.9) $
21.7
$
(4.2) $
17.5
Foreign Currency Translation
Adjustments
Defined Benefit Pension Plans:
Prior service cost from plan
amendment during period
Actuarial gains (losses)
Amortization of defined
benefit pension items:
Prior service cost (1)
Actuarial losses (1)
Total Defined Benefit Plans,
net
Other Comprehensive Income/
(Expense)
_______________________________________
(1)
The before tax amount of these accumulated other comprehensive income components is included in net periodic pension cost. See the Pension and
Defined Contribution Plans footnote for additional details.
3.
New Accounting Pronouncements
Accounting Standards Adopted in Fiscal 2013
In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive
Income that amended ASU No. 2011-12 and ASU No. 2011-05. ASU 2013-02 is effective for reporting periods beginning after
December 15, 2012. The Company early adopted ASU 2013-02 in the second quarter of fiscal 2013. The provisions of ASU
2013-02 did not have a material effect on the Company's financial condition, results of operations, and cash flows.
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive
Income (“ASU 2011-05”). ASU 2011-05 changes the presentation of comprehensive income in the financial statements for all
periods reported and eliminates the option under the previous guidance that allowed for presentation of other comprehensive
income as part of the Statement of Stockholders' Equity. The update allows two options for the proper presentation of comprehensive
income: 1) a single Statement of Comprehensive Income, which includes all components of net income and other comprehensive
income; or 2) a Statement of Income followed immediately by a Statement of Comprehensive Income, which includes summarized
net income and all components of other comprehensive income. Additionally, the update requires the presentation of reclassification
adjustments out of accumulated other comprehensive income on the face of the Statement of Comprehensive Income or within
the footnotes. The provisions of ASU 2011-05 are effective for public entities retrospectively for annual periods, and interim
periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company adopted ASU 2011-05
in the first quarter of fiscal 2013. The provisions of ASU 2011-05 did not have a material effect on the Company’s financial
condition, results of operations, and cash flows.
In October 2012, the FASB issued ASU No. 2012-04, Technical Corrections and Improvements ("ASU 2012-04"), which
amends a wide variety of Topics in the FASB Accounting Standards Codification ("Codification"). The amendments in ASU No.
2012-04 represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements
to the Codification that are not expected to have a significant effect on current accounting practice. Additionally, the amendments
are intended to make the Codification easier to understand and the fair value measurement guidance easier to apply by eliminating
inconsistencies and providing needed clarifications. Amendments in ASU 2012-04 that do not provide transition guidance were
effective upon issuance for public entities. Amendments that are subject to the transition guidance are effective for fiscal periods
beginning after December 15, 2012. The Company adopted ASU 2012-04 in the first quarter of fiscal 2013. The provisions of
ASU 2012-04 did not have a material effect on the Company's financial condition, results of operations, and cash flows.
49
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Accounting Standards Yet to Be Adopted
In July 2012, the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350) - Testing Indefinite-
Lived Intangible Assets for Impairment (“ASU 2012-02”), which allows companies to assess qualitative factors to determine if
indefinite-lived intangible assets other than goodwill have been impaired. If the qualitative factors reviewed do not indicate that
it is more likely than not that the fair value of an indefinite-lived intangible asset does not exceed the carrying value, ASU 2012-02
deems any further impairment testing to be unnecessary. In the event that the qualitative review indicates otherwise, the company
is required to perform further quantitative impairment testing as prescribed by Topic 350. ASU 2012-02 is effective for fiscal years
beginning after September 15, 2012, with early adoption permitted. The Company is currently reviewing the provisions of ASU
2012-02 but does not expect it to have a material effect on the Company's financial condition, results of operations, and cash flows.
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets
and Liabilities (“ASU 2013-01”), which amended ASC Subtopic 210-20, Balance Sheet - Offsetting. ASU 2013-01 clarified the
scope of ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities ("ASU 2011-11"). ASU
2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of that entity's financial
statements to understand the effect of those arrangements on its financial position. ASU 2013-01 clarifies the scope of ASU
2011-11 as applying to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated
embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending
transactions that are offset either in accordance with other requirements of the Accounting Standards Codification or subject to
an enforceable master netting arrangement or similar arrangement. The provisions of ASU 2011-11 and ASU 2013-01 are effective
retrospectively to all comparative periods for public entities during annual reporting periods beginning after January 1, 2013
(effective date) and interim reporting periods therein. The Company is currently reviewing the provisions of ASU 2011-11 and
ASU 2013-01 but does not expect either to have a material effect on the Company's financial condition, results of operations, and
cash flows.
In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for
the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity
or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force) (“ASU 2013-05”), which
applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its
investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a
business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. ASU
2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December
15, 2013. The Company is currently reviewing the provisions of ASU 2013-05 but does not expect it to have a material effect
on the Company's financial condition, results of operations, and cash flows.
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax
Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the
FASB Emerging Issues Task Force) (“ASU 2013-11”), which applies to the presentation of unrecognized tax benefits as a
liability on the balance sheet when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not
available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would
result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and
the entity does not intend to use, the deferred tax asset for such purpose. ASU 2013-11 is effective prospectively for fiscal
years (and interim reporting periods within those years) beginning after December 15, 2013. The Company is currently
reviewing the provisions of ASU 2013-11 but does not expect it to have a material effect on the Company's financial condition,
results of operations, and cash flows.
4.
Acquisitions
The Company has actively pursued opportunities for investment and growth through acquisitions. In recent years, the
Company has acquired a number of businesses that participate in the North American lighting market, including the businesses
discussed below. The companies were purchased to further expand and complement the Company’s lighting solutions portfolio
and were fully incorporated into the Company’s operations. None of the business combinations-individually or in the
aggregate-represented a material transaction.
eldoLED Acquisition
On March 13, 2013, the Company acquired for cash, including potential additional cash payments that may be paid in future
periods under earn-out provisions, all of the ownership interests in eldoLED, a leading provider of high-performance drivers for
LED lighting systems based in Eindhoven, The Netherlands. Potential cash payments related to the earn-out provisions are
50
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
payable beginning in fiscal 2014 and ending in fiscal 2017 subject to achievement of those provisions. The operating results of
eldoLED have been included in the Company's consolidated financial statements since the date of acquisition and are not material
to the Company's financial condition, results of operations, or cash flows. Preliminary amounts related to the acquisition are
reflected in the Consolidated Balance Sheets as of August 31, 2013. These amounts are deemed to be provisional until disclosed
otherwise, as the Company continues to gather information related to the identification and valuation of intangible and other
acquired assets and liabilities.
Adura Technologies Acquisition
On December 20, 2012, the Company acquired for cash all of the ownership interests in Adura, a leading developer of radio
frequency (RF) mesh networking technology that allows individual light fixtures to communicate in a wireless mesh network with
switches, sensors and system management software. The operating results of Adura have been included in the Company's
consolidated financial statements since the date of acquisition and are not material to the Company's financial condition, results
of operations, or cash flows. Preliminary amounts related to the acquisition are reflected in the Consolidated Balance Sheets as
of August 31, 2013. These amounts are deemed to be provisional until disclosed otherwise, as the Company continues to gather
information related to the identification and valuation of intangible and other acquired assets and liabilities.
Healthcare Lighting Acquisition
On May 12, 2011, the Company acquired for cash all of the ownership interests in Healthcare Lighting, a leading provider
of specialized, high-performance lighting solutions for healthcare facilities. Based in Fairview, Pennsylvania, Healthcare
Lighting exclusively focused on servicing the healthcare industry through the design and manufacture of medical lighting
products meant to enhance the visual environment in healthcare settings. The operating results of Healthcare Lighting have
been included in the Company’s consolidated financial statements since the date of acquisition. Management finalized the
acquisition accounting for Healthcare Lighting during fiscal 2012, and the amounts are reflected in the Consolidated Balance
Sheets. There were no material changes to the Company’s financial statements as a result of the finalization of the acquisition
accounting.
Sunoptics Acquisition
On February 23, 2011, the Company acquired for cash all of the ownership interests in Sunoptics, a premier provider of
high-performance, prismatic daylighting solutions based in Sacramento, California. Sunoptics' high-performance prismatic
skylights optimize lighting performance through the use of sustainable and energy-efficient solutions for retail, industrial,
warehouse, education, government, and office applications. The operating results of Sunoptics have been included in the
Company’s consolidated financial statements since the date of acquisition. Management finalized the acquisition accounting for
Sunoptics during fiscal 2012, and the amounts are reflected in the Consolidated Balance Sheets. There were no material
changes to the Company’s financial statements as a result of the finalization of the acquisition accounting.
Winona Lighting Acquisition
On October 14, 2010, the Company acquired for cash all of the outstanding capital stock of Winona Lighting, a premier
provider of architectural and high-performance indoor and outdoor lighting solutions headquartered in Winona, Minnesota.
Recognized throughout the architectural design community, Winona Lighting served the commercial, retail, and institutional
markets with a solutions portfolio of high-quality and design-oriented luminaires suitable for decorative, custom, asymmetric,
and landscape lighting applications. The operating results of Winona Lighting have been included in the Company’s
consolidated financial statements since the date of acquisition. Management finalized the acquisition accounting for Winona
Lighting during fiscal 2011, and the amounts are reflected in the Consolidated Balance Sheets.
5.
Fair Value Measurements
The Company determines a fair value measurement based on the assumptions a market participant would use in pricing an
asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a three level hierarchy
making a distinction between market participant assumptions based on (i) unadjusted quoted prices for identical assets or liabilities
in an active market (Level 1), (ii) quoted prices in markets that are not active or inputs that are observable either directly or
indirectly for substantially the full term of the asset or liability (Level 2), and (iii) prices or valuation techniques that require inputs
that are both unobservable and significant to the overall fair value measurement (Level 3).
51
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents information about assets and liabilities required to be carried at fair value and measured on a
recurring basis as of August 31, 2013 and 2012:
Fair Value Measurements as of:
August 31, 2013
August 31, 2012
Level 1
Level 2
Level 3
Total
Fair
Value
Level 1
Level 2
Level 3
Total Fair
Value
Assets:
Cash and cash equivalents
$ 359.1
$ — $ — $ 359.1
$ 284.5
$ — $ — $ 284.5
Other
Liabilities:
Other
0.7
—
—
0.7
1.3
—
—
1.3
$
0.7
$ — $ 12.1
$ 12.8
$
1.3
$ — $ — $
1.3
The Company utilizes valuation methodologies to determine the fair values of its 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.
The Company used the following valuation methods and assumptions in estimating the fair value of the following assets
and liabilities:
The fair value of Level 1 assets and liabilities is determined based on quoted market prices.
The fair value of Level 3 liabilities is estimated using a discounted cash flow technique with significant inputs that are
not observable in the market, appropriately discounted considering the uncertainties associated with the obligation.
Changes in these inputs, including probability assessments or the discount rate, could result in a higher or lower fair
value measurement.
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.
Changes in the Company's Level 3 liabilities consist of additions totaling $11.7 for preliminary estimates associated with
certain acquisition-related liabilities (refer to the Acquisitions footnote). The estimated fair value of the acquisition-related
liabilities increased by $0.4 during the fourth quarter of fiscal 2013. Expense associated with the change in the estimated fair
value of the acquisition-related liabilities was included in Selling, Distribution, and Administrative Expenses within the
Consolidated Statements of Comprehensive Income.
Disclosures of fair value information about financial instruments (whether or not recognized in the balance sheet), for which
it is practicable to estimate that value, are required each reporting period in addition to any financial instruments carried at fair
value on a recurring basis as prescribed by ASC Topic 825, Financial Instruments (“ASC 825”). In cases where quoted market
prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.
The carrying values and estimated fair values of certain of the Company’s financial instruments were as follows at
August 31, 2013 and 2012:
August 31, 2013
August 31, 2012
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Liabilities:
Senior unsecured public notes, net of unamortized discount
$
349.6
$
381.5
$
349.5
$
407.5
Industrial revenue bond
4.0
4.0
4.0
4.0
The senior unsecured public notes are carried at the outstanding balance, including bond discounts, 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).
52
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The industrial revenue bond is carried at the outstanding balance as of the end of the reporting period. The industrial
revenue bond is a tax-exempt, variable-rate instrument that resets on a weekly basis; therefore, the Company estimates that the
face amount of the bond approximates fair value as of August 31, 2013 based on bonds 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 the Company. In many cases,
the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized
in immediate settlement of the instruments. In evaluating the Company’s management of liquidity and other risks, the fair
values of all assets and liabilities should be taken into consideration, not only those presented above.
53
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
6.
Pension and Defined Contribution Plans
Company-sponsored Pension Plans
The Company has several pension plans, both qualified and non-qualified, covering certain hourly and salaried
employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the
final years of employment. The Company makes 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.
The following tables reflect the status of the Company’s domestic (U.S.-based) and international pension plans at
August 31, 2013 and 2012:
Fair value of plan assets at beginning of year
$
95.6
$
83.9
$
28.1
$
Change in Benefit Obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Amendments
Actuarial (gain) loss
Curtailment
Benefits paid
Other
Benefit obligation at end of year
Change in Plan Assets:
Actual return on plan assets
Employer contributions
Benefits paid
Other
Fair value of plan assets at end of year
Funded status at end of year:
Funded Status
Net amount recognized in Consolidated Balance Sheets
Amounts Recognized in the Consolidated Balance Sheets Consist of:
Current liabilities
Non-current liabilities
Net amount recognized in Consolidated Balance Sheets
Accumulated Benefit Obligation
Amounts in accumulated other comprehensive income:
Prior service cost
Net actuarial loss
Amounts in accumulated other comprehensive income
Estimated amounts that will be amortized from accumulated
comprehensive income over the next fiscal year:
Prior service cost
Net actuarial loss
54
Domestic Plans
August 31,
International Plans
August 31,
2013
2012
2013
2012
$
168.1
$
136.3
$
46.9
$
35.8
3.4
6.3
5.5
(24.9)
—
(6.9)
—
151.5
2.7
6.6
—
29.1
0.1
(6.7)
—
168.1
0.1
1.7
—
(6.5)
—
(1.0)
(1.0)
40.2
9.3
7.7
(6.9)
—
105.7
7.9
10.5
(6.7)
—
95.6
2.5
1.1
(1.0)
(0.6)
30.1
0.1
1.9
—
11.1
—
(1.1)
(0.9)
46.9
26.5
2.3
1.0
(1.1)
(0.6)
28.1
$
$
$
$
$
$
$
$
(45.8) $
(45.8) $
(72.5) $
(72.5) $
(10.1) $
(10.1) $
(18.8)
(18.8)
(1.2) $
(44.6)
(45.8) $
$
151.5
(1.2) $
(71.3)
(72.5) $
$
168.1
— $
(10.1)
(10.1) $
$
40.2
(5.3) $
(48.9)
(54.2) $
(0.6) $
(80.4)
(81.0) $
— $
(13.0)
(13.0) $
—
(18.8)
(18.8)
46.9
—
(22.8)
(22.8)
$
0.8
2.0
0.1
4.6
$
— $
1.0
—
1.8
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Components of net periodic pension cost for the fiscal years ended August 31, 2013, 2012, and 2011 included the
following:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Curtailment
Recognized actuarial loss
Net periodic pension cost
Domestic Plans
International Plans
2013
2012
2011
2013
2012
2011
$
$
3.4
6.3
(7.1)
0.7
—
4.4
7.7
$
2.7
$
3.1
$
0.1
$
0.1
$
6.6
(6.5)
0.1
0.1
3.2
6.2
$
6.5
(5.9)
0.1
—
3.7
7.5
$
1.7
(1.5)
—
—
1.8
2.1
$
1.9
(1.7)
—
—
0.9
1.2
$
$
0.1
1.8
(1.6)
—
—
1.1
1.4
Weighted average assumptions used in computing the benefit obligation are as follows:
Discount rate
Rate of compensation increase
Domestic Plans
International Plans
2013
2012
2013
2012
4.8%
5.5%
3.8%
5.5%
4.5%
3.3%
3.7%
2.5%
Weighted average assumptions used in computing net periodic benefit cost are as follows:
Discount rate
Expected return on plan assets
Rate of compensation increase
Domestic Plans
International Plans
2013
2012
2011
2013
2012
2011
3.8%
7.5%
5.5%
5.0%
7.5%
5.5%
5.0%
7.8%
5.5%
3.7%
6.2%
2.5%
5.6%
5.5%
3.4%
4.9%
6.6%
3.1%
It is the Company’s policy to adjust, on an annual basis, the discount rate used to determine the projected benefit
obligation to approximate rates on high-quality, long-term obligations based on the Company’s estimated benefit payments
available as of the measurement date. The Company uses a publicly published yield curve to assist in the development of its
discount rates. The Company estimates that each 100 basis point increase in the discount rate would result in reduced net
periodic pension cost of approximately $0.8 and $0.1 for domestic plans and international plans, respectively. The expected
return on plan assets is derived from a periodic study of long-term historical rates of return on the various asset classes included
in the Company’s targeted pension plan asset allocation. The Company estimates that each 100 basis point reduction in the
expected return on plan assets would result in additional net periodic pension cost of $1.1 and $0.3 for domestic plans and
international plans, respectively. The rate of compensation increase is also evaluated and is adjusted by the Company, if
necessary, annually.
The Company’s investment objective for domestic plan assets is to earn a rate of return sufficient to match or exceed the
long-term growth of the plans’ liabilities without subjecting plan assets to undue risk. The plan assets are invested primarily in
high quality equity and debt securities. The Company conducts a periodic strategic asset allocation study to form a basis for the
allocation of pension assets between various asset categories. Specific allocation percentages are assigned to each asset
category with minimum and maximum ranges established for each. The assets are then managed within these ranges. During
fiscal 2013, the U.S. targeted asset allocation was 55% equity securities, 40% fixed income securities, and 5% real estate
securities. The Company’s investment objective for the international plan assets is also to add value by matching or exceeding
the long-term growth of the plans’ liabilities. During fiscal 2013, the international asset target allocation approximated 60%
equity securities, 25% fixed income securities, 10% multi-strategy funds, and 5% real estate securities.
55
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company’s pension plan asset allocation at August 31, 2013 and 2012 by asset category is as follows:
Equity securities
Fixed income securities
Multi-strategy investments
Real estate
Total
% of Plan Assets
Domestic Plans
International Plans
2013
2012
2013
2012
58.8%
36.4%
—%
4.8%
100.0%
57.3%
37.8%
—%
4.9%
100.0%
63.4%
22.5%
9.6%
4.5%
100.0%
70.0%
25.0%
—%
5.0%
100.0%
The Company’s pension plan assets are stated at fair value from quoted market prices in an active market, quoted
redemption values, or estimates based on reasonable assumptions as of the most recent measurement period. See the Fair Value
Measurements footnote for a description of the fair value guidance.
The following tables present the fair value of the domestic pension plan assets by major category as of August 31, 2013
and 2012:
Assets
Mutual Funds:
Large blend fund
Foreign large blend fund
Small blend fund
Real Estate Fund
Short-Term Investments
Fixed-Income Investments
Assets
Mutual Funds:
Large blend fund
Foreign large blend fund
Small blend fund
Real Estate Fund
Short-Term Investments
Fixed-Income Investments
Fair Value Measurements
Quoted Market
Prices in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
Fair Value
as of
August 31,
2013
$
$
$
39.1
10.6
12.4
5.1
5.1
33.4
105.7
39.1
10.6
12.4
—
5.1
—
$
— $
—
—
—
—
33.4
—
—
—
5.1
—
—
Fair Value Measurements
Quoted Market
Prices in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
Fair Value
as of
August 31,
2012
—
—
—
4.7
—
—
$
35.6
$
35.6
$
— $
9.2
10.0
4.7
5.3
30.8
95.6
9.2
10.0
—
5.3
—
—
—
—
—
30.8
$
56
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following tables present the fair value of the international pension plan assets by major category as of August 31,
2013 and 2012:
Assets
Equity Securities
Real Estate Fund
Multi-Strategy Investments
Fixed-Income Investments
Assets
Equity Securities
Real Estate Fund
Fixed-Income Investments
Fair Value Measurements
Quoted Market
Prices in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
Fair Value
as of
August 31,
2013
19.0
$
— $
19.0
$
1.4
3.0
6.7
30.1
—
—
—
—
3.0
6.7
—
1.4
—
—
Fair Value Measurements
Quoted Market
Prices in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
Fair Value
as of
August 31,
2012
18.9
$
— $
18.9
$
1.4
7.8
28.1
—
—
—
7.8
—
1.4
—
$
$
$
$
Publicly-traded securities are valued at the last reported sales price on the last business day of the period. Investments
traded in the over-the-counter market and listed securities for which no sale was reported on the last day of the period are
valued at the last reported bid price.
Investments in real estate are stated at estimated fair values based on the fund management’s valuations and upon
appraisal reports prepared periodically by independent real estate appraisers. These investments are classified as Level 3 assets
within the fair value hierarchy. The purpose of the appraisal is to estimate the fair value of the real estate as of a specific date
based on the most probable price for which the appraised real estate will sell in a competitive market under all conditions
requisite to a fair sale. Estimated fair value is based on (i) discounted cash flows using certain market assumptions, including
holding period, discount rates, capitalization rates, rent and expense growth rates, future capital expenditures and the ultimate
sale of the property at the end of the holding period; (ii) direct capitalization method; or (iii) comparable sales method.
The tables below present a rollforward of the domestic and international pension plans’ Level 3 assets for the years ended
August 31, 2013 and 2012:
Balance, beginning of year
Net unrealized gain relating to instruments still held at the reporting date
Shares purchased, including from dividend reinvestment
Balance, end of year
Domestic Real Estate Fund
Years Ended August 31,
2013
2012
$
$
4.7
0.3
0.1
5.1
$
$
4.2
0.4
0.1
4.7
57
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Balance, beginning of year
Shares purchased, including from dividend reinvestment(1)
Balance, end of year
_______________________________________
(1) Activity in 2013 was less than $0.1.
International Real Estate Fund
Years Ended August 31,
2013
2012
$
$
1.4
—
1.4
$
$
0.6
0.8
1.4
The Company expects to contribute approximately $8.7 and $1.1 during 2014 to its domestic and international defined
benefit plans, respectively. These amounts are based on the total contributions required during 2014 to satisfy current legal
minimum funding requirements for qualified plans and estimated benefit payments for non-qualified plans.
Benefit payments are made primarily from funded benefit plan trusts. Benefit payments are expected to be paid as
follows for the years ending August 31:
2014
2015
2016
2017
2018
2019 - 2023
Domestic
Plans
International
Plans
$
$
7.0
7.1
7.2
7.6
8.4
47.5
1.0
1.0
1.0
1.1
1.1
6.0
Multi-employer Pension Plans
The Company contributes to three multi-employer defined benefit pension plans under the terms of collective-bargaining
agreements that cover certain of its union-represented employees. The risks of participating in these multi-employer plans are
different from single-employer plans in the following aspects:
• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees
•
•
of other participating employers.
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be shared
by the remaining participating employers.
If a participating employer chooses to stop participating in some of its multi-employer plans, the employer
may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a
withdrawal liability.
The Company’s contributions to these plans were $0.3, $0.2, and $0.2 for the years ended August 31, 2013, 2012, and
2011, respectively. The most recent Pension Protection Act zone status for one of the plans is red, generally defined as less
than 65% funded. This plan currently has a rehabilitation plan in place and the Company's contributions include a surcharge.
Defined Contribution Plans
The Company also has defined contribution plans to which both employees and the Company make contributions. The
cost to the Company for these plans was $4.7 in fiscal 2013 and $4.1 in each of fiscal years 2012 and 2011. Employer matching
amounts are allocated in accordance with the participants’ investment elections for elective deferrals. At August 31, 2013,
assets of the domestic defined contribution plans included shares of the Company’s common stock with a market value of
approximately $9.1, which represented approximately 3.8% of the total fair market value of the assets in the Company’s
domestic defined contribution plans.
58
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
7.
Debt and Lines of Credit
Debt
The Company’s debt at August 31, 2013 and 2012 consisted of the following:
Senior unsecured public notes due December 2019, principal
Senior unsecured public notes due December 2019, unamortized discount
Industrial revenue bond due 2021
Total debt outstanding
August 31,
2013
2012
$
$
$
350.0
(0.4)
4.0
353.6
$
350.0
(0.5)
4.0
353.5
All future annual principal payments of long-term debt in the amount of $354.0 will become due after fiscal 2018.
On December 1, 2009, the Company announced a private offering by ABL, Acuity Brands’ wholly-owned principal
operating subsidiary, of $350.0 aggregate principal amount of senior unsecured notes due in fiscal 2020 (the “Notes”). The
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 Acuity Brands, the “Guarantors”), a wholly-owned subsidiary of Acuity Brands. The Notes are
senior unsecured obligations of ABL and rank equally in right of payment with all of ABL’s existing and future senior
unsecured indebtedness. The guarantees of Acuity Brands and ABL IP Holding are senior unsecured obligations of Acuity
Brands and ABL IP Holding and rank equally in right of payment with their other senior unsecured indebtedness. The Notes
bear interest at a rate of 6% per annum and were issued at a price equal to 99.797% of their face value and for a term of 10
years. Interest on the Notes is payable semi-annually on June 15 and December 15. Additionally, the Company capitalized $3.1
of deferred issuance costs related to the Notes that are being amortized over the 10-year term of the Notes.
In accordance with the registration rights agreement by and between ABL and the Guarantors and the initial purchasers of
the Notes, ABL and the Guarantors filed a registration statement with the SEC for an offer to exchange the Notes for SEC-
registered notes with substantially identical terms. The registration became effective on August 17, 2010, and all of the Notes
were exchanged.
The $4.0 industrial revenue bond matures in 2021. The interest rates on the $4.0 bond were approximately 0.2% and
0.3% at August 31, 2013 and 2012, respectively.
Lines of Credit
On January 31, 2012, the Company executed a new $250.0 revolving credit facility (the “Revolving Credit Facility”).
The Revolving Credit Facility replaced the Company’s prior $250.0 revolving credit facility (the “prior facility”), which was
scheduled to mature on October 19, 2012. The Company recognized a write-off of less than $0.1 in deferred financing costs in
connection with the early termination of the prior facility. The Revolving Credit Facility will mature and all amounts
outstanding will be due and payable on January 31, 2017.
The Revolving Credit Facility contains financial covenants, including a minimum interest coverage ratio (“Minimum
Interest Coverage Ratio”) and a leverage ratio (“Maximum Leverage Ratio”) of total indebtedness to EBITDA (earnings before
interest, taxes, depreciation and amortization expense), as such terms are defined in the Revolving Credit Facility agreement.
These ratios are computed at the end of each fiscal quarter for the most recent 12-month period. The Revolving Credit Facility
allows for a Maximum Leverage Ratio of 3.50 and a Minimum Interest Coverage Ratio of 2.50, subject to certain conditions
defined in the financing agreement. Generally, amounts outstanding under the Revolving Credit Facility bear interest at a
“Eurocurrency Rate”. Eurocurrency rate advances can be denominated in a variety of currencies, including U.S. dollars, and
amounts outstanding bear interest at a periodic fixed rate equal to the London Inter Bank Offered Rate (“LIBOR”) for the
applicable currency plus a margin as determined by Acuity Brands' leverage ratio (“Applicable Margin”). The Applicable
Margin is based on the Company’s leverage ratio, as defined in the Revolving Credit Facility, with such margin ranging from
1.075% to 1.650%. Additionally, the Company is required to pay certain fees in connection with the Revolving Credit Facility,
including administrative service fees and an annual facility fee. The annual facility fee is payable quarterly in arrears and is
determined by the Company’s leverage ratio as defined in the Revolving Credit Facility. This facility fee ranges from 0.175%
to 0.350% of the aggregate $250.0 commitment of the lenders under the Revolving Credit Facility.
The Company was compliant with all financial covenants under the Revolving Credit Facility as of August 31, 2013. As
of August 31, 2013, the Company had outstanding letters of credit totaling $9.9, primarily for securing collateral requirements
59
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
under the casualty insurance programs for Acuity Brands and providing credit support for the Company’s industrial revenue
bond (not an outstanding amount under the Revolving Credit Facility). At August 31, 2013, the Company had additional
borrowing capacity under the Revolving Credit Facility of $244.3 under the most restrictive covenant in effect at the time,
which represents the full amount of the Revolving Credit Facility less outstanding letters of credit of $5.7 issued under the
Revolving Credit Facility.
None of the Company’s existing debt instruments include provisions that would require an acceleration of repayments
based solely on changes in the Company’s credit ratings.
8.
(share data presented in whole units except where otherwise indicated)
Common Stock and Related Matters
Common Stock
Changes in common stock for the years ended August 31, 2013, 2012, and 2011 were as follows:
(Amounts and shares in millions)
Balance at August 31, 2010
Issuance of restricted stock grants, net of forfeitures
Stock options exercised
Balance at August 31, 2011
Issuance of restricted stock grants, net of forfeitures
Stock options exercised
Balance at August 31, 2012
Issuance of restricted stock grants, net of forfeitures
Stock options exercised
Balance at August 31, 2013
Common Stock
Shares
Amount
(At par)
50.4
$
0.3
0.3
51.0
$
0.2
0.3
51.5
$
0.2
0.5
52.2
$
0.5
—
—
0.5
—
—
0.5
—
—
0.5
During fiscal 2012, the Company reacquired 252,000 shares of the Company’s outstanding common stock at a total cost
of $9.2, which completed the plan to repurchase two million shares previously authorized by the Board of Directors in July
2010. As of August 31, 2013 and 2012, the Company had 9.7 million repurchased shares recorded as treasury stock at an
original repurchase cost of $420.2.
In September 2011, the Company's Board of Directors authorized the repurchase of an additional two million shares of
the Company's outstanding common stock. No shares have been repurchased under the repurchase plan approved in September
2011.
Preferred Stock
The Company has 50 million shares of preferred stock authorized. No shares of preferred stock were issued in fiscal 2013
or 2012.
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, which has been modified to include the effects of all participating securities (unvested
share-based payment awards with a right to receive nonforfeitable dividends) as prescribed by the two-class method under ASC
Topic 260, Earnings Per Share (“ASC 260”), during the period. Diluted earnings per share is computed similarly but reflects
the potential dilution that would occur if dilutive options were exercised and restricted stock awards were vested. Stock options
of approximately 62,000 and 180,000 were excluded from the diluted earnings per share calculation for the years ended
August 31, 2013 and 2012, respectively, as the effect of inclusion would have been antidilutive.
60
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table calculates basic earnings per common share and diluted earnings per common share for the years
ended August 31, 2013, 2012, and 2011:
(Amounts and shares in millions, except earnings per share)
Basic Earnings per Share
Net income
Less: Income attributable to participating securities
Net income available to common shareholders
Basic weighted average shares outstanding
Basic earnings per share
Diluted Earnings per Share
Net income
Less: Income attributable to participating securities
Net income available to common shareholders
Basic weighted average shares outstanding
Common stock equivalents
Diluted weighted average shares outstanding
Diluted earnings per share
Years Ended August 31,
2013
2012
2011
$
$
$
$
$
$
127.4
(2.0)
125.4
42.2
2.97
127.4
(2.0)
125.4
42.2
0.3
42.5
2.95
$
$
$
$
$
$
116.3
(2.2)
114.1
41.4
2.75
116.3
(2.2)
114.1
41.4
0.5
41.9
2.72
$
$
$
$
$
$
105.5
(1.9)
103.6
42.2
2.46
105.5
(1.9)
103.6
42.2
0.6
42.8
2.42
9.
(share data presented in whole units except where otherwise indicated)
Share-Based Payments
Omnibus Stock Compensation Incentive and Directors’ Equity Plans
In January 2013, the Company’s stockholders approved the Acuity Brands, Inc. 2012 Omnibus Stock Compensation
Incentive Plan (“2012 Plan”) to replace the Amended and Restated 2007 Acuity Brands, Inc. Long Term Incentive Plan (“2007
Plan”). An aggregate of 2.3 million shares are available for issuance under the new plan including 1.9 million previously
issuable shares under the 2007 Plan and 400,000 newly authorized shares. In addition, 1.7 million shares that were previously
approved by the Company’s stockholders and that are subject to outstanding awards granted under the 2007 plan are issuable
under the 2012 Plan.
In November 2001, the Company adopted the Acuity Brands, Inc., 2001 Nonemployee Directors’ Stock Option Plan (the
“Directors’ Plan”), under which 300,000 shares were authorized for issuance. In January 2007, the Directors’ Plan was
amended to provide that no further annual grants of stock options would be made to nonemployee directors. The Directors’
Plan expired on November 1, 2011. Approximately 16,000 options, which were previously approved by the Company’s
stockholders and are subject to awards granted prior to expiration, remain issuable under the Directors’ Plan.
Shares available for grant under all plans were approximately 2.3 million, 2.3 million, and 2.6 million at August 31, 2013,
2012, and 2011, respectively. Forfeited shares are returned to the pool of shares available for grant.
Restricted Stock Awards
As of August 31, 2013, the Company had approximately 660,000 shares outstanding of restricted stock to officers,
directors, and other key employees under the 2012 Plan, including restricted stock units granted to foreign employees. The
shares vest primarily over a four-year period and are valued at the closing stock price on the date of the grant. Compensation
expense recognized related to the awards under the equity incentive plans was $13.2, $13.1, and $11.4 in fiscal 2013, 2012, and
2011, respectively.
61
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Activity related to restricted stock awards during the fiscal year ended August 31, 2013 was as follows:
Outstanding at August 31, 2012
Granted
Vested
Forfeited
Outstanding at August 31, 2013
Number of
Shares
(in millions)
0.8
0.3
(0.3)
(0.1)
0.7
Weighted
Average
Grant Date
Fair Value Per
Share
$
$
$
$
$
44.11
64.01
40.88
53.33
52.90
As of August 31, 2013, there was $23.8 of total unrecognized compensation cost related to unvested restricted stock,
which is expected to be recognized over a weighted-average period of 1.7 years. The total fair value of shares vested during the
years ended August 31, 2013 and 2012, was approximately $13.4 and $12.6, respectively.
Stock Options
As of August 31, 2013, the Company had approximately 790,000 options outstanding to officers and other key employees
under the 2012 Plan. Options issued under the 2012 Plan are generally granted with an exercise price equal to the fair market
value of the Company’s stock on the date of grant (but never less than the fair market value on the grant date) and expire
10 years from the date of grant. These options generally vest and become exercisable over a three-year period. The stock
options granted under the Directors’ Plan vested and became exercisable one year from the date of grant. Options under the
Directors' Plan have an exercise price equal to the fair market value of the Company’s stock on the date of the grant and expire
10 years from that date. As of August 31, 2013, approximately 16,000 options remain outstanding under the Director’s Plan and
are included in the table below. Compensation expense recognized related to the awards under the current and prior equity
incentive plans was $2.5, $2.3, and $2.2 in fiscal 2013, 2012, and 2011, respectively. There was no expense related to the
director plan in fiscal 2013, 2012, and 2011.
The fair value of each option was estimated on the date of grant using the Black-Scholes model. The dividend yield was
calculated based on annual dividends paid and the trailing 12-month average closing stock price at the time of grant. Expected
volatility was based on historical volatility of the Company’s stock, calculated using the most recent time period equal to the
expected life of the options. The risk-free interest rate was based on the U.S. Treasury yield for a term equal to the expected life
of the options at the time of grant. The Company used historical exercise behavior data of similar employee groups to
determine the expected life of options. All inputs into the Black-Scholes model 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 net income.
The following weighted average assumptions were used to estimate the fair value of stock options granted in the fiscal
years ended August 31:
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of options
Weighted-average fair value of options
2013
0.9%
43.8%
0.8%
5 years
$22.32
2012
1.0%
43.2%
1.1%
5 years
$16.43
2011
1.3%
41.8%
1.2%
5 years
$16.95
62
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Stock option activity during the years ended August 31, 2013, 2012, and 2011 were as follows:
Outstanding at August 31, 2010
Granted
Exercised
Cancelled
Outstanding at August 31, 2011
Granted
Exercised
Cancelled
Outstanding at August 31, 2012
Granted
Exercised
Outstanding at August 31, 2013
Range of option exercise prices:
$20.01 - $30.00 (average life - 2.9 years)
$30.01 - $40.00 (average life - 5.0 years)
$40.01 - $50.00 (average life - 6.4 years)
$50.01 - $70.00 (average life - 8.1 years)
_______________________________________
*
Represents outstanding or exercisable shares of less than 0.1.
Outstanding
Exercisable
Number of
Shares
(in millions)
Weighted
Average
Exercise Price
1.5
0.2
(0.3)
(0.1)
1.3
0.1
(0.3)
—
1.1
0.1
(0.4)
0.8
—
0.3
0.3
0.2
$27.78
$50.56
$21.18
$39.57
$31.67
$46.29
$22.02
$35.64
$36.25
$62.54
$30.72
$43.16
$25.58
$34.25
$43.62
$56.35
*
*
Number of
Shares
(in millions)
1.1
Weighted
Average
Exercise Price
$26.03
1.0
$28.81
1.0
0.5
—
0.3
0.1
0.1
$33.06
$38.00
$25.58
$34.25
$41.81
$50.56
*
The total intrinsic value of options exercised during the years ended August 31, 2013 and 2012 was $19.2 and $11.7,
respectively. As of August 31, 2013, the total intrinsic value of options outstanding was $33.5, the total intrinsic value of
options expected to vest was $33.4, and the total intrinsic value of options exercisable was $25.5. As of August 31, 2013, there
was $2.7 of total unrecognized compensation cost related to unvested options. That cost is expected to be recognized over a
weighted-average period of approximately 1.3 years.
Employee Deferred Share Units
The Company previously allowed employees to defer a portion of restricted stock awards granted in fiscal 2003 and
fiscal 2004 into the Supplemental Deferred Savings Plan (“SDSP”) as share units. The share units are payable in shares of stock
at the time of distribution from the SDSP. As of August 31, 2013, approximately 23,000 fully vested share units remain
deferred, but undistributed, under the 2012 Plan. There was no compensation expense related to these share units during fiscal
years 2013, 2012, and 2011.
Director Deferred Share Units
The Company previously required its Directors to defer at least 50% of their annual retainer into the 2006 Nonemployee
Director Deferred Compensation Plan ("2006 Plan"). Shares deferred under the 2006 Plan are to be paid in shares at retirement
from the Board. In January 2012, the Company's stockholders approved the 2011 Nonemployee Director Deferred
Compensation Plan ("2011 Plan"), following the expiration of the 2006 Plan on November 30, 2011. Pursuant to the 2011 Plan,
fees deferred by nonemployee directors can be invested in deferred stock units to be paid in shares or credited to an interest-
bearing account to be paid in cash at retirement from the Board. 300,000 shares of common stock were reserved for issuance
under the 2011 Plan, which incorporated approximately 86,000 shares previously available for grant under the 2006
Plan. Beginning in fiscal year 2013, the deferral requirement was adjusted to 55% of the annual director fees. On September
28, 2012, the 2011 Plan was amended to allow for stock grants in lieu of mandatory deferrals for the non-cash component of a
nonemployee director's annual fee if a director exceeds the stock ownership requirement of five-times the annual cash retainer
fee. Shares available for issuance under both plans were approximately 400,000 at both August 31, 2013 and 2012 and
63
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
approximately 200,000 at August 31, 2011. As of August 31, 2013, approximately 135,000 share units were deferred, but
undistributed, under the 2006 Plan and the 2011 Plan.
Compensation expense recognized related to the share units under these plans was $0.8 million, $0.5 million, and $0.6
million in fiscal 2013, 2012, and 2011, respectively.
Employee Stock Purchase Plan
Employees are able to purchase, through payroll deduction, common stock at a 5% discount on a monthly basis. There
were 1.5 million shares of the Company’s common stock reserved for purchase under the plan, of which approximately 1.0
million shares remain available as of August 31, 2013. Employees may participate at their discretion.
10.
Commitments and Contingencies
Self-Insurance
It is the policy of the Company to self-insure — up to certain limits — traditional risks, including workers’ compensation,
comprehensive general liability, and auto liability. The Company’s self-insured retention for each claim involving workers’
compensation, comprehensive general liability (including product liability claims), and auto liability is limited per occurrence
of such claims. A provision for claims under this self-insured program, based on the Company’s estimate of the aggregate
liability for claims incurred, is revised and recorded annually. The estimate is derived from both internal and external sources
including, but not limited to, the Company’s independent actuary. The Company is also self-insured up to certain limits for
certain other insurable risks, primarily physical loss to property and business interruptions resulting from such loss lasting two
days or more in duration. Insurance coverage is maintained for catastrophic property and casualty exposures, as well as those
risks required to be insured by law or contract. The Company is fully self-insured for certain other types of liabilities, including
environmental, product recall, warranty, and patent infringement. The actuarial estimates are subject to uncertainty from
various sources including, among others, changes in claim reporting patterns, claim settlement patterns, judicial decisions,
legislation, and economic conditions. Although the Company believes that the actuarial estimates are reasonable, significant
differences related to the items noted above could materially affect the Company’s self-insurance obligations, future expense,
and cash flow. The Company is also self-insured for the majority of its medical benefit plans. The Company estimates its
aggregate liability for claims incurred by applying a lag factor to the Company’s historical claims and administrative cost
experience. The appropriateness of the Company’s lag factor is evaluated and revised annually, as necessary.
Leases
The Company leases certain of its buildings and equipment under noncancelable lease agreements. Future minimum
annual lease payments under noncancelable leases are $14.3, $12.1, $11.2, $9.1, $5.2, and $9.4 for fiscal 2014, 2015, 2016,
2017, 2018, and after 2018, respectively.
Total rent expense was $16.2, $15.7, and $15.8 in fiscal 2013, 2012, and 2011, respectively.
Purchase Obligations
The Company has incurred purchase obligations in the ordinary course of business that are enforceable and legally
binding. Obligations for years subsequent to August 31, 2013 include $99.5, $1.5, and $1.5 in fiscal 2014, 2015, and 2016,
respectively. As of August 31, 2013, the Company had no purchase obligations extending beyond August 31, 2016.
Collective Bargaining Agreements
Approximately 60% of the Company’s total work force is covered by collective bargaining agreements. Collective
bargaining agreements representing approximately 47% of the Company’s work force will expire within one year.
Litigation
The Company is subject to various legal claims arising in the normal course of business, including patent infringement
and product recall 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 the financial condition, results of
operations, or cash flows of the Company. However, in the event of unexpected future developments, it is possible that the
ultimate resolution of any such matters, if unfavorable, could have a material adverse effect on the financial condition, results
of operations, or cash flows of the Company in future periods. The Company establishes reserves for legal claims when
64
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
associated costs become probable and can be reasonably estimated. The actual costs of resolving legal claims may be
substantially higher than the amounts reserved for such claims. However, the Company cannot make a meaningful estimate of
actual costs to be incurred that could possibly be higher or lower than the amounts reserved.
On March 25, 2013, a freight payment and audit service provider, Trendset, Inc. (“Trendset”), provided notice to its
customers that all freight payment services would immediately cease as a result of fraud at Trendset. Management believes that
the Company incurred a loss primarily related to funds disbursed by the Company to Trendset that were not subsequently
remitted to freight carriers that provided services on behalf of the Company and additional costs related to recovery efforts.
Based on available information, management estimates that the Company's loss was approximately $8.1 which is included in
Selling, Distribution, and Administrative Expenses in the Consolidated Statements of Comprehensive Income.
The Company is seeking to recover its loss through multiple sources including, but not limited to, claims against the
freight service company, claims against certain parties affiliated with the freight service company, and claims under insurance
policies maintained by the Company. Numerous other Trendset customers are also pursuing claims against Trendset for their
losses, and several with significant losses filed an involuntary petition commencing a bankruptcy proceeding against Trendset
under Chapter 11 of the United States Bankruptcy Code. Based on available information, management cannot estimate the
amount or timing of potential recovery, if any, although management believes that at least some portion of the loss will be
covered by insurance policies maintained by the Company. Any future recovery will be recorded when realized. The
Company may incur additional costs in future periods as a result of these recovery activities. It is the opinion of management
that any future costs will not have a material adverse effect on the financial condition or results of operations of Acuity Brands.
Environmental Matters
The operations of the Company are subject to numerous comprehensive laws and regulations relating to the generation,
storage, handling, transportation, and disposal of hazardous substances, as well as solid and hazardous wastes, and to the
remediation of contaminated sites. In addition, permits and environmental controls are required for certain of the Company’s
operations to limit air and water pollution, and these permits are subject to modification, renewal, and revocation by issuing
authorities. On an ongoing basis, the Company invests capital and incurs operating costs relating to environmental compliance.
Environmental laws and regulations have generally become stricter in recent years. The Company is not aware of any pending
legislation or proposed regulation related to environmental issues that would have a material adverse effect on the Company.
The cost of responding to future changes may be substantial. The Company establishes reserves for known environmental
claims when the associated costs become probable and can be reasonably estimated. The actual cost of environmental issues
may be substantially higher than that reserved due to difficulty in estimating such costs.
Guarantees and Indemnities
The Company is a party to contracts entered into in the normal course of business in which it is common for the
Company to agree to indemnify third parties for certain liabilities that may arise out of or relate to the subject matter of the
contract. In most cases, the Company cannot estimate the potential amount of future payments under these indemnities until
events arise that would result in a liability under the indemnities.
Acuity Brands completed the spin-off of its specialty products business (the “Spin-off”), Zep Inc. (“Zep”) on October 31,
2007, by distributing all of the shares of Zep common stock, par value $0.01 per share, to the Company's stockholders of record
as of October 17, 2007. In conjunction with the separation of their businesses (the “Distribution”), Acuity Brands and Zep
entered into various agreements that addressed the allocation of assets and liabilities and defined the Company’s relationship
with Zep after the Distribution, including a tax disaffiliation agreement. The tax disaffiliation agreement provides that Acuity
Brands will indemnify Zep for certain taxes and liabilities that may arise related to the Distribution and generally for
deficiencies, if any, with respect to federal, state, local, or foreign taxes of Zep for periods before the Distribution. Liabilities
determined under the tax disaffiliation agreement terminate upon the expiration of the applicable statutes of limitation for such
liabilities. There is no stated maximum potential liability included in the tax disaffiliation agreement. The Company does not
believe that any amounts it is likely to be required to pay under these indemnities will be material to the Company’s financial
position, results of operations, or cash flow. The Company cannot estimate the potential amount of future payments under these
indemnities because claims that would result in a liability under the indemnities are not fully known.
65
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Acquisition-Related Liabilities
During the negotiations related to business combinations, the previous owners of the acquired entity (“acquiree”)
typically indemnify the Company for specific unrecognized liabilities of the acquiree in existence as of the date of acquisition.
For some acquisitions of businesses, the Company acts in the place of escrow agents in the holding of funds, including accrued
interest (collectively, the “holdback funds”), used to fulfill pre-acquisition obligations agreed to be paid by the acquiree. These
funds represent consideration given to the previous owners of the businesses acquired and are payable to them, net of any pre-
acquisition obligations satisfied within a stated amount of time, at a future date. Any potential pre-acquisition obligations for
which the Company may be reimbursed through the holdback funds are usually uncertain as of the date of the change of
control. In certain circumstances, the Company is capable of the identification and quantification of particular liabilities
including, but not limited to, uncertain tax positions, legal issues, and other outstanding obligations not recognized in the
financial statements of the acquired entity. Under ASC Topic 805, Business Combinations, these unrecognized liabilities are
recorded as obligations of the Company with a corresponding receivable due from the previous owners as of the date of
acquisition and are included as part of the acquisition accounting. The actual costs of resolving pre-acquisition obligations may
be substantially higher than the holdback funds or amounts reserved. The Company does not believe that any amounts it is
likely to be required to pay under these acquisition-related liabilities, including net holdback funds, will be material to the
Company’s financial position, results of operations, or cash flow.
Product Warranty and Recall Costs
Acuity Brands records an allowance for the estimated amount of future warranty or recall costs when the related revenue
is recognized, primarily based on historical experience of identified warranty claims. However, there can be no assurance that
future warranty costs will not exceed historical amounts or new technology products, which may include extended warranties,
may not generate unexpected costs. If actual future warranty or recall costs exceed historical amounts, additional allowances
may be required, which could have a material adverse impact on the Company’s results of operations and cash flow.
The changes in product warranty and recall reserves (included in Other accrued liabilities on the Consolidated Balance
Sheets) during the fiscal years ended August 31, 2013 and 2012 are summarized as follows:
Balance at September 1
Adjustments to the warranty and recall reserve
Payments made during the period
Balance at August 31
11.
Special Charge
Fiscal 2008-2010 Actions
2013
2012
4.0
$
6.7
(4.8)
5.9
$
4.2
5.6
(5.8)
4.0
$
$
During fiscal 2008, the Company commenced actions to streamline and simplify the Company’s organizational structure
and operations and incurred special charges in connection therewith. The charges consisted of severance and related employee
benefit costs associated with the elimination of certain positions worldwide, consolidation of certain manufacturing facilities,
the estimated costs associated with the early termination of certain leases, and share-based expense due to the modification of
the terms of agreements to accelerate vesting for certain terminated employees. These actions, including those taken in fiscal
2009 and 2010 as part of this program, are expected to allow the Company to better leverage efficiencies in its supply chain and
support areas, while funding continued investments in other areas that support future growth opportunities.
Fiscal 2012 Actions
During fiscal 2012, the Company continued efforts to streamline the organization through the planned closure of its
Cochran, Georgia production facility (“Cochran facility”) and reductions in workforce resulting from the downsizing of the
Company’s operations in Spain as well as the realignment of responsibilities primarily within various Selling, Distribution, and
Administrative (“SD&A”) departments. The Company expects that these actions to streamline its business activities, in
addition to those taken in previous fiscal years, will allow it to reduce costs and enhance customer service capabilities, while
permitting for the continued investment in future growth initiatives, such as new products, expanded market presence, and
technology and innovation.
66
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company recorded a $2.7 pre-tax special charge in the first quarter of fiscal 2012 related to the realignment of
responsibilities primarily within various SD&A departments. The Company recorded a pre-tax special charge of approximately
$1.2 during the second quarter of fiscal 2012 associated with a reduction in workforce, primarily at its operations in Spain. The
reduction in workforce was due to the decline in market conditions in Spain, which were not expected to rebound materially in
the near future. The pre-tax charge consisted primarily of severance and other employee related costs.
During the second quarter of fiscal 2012, the Company decided to close its Cochran facility. The closure was principally
completed by the end of the second quarter of fiscal 2013. The Company transitioned production from the Cochran facility,
which produced less than 10% of the Company’s total sales, to various existing facilities in North America.
During fiscal 2012, approximately $9.4 of pre-tax special charges related to the Cochran facility closure consisting
primarily of severance and employee-related costs of $7.6, production transfer expenses of $1.4, and non-cash impairments and
other miscellaneous costs of $0.4 were recognized and were included in Special Charge in the Consolidated Statements of
Comprehensive Income. In addition, related pre-tax expenses of $4.4 were recognized in fiscal 2012 and were included in Cost
of Products Sold in the Company’s Consolidated Statements of Comprehensive Income. These related expenses consisted of
manufacturing inefficiencies of $3.2 and non-cash asset impairments of $1.2 related to the abandonment of certain otherwise
usable inventory at the Cochran facility.
During fiscal 2013, approximately $0.8 of net pre-tax special charges related to fiscal 2012 actions, consisting primarily
of production transfer expenses, were recognized and were included in Special Charge in the Consolidated Statements of
Comprehensive Income. In addition, related pre-tax expenses of $8.4 directly attributable to temporary manufacturing
inefficiencies were recorded in the first nine months of fiscal 2013 and were included in Cost of Products Sold in the
Consolidated Statements of Comprehensive Income. Management anticipates no further costs related to this streamlining effort
will be incurred after fiscal 2013.
Fiscal 2013 Actions
During fiscal 2013, the Company continued efforts to streamline the organization through the planned closure of certain
production facilities as well as the realignment of responsibilities primarily within various SD&A departments. The Company
expects that these actions to streamline its business activities, in addition to those taken in previous fiscal years, will allow it to
reduce costs and enhance customer service capabilities, while permitting continued investment in future growth initiatives, such
as new products, expanded market presence, and technology and innovation.
During fiscal 2013, the Company recorded a pre-tax special charge of $7.8 consisting of severance and employee-related
costs of $7.6 and lease termination costs of $0.2, which are included in Special Charge in the Consolidated Statements of
Comprehensive Income.
The remaining severance reserves related to these programs are included in Accrued Compensation on the Consolidated
Balance Sheets. The changes in the reserves related to these programs during the year ended August 31, 2013 are summarized as
follows:
Balance as of August 31, 2012
Special charge adjustment
Payments made during the period
Balance as of August 31, 2013
12.
Income Taxes
Fiscal 2008 - 2010
Fiscal 2012
Actions
Actions
Fiscal 2013
Actions
$
$
$
0.2
(0.1)
(0.1)
— $
$
5.6
(0.4)
(5.2)
— $
—
7.6
(2.5)
5.1
The Company accounts for income taxes using the asset and liability approach as prescribed by ASC Topic 740, Income
Taxes (“ASC 740”). This approach requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or tax returns. Using the enacted tax rates in effect
for the year in which the differences are expected to reverse, deferred tax liabilities and assets are determined based on the
differences between the financial reporting and the tax basis of an asset or liability.
67
36.9
3.9
2.3
9.0
52.1
55.1
4.0
(0.8)
(6.2)
52.1
Years Ended August 31,
2013
2012
2011
67.6
$
62.6
$
4.5
(1.2)
(3.2)
62.7
$
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The provision for income taxes consists of the following components:
Provision for current federal taxes
Provision for current state taxes
Provision for current foreign taxes
Provision for deferred taxes
Total provision for income taxes
Years Ended August 31,
2013
2012
2011
48.4
$
47.9
$
6.9
4.2
6.2
5.4
3.7
5.7
65.7
$
62.7
$
$
$
A reconciliation of the federal statutory rate to the total provision for income taxes is as follows:
Federal income tax computed at statutory rate
State income tax, net of federal income tax benefit
Foreign permanent differences and rate differential
Other, net
Total provision for income taxes
$
$
Components of the net deferred income taxes at August 31, 2013 and 2012 include:
Deferred Income Tax Liabilities:
Depreciation
Goodwill and intangibles
Other liabilities
Total deferred income tax liabilities
Deferred Income Tax Assets:
Self-insurance
Pension
Deferred compensation
Bonuses
Net operating losses
Other accruals not yet deductible
Other assets
Total deferred income tax assets
Valuation Allowance
Net deferred income tax liabilities
4.8
(1.1)
(5.6)
65.7
$
$
$
August 31,
2013
2012
(8.1) $
(98.6)
(5.8)
(112.5)
(6.0)
(88.2)
(6.1)
(100.3)
3.6
17.6
26.0
0.7
17.6
14.4
6.4
86.3
(12.4)
(38.6) $
3.2
30.4
26.0
1.9
13.7
12.5
6.5
94.2
(10.2)
(16.3)
The Company currently intends to indefinitely reinvest all undistributed earnings of and original investments in foreign
subsidiaries, which amounted to approximately $47.3 at August 31, 2013; however, this amount could fluctuate due to changes
in business, economic, or other conditions. If these earnings were distributed to the U.S. in the form of dividends or otherwise
or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, the Company would be subject to
additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Determination of
the amount of unrecognized deferred income tax liability related to these earnings or investments is not practicable.
At August 31, 2013, the Company had state tax credit carryforwards of approximately $2.0, which will expire between
2018 and 2022. At August 31, 2013, the Company had federal net operating loss carryforwards of $31.4 that expire beginning
68
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
in 2027, state net operating loss carryforwards of $16.2 that begin expiring in 2028, and foreign net operating loss
carryforwards of $22.4 that begin expiring in 2014.
The gross amount of unrecognized tax benefits as of August 31, 2013 totaled $5.0, which includes $4.0 of net
unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. The Company recognizes potential
interest and penalties related to unrecognized tax benefits as a component of income tax expense; such accrued interest and
penalties are not material. With few exceptions, the Company is no longer subject to United States federal, state, and local
income tax examinations for years ended before 2009 or for foreign income tax examinations before 2007. The Company does
not anticipate unrecognized tax benefits will significantly increase or decrease within the next twelve months.
A reconciliation of the change in the unrecognized income tax benefit (reported in Other long-term liabilities on the
Consolidated Balance Sheets) for the years ended August 31, 2013 and 2012 is as follows:
Unrecognized tax benefits balance at September 1
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Reductions due to settlements
Reductions due to lapse of statute of limitations
Unrecognized tax benefits balance at August 31
2013
2012
7.0
0.3
0.6
—
(0.3)
(2.6)
5.0
$
$
6.8
0.2
1.1
(0.3)
(0.1)
(0.7)
7.0
$
$
During fiscal 2013, the Company did not increase its interest accrual associated with uncertain tax positions. Total
accrued interest was $0.6 and $0.8 as of August 31, 2013 and 2012, respectively. There were no accruals related to income tax
penalties during fiscal 2013. Interest, net of tax benefits, and penalties are included in income tax expense. The classification of
interest and penalties did not change during the current fiscal year.
69
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13.
Geographic Information
The Company has one operating segment. The geographic distribution of the Company’s net sales, operating profit,
income before provision for income taxes, and long-lived assets is summarized in the following table for the years ended
August 31:
Net sales(1)
Domestic(2)
International
Total
Operating profit
Domestic(2)
International
Total
Income before Provision for Income Taxes
Domestic(2)
International
Total
Long-lived assets(3)
Domestic(2)
International
Total
2013
2012
2011
$
$
$
$
$
$
$
$
1,854.9
234.2
2,089.1
207.2
14.3
221.5
181.2
11.9
193.1
146.1
30.9
177.0
$
$
$
$
$
$
$
$
1,728.1
205.6
1,933.7
197.7
10.3
208.0
171.6
7.4
179.0
141.9
30.3
172.2
$
$
$
$
$
$
$
$
1,604.5
191.2
1,795.7
175.4
13.3
188.7
145.5
12.1
157.6
140.8
32.7
173.5
_______________________________________
(1) Net sales are attributed to each country based on the selling location.
(2) Domestic amounts include net sales (including export sales), operating profit, income before provision for income taxes, and long-lived assets for
(3)
U.S. based operations.
Long-lived assets include net property, plant, and equipment, deferred compensation plan assets, long-term deferred income tax assets, and other
long-term assets.
14.
Supplemental Guarantor Condensed Consolidating Financial Statements
In December 2009, ABL, the wholly-owned and principal operating subsidiary of the Company, engaged in the
refinancing of the current debt outstanding through a private placement bond offering of $350.0 aggregate principal amount of
senior unsecured notes due in fiscal 2020. See the Debt and Lines of Credit footnote for further information on the refinancing
activities.
In accordance with the registration rights agreement by and between ABL and the Guarantors and the initial purchases of
the Notes, ABL and the Guarantors to the Notes filed a registration statement with the SEC for an offer to exchange the Notes
for an issue of SEC-registered notes with identical terms. Due to the filing of the registration statement and offer to exchange,
the Company determined the need for compliance with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”). In lieu of providing
separate audited financial statements for ABL and ABL IP Holding, the Company has included the accompanying Condensed
Consolidating Financial Statements in accordance with Rule 3-10(d) of SEC Regulation S-X. The column marked “Parent”
represents the financial condition, results of operations, and cash flows of Acuity Brands. The column marked “Subsidiary
Issuer” represents the financial condition, results of operations, and cash flows of ABL. The column entitled “Subsidiary
Guarantor” represents the financial condition, results of operations, and cash flows of ABL IP Holding. Lastly, the column
listed as “Non-Guarantors” includes the financial condition, results of operations, and cash flows of the non-guarantor direct
and indirect subsidiaries of Acuity Brands, which consist primarily of foreign subsidiaries. Eliminations were necessary in
order to arrive at consolidated amounts. In addition, the equity method of accounting was used to calculate investments in
subsidiaries. Accordingly, this basis of presentation is not intended to present the Company's financial condition, results of
operations, or cash flows for any purpose other than to comply with the specific requirements for parent-subsidiary guarantor
reporting.
70
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING BALANCE SHEETS
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
At August 31, 2013
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total Current Assets
Property, Plant, and Equipment, net
Goodwill
Intangible assets
Other long-term assets
Investments in and amounts due from
subsidiaries
$
331.0
$
0.8
$
— $
—
—
4.4
335.4
0.4
—
—
3.8
701.5
270.8
191.2
23.0
485.8
118.1
517.0
99.9
19.4
170.7
—
—
—
—
—
2.7
119.2
—
118.2
Total Assets
$ 1,041.1
$ 1,410.9
$
240.1
$
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Other accrued liabilities
Total Current Liabilities
Long-Term Debt
Deferred Income Taxes
Other Long-Term Liabilities
Total Stockholders’ Equity
$
1.6
$
233.2
$
— $
17.0
18.6
—
(32.5)
61.5
993.5
95.0
328.2
353.6
85.8
33.6
609.7
—
—
—
—
—
240.1
27.3
47.5
11.8
5.7
92.3
29.4
48.5
26.0
5.9
(61.5)
140.6
14.7
24.7
39.4
—
0.6
21.5
79.1
$
— $
—
—
—
—
—
—
—
—
359.1
318.3
203.0
33.1
913.5
147.9
568.2
245.1
29.1
$
$
(928.9)
—
(928.9) $ 1,903.8
— $
—
—
—
—
—
(928.9)
249.5
136.7
386.2
353.6
53.9
116.6
993.5
Total Liabilities and Stockholders’
Equity
$ 1,041.1
$ 1,410.9
$
240.1
$
140.6
$
(928.9) $ 1,903.8
71
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING BALANCE SHEETS
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
At August 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total Current Assets
Property, Plant, and Equipment, net
Goodwill
Intangible assets
Other long-term assets
Investments in and amounts due from
subsidiaries
$
246.6
$
— $
— $
—
—
4.5
251.1
—
—
—
3.6
228.2
183.8
26.2
438.2
109.6
516.1
104.5
20.8
—
—
—
—
—
2.7
122.0
—
621.7
115.6
98.1
Total Assets
$
876.4
$ 1,304.8
$
222.8
$
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Other accrued liabilities
Total Current Liabilities
Long-Term Debt
Deferred Income Taxes
Other Long-Term Liabilities
Total Stockholders’ Equity
$
0.8
$
218.0
$
— $
12.6
13.4
—
(32.0)
61.0
834.0
103.2
321.2
353.5
68.2
64.7
497.2
—
—
—
—
—
222.8
37.9
35.6
10.3
5.9
89.7
29.6
36.1
4.3
8.6
(43.0)
125.3
13.9
16.3
30.2
—
(2.8)
25.5
72.4
$
— $
—
—
—
—
—
—
—
—
284.5
263.8
194.1
36.6
779.0
139.2
554.9
230.8
33.0
$
$
(792.4)
—
(792.4) $ 1,736.9
— $
—
—
—
—
—
(792.4)
232.7
132.1
364.8
353.5
33.4
151.2
834.0
Total Liabilities and Stockholders’
Equity
$
876.4
$ 1,304.8
$
222.8
$
125.3
$
(792.4) $ 1,736.9
72
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Net Sales:
External sales
Intercompany sales
Total Sales
Cost of Products Sold
Gross Profit
Selling, Distribution, and Administrative
Expenses
Intercompany charges
Special Charge
Operating Profit
Interest expense (income), net
Equity earnings in subsidiaries
Miscellaneous (income) expense, net
Income (Loss) before Provision for Income
Taxes
Provision for Income Taxes
Net Income
Other Comprehensive Income/(Expense)
Items:
Foreign Currency Translation Adjustments
Defined Benefit Pension Plans, net
Other Comprehensive Income/(Expense)
Items after Provision for Income Taxes
Other Comprehensive Income/(Expense)
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
Year Ended August 31, 2013
$
— $ 1,851.4
$
— $
237.7
$
— $ 2,089.1
—
—
—
—
—
1,851.4
1,088.6
762.8
28.0
(37.5)
—
9.5
9.4
(127.4)
—
127.5
0.1
542.6
32.8
6.5
180.9
22.1
(2.1)
(1.0)
161.9
51.5
$
127.4
$
110.4
$
31.8
31.8
—
31.8
2.9
—
—
28.9
—
—
—
28.9
11.6
17.3
85.0
322.7
247.9
74.8
65.9
4.7
2.0
2.2
(0.3)
—
(1.8)
(116.8)
(116.8)
(85.0)
(31.8)
(31.8)
—
—
—
—
129.5
—
4.3
2.5
1.8
$
(129.5)
—
(129.5) $
$
—
2,089.1
1,251.5
837.6
607.6
—
8.5
221.5
31.2
—
(2.8)
193.1
65.7
127.4
$
$
$
$
(1.9) $
24.0
22.1
149.5
$
$
$
(1.9) $
$
17.3
— $
— $
15.4
125.8
$
$
— $
17.3
$
— $
7.2
7.2
9.0
$
$
$
1.9
$
(24.5) $
(1.9)
24.0
(22.6) $
(152.1) $
22.1
149.5
73
—
1,933.7
1,145.7
788.0
566.7
—
13.3
208.0
30.7
—
(1.7)
179.0
62.7
116.3
(8.2)
(22.7)
(30.9)
85.4
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Net Sales:
External sales
Intercompany sales
Total Sales
Cost of Products Sold
Gross Profit
Selling, Distribution, and Administrative
Expenses
Intercompany charges
Special Charges
Operating Profit (Loss)
Interest expense (income), net
Equity earnings in subsidiaries
Miscellaneous (income) expense, net
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
Year Ended August 31, 2012
$
— $ 1,726.4
$
— $
207.3
$
— $ 1,933.7
—
—
—
—
—
1,726.4
1,002.9
723.5
25.4
(35.4)
—
10.0
8.9
(115.4)
(0.3)
116.8
0.5
508.4
30.7
12.4
172.0
22.2
1.3
(2.1)
150.6
49.2
$
116.3
$
101.4
$
30.2
30.2
—
30.2
3.5
—
—
26.7
—
—
—
26.7
10.8
15.9
67.5
274.8
210.3
64.5
59.6
4.7
0.9
(0.7)
(0.4)
0.1
(97.7)
(97.7)
(67.5)
(30.2)
(30.2)
—
—
—
—
114.0
0.7
(1.1)
2.2
(3.3) $
—
(114.0)
—
(114.0) $
$
Other Comprehensive Income/(Expense)
Items:
Foreign Currency Translation Adjustments
Defined Benefit Pension Plans, net
Other Comprehensive Income/(Expense)
Items after Provision for Income Taxes
Other Comprehensive Income/(Expense)
$
$
$
$
(8.2) $
(22.7) $
(8.2) $
(13.9) $
— $
— $
— $
(7.4) $
8.2
21.3
$
$
(30.9) $
85.4
$
(22.1) $
$
79.3
— $
15.9
$
(7.4) $
(10.7) $
29.5
$
(84.5) $
74
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Net Sales:
External sales
Intercompany sales
Total Sales
Cost of Products Sold
Gross Profit
Selling, Distribution, and Administrative
Expenses
Intercompany charges
Operating Profit
Interest expense (income), net
Equity earnings in subsidiaries
Miscellaneous (income) expense, net
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Other Comprehensive Income/(Expense)
Items:
Foreign Currency Translation Adjustments
Defined Benefit Pension Plans, net
Other Comprehensive Income/(Expense)
Items after Provision for Income Taxes
Other Comprehensive Income/(Expense)
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
Year Ended August 31, 2011
$
— $ 1,603.4
$
— $
192.3
$
— $ 1,795.7
—
—
—
—
25.3
(35.8)
10.5
8.4
(103.9)
(0.3)
106.3
0.8
105.5
—
1,603.4
934.1
669.3
483.8
30.9
154.6
21.8
(3.1)
1.6
134.3
41.9
92.4
27.7
27.7
—
27.7
4.6
—
23.1
—
—
—
23.1
9.3
13.8
71.8
264.1
203.4
60.7
55.3
4.9
0.5
(0.3)
0.1
(0.1)
0.8
0.1
0.7
(99.5)
(99.5)
(71.8)
(27.7)
(27.7)
—
—
—
106.9
—
(106.9)
—
(106.9)
—
1,795.7
1,065.7
730.0
541.3
—
188.7
29.9
—
1.2
157.6
52.1
105.5
$
$
$
$
9.9
7.6
17.5
123.0
$
$
$
$
9.9
5.0
14.9
107.3
$
$
$
$
— $
— $
— $
13.8
$
— $
2.2
2.2
2.9
$
$
$
(9.9) $
(7.2) $
9.9
7.6
(17.1) $
(124.0) $
17.5
123.0
75
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net Cash Provided by Operating Activities
$
83.7
$
46.4
$
— $
14.3
$
(12.1) $
132.3
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
Year Ended August 31, 2013
Cash Provided by (Used for) Investing
Activities:
Purchases of property, plant, and equipment
(0.4)
(36.9)
Proceeds from sale of property, plant, and
equipment
Investments in subsidiaries
Acquisitions of business and intangible
assets
—
—
—
Net Cash Used for Investing Activities
(0.4)
Cash Provided by (Used for) Financing
Activities:
Proceeds from stock option exercises and
other
Repurchases of common stock
Excess tax benefits from share-based
payments
Intercompany dividends
Intercompany capital
Dividends paid
Net Cash Provided by (Used for)
Financing Activities
Effect of Exchange Rate Changes on Cash
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Period
14.9
—
8.6
—
—
(22.4)
1.1
—
84.4
246.6
Cash and Cash Equivalents at End of Period
$
331.0
$
7.6
(13.1)
(3.7)
(46.1)
—
—
—
—
—
—
—
0.5
0.8
—
0.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
— $
(3.3)
—
—
(21.8)
(25.1)
—
—
—
(12.1)
13.1
—
1.0
(0.8)
(10.6)
37.9
27.3
—
—
13.1
—
13.1
—
—
—
12.1
(13.1)
—
(1.0)
—
—
—
$
— $
(40.6)
7.6
—
(25.5)
(58.5)
14.9
—
8.6
—
—
(22.4)
1.1
(0.3)
74.6
284.5
359.1
76
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net Cash Provided by Operating Activities
$
141.9
$
29.8
$
— $
2.5
$
(2.0) $
172.2
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
Year Ended August 31, 2012
Cash Provided by (Used for) Investing
Activities:
Purchases of property, plant, and equipment
Proceeds from sale of property, plant, and
equipment
Investments in subsidiaries
Acquisitions of business and intangible
assets
Net Cash Used for Investing Activities
Cash Provided by (Used for) Financing
Activities:
Proceeds from stock option exercises and
other
Repurchases of common stock
Excess tax benefits from share-based
payments
Intercompany dividends
Intercompany capital
Dividends paid
Net Cash (Used for) Provided by
Financing Activities
Effect of Exchange Rate Changes on Cash
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Period
—
—
(3.8)
—
(3.8)
7.6
(9.2)
4.9
—
—
(22.0)
(18.7)
—
119.4
127.2
(27.7)
0.1
—
(3.8)
(31.4)
—
—
—
—
3.8
—
3.8
(2.3)
(0.1)
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cash and Cash Equivalents at End of Period
$
246.6
$
— $
— $
(3.7)
—
—
—
(3.7)
—
—
—
(2.0)
—
—
(2.0)
(1.8)
(5.0)
42.9
37.9
—
—
3.8
—
3.8
—
—
—
2.0
(3.8)
—
(1.8)
—
—
—
$
— $
(31.4)
0.1
—
(3.8)
(35.1)
7.6
(9.2)
4.9
—
—
(22.0)
(18.7)
(4.1)
114.3
170.2
284.5
77
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Net Cash Provided by Operating Activities
$
126.3
$
18.0
$
— $
16.8
$
— $
161.1
Parent
Subsidiary
Issuer
Subsidiary
Guarantor
Non-
Guarantors
Eliminations
Consolidated
Year Ended August 31, 2011
Cash Provided by (Used for) Investing
Activities:
Purchases of property, plant, and equipment
Proceeds from sale of property, plant, and
equipment
Investments in subsidiaries
Acquisitions of businesses
Net Cash Used for Investing Activities
Cash Provided by (Used for) Financing
Activities:
Proceeds from stock option exercises and
other
Repurchases of common stock
Excess tax benefits from share-based
payments
Intercompany capital
Dividends paid
Net Cash (Used for) Provided by
Financing Activities
Effect of Exchange Rate Changes on Cash
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Period
—
—
(90.4)
—
(90.4)
6.5
(61.0)
5.3
—
(22.6)
(71.8)
—
(35.9)
163.1
Cash and Cash Equivalents at End of Period
$
127.2
$
(20.0)
1.2
—
(90.4)
(109.2)
—
—
—
90.4
—
90.4
0.5
(0.3)
0.4
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
— $
(3.3)
—
—
—
(3.3)
—
—
—
—
—
—
1.9
15.4
27.5
42.9
—
—
90.4
—
90.4
—
—
—
(90.4)
—
(90.4)
—
—
—
$
— $
(23.3)
1.2
—
(90.4)
(112.5)
6.5
(61.0)
5.3
—
(22.6)
(71.8)
2.4
(20.8)
191.0
170.2
78
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15.
Quarterly Financial Data (Unaudited)
Net Sales
Gross Profit
Net Income
Basic Earnings per Share
Diluted Earnings per Share
Net Sales
Gross Profit
Net Income
Basic Earnings per Share
Diluted Earnings per Share
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Fiscal Year 2013
481.1
189.5
26.1
0.61
0.61
$
$
$
$
$
486.7
189.7
24.7
0.58
0.57
$
$
$
$
$
541.5
221.1
31.7
0.74
0.73
$
$
$
$
$
579.8
237.3
44.9
1.04
1.03
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Fiscal Year 2012
474.3
193.6
29.9
0.71
0.70
$
$
$
$
$
457.7
181.9
19.5
0.46
0.46
$
$
$
$
$
487.5
202.0
33.6
0.80
0.79
$
$
$
$
$
514.3
210.5
33.3
0.78
0.78
$
$
$
$
$
$
$
$
$
$
79
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9a.
Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to reasonably ensure that
information required to be disclosed in the reports filed or submitted by the Company under the Securities Exchange Act of
1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange
Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to reasonably ensure that information required to be disclosed by the Company in the reports filed under
the Securities Exchange Act of 1934 is accumulated and communicated to management, including the principal executive
officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As required by SEC rules, the Company has evaluated the effectiveness of the design and operation of its disclosure
controls and procedures as of August 31, 2013. This evaluation was carried out under the supervision and with the participation
of management, including the principal executive officer and principal financial officer. Based on this evaluation, these officers
have concluded that the design and operation of the Company’s disclosure controls and procedures were effective as of
August 31, 2013 at a reasonable assurance level. However, because all disclosure procedures must rely to a significant degree
on actions or decisions made by employees throughout the organization, such as reporting of material events, the Company and
its reporting officers believe that they cannot provide absolute assurance that all control issues and instances of fraud or errors
and omissions, if any, within the Company will be detected. Limitations within any control system, including the Company’s
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.
Management’s annual report on the Company’s internal control over financial reporting and the independent registered
public accounting firm’s attestation report are included in the Company’s 2013 Financial Statements in Item 8 of this Annual
Report on Form 10-K, under the headings, Management’s Report on Internal Control over Financial Reporting and Report of
Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting, respectively, and are
incorporated herein by reference.
There have been no changes in the Company’s internal control over financial reporting that occurred during the
Company’s most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
Item 9b.
Other Information
None.
80
Item 10.
Directors, Executive Officers and Corporate Governance
PART III
The information required by this item, with respect to directors and corporate governance, is included under the captions
Item 1 — Election of Directors and Information Concerning the Board and Its Committees of the Company’s proxy statement
for the annual meeting of stockholders to be held January 7, 2014, to be filed with the Commission pursuant to Regulation 14A,
and is incorporated herein by reference.
The information required by this item, with respect to executive officers, is included under the caption Executive Officers
of the Company’s proxy statement for the annual meeting of stockholders to be held January 7, 2014, to be filed with the
Commission pursuant to Regulation 14A, and is incorporated herein by reference.
The information required by this item, with respect to beneficial ownership reporting, is included under the caption
Section 16(a) Beneficial Ownership Reporting Compliance of the Company’s proxy statement for the annual meeting of
stockholders to be held January 7, 2014, to be filed with the Commission pursuant to Regulation 14A, and is incorporated
herein by reference.
The information required by this item, with respect to the code of ethics, is included under the caption Questions and
Answers about Communications, Governance, and Company Documents of the Company’s proxy statement for the annual
meeting of stockholders to be held January 7, 2014, to be filed with the Commission pursuant to Regulation 14A, and is
incorporated herein by reference.
Item 11.
Executive Compensation
The information required by this item is included under the captions Compensation of Directors, Information Concerning
the Board and Its Committees, Compensation Committee Interlocks and Insider Participation, Report of the Compensation
Committee, Compensation Discussion and Analysis, Fiscal 2013 Summary Compensation Table, Fiscal 2013 Grants of Plan-
Based Awards, Outstanding Equity Awards at Fiscal 2013 Year-End, Option Exercises and Stock Vested in Fiscal 2013, Pension
Benefits in Fiscal 2013, Fiscal 2013 Nonqualified Deferred Compensation, Employment Arrangements, Potential Payments
upon Termination, and Equity Compensation Plans of the Company’s proxy statement for the annual meeting of stockholders
to be held January 7, 2014, to be filed with the Commission pursuant to Regulation 14A, and is incorporated herein by
reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is included under the captions Beneficial Ownership of the Company’s Securities
and Equity Compensation Plans of the Company’s proxy statement for the annual meeting of stockholders to be held January 7,
2014, to be filed with the Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this item is included under the caption Certain Relationships and Related Party
Transactions of the Company’s proxy statement for the annual meeting of stockholders to be held January 7, 2014, to be filed
with the Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Item 14.
Principal Accountant Fees and Services
The information required by this item is included under the caption Fees Billed by Independent Registered Public
Accounting Firm of the Company’s proxy statement for the annual meeting of stockholders to be held January 7, 2014, to be
filed with the Commission pursuant to Regulation 14A, and is incorporated herein by reference.
81
Item 15.
Exhibits and Financial Statement Schedules
(a) The following documents are filed as a part of this report:
PART IV
(1) Management’s Report on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of August 31, 2013 and 2012
Consolidated Statements of Comprehensive Income for the years ended August 31, 2013, 2012, and 2011
Consolidated Statements of Cash Flows for the years ended August 31, 2013, 2012, and 2011
Consolidated Statements of Stockholders’ Equity for the years ended August 31, 2013, 2012, and 2011
(2)
(3)
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Schedule II Valuation and Qualifying Accounts
Any of Schedules I through V not listed above have been omitted because they are not applicable or the
required information is included in the consolidated financial statements or notes thereto
Exhibits filed with this report (begins on next page):
Copies of exhibits will be furnished to stockholders upon request at a nominal fee. Requests should be sent to
Acuity Brands, Inc., Investor Relations Department, 1170 Peachtree Street, N.E., Suite 2400, Atlanta,
Georgia 30309-7676
35
36
38
39
40
41
42
91
82
EXHIBIT 2
INDEX TO EXHIBITS
(a) Agreement and Plan of Merger among Acuity
Brands, Inc., Acuity Merger Sub, Inc. and
Acuity Brands Holdings, Inc., dated
September 25, 2007.
(b) Agreement and Plan of Distribution by and
between Acuity Brands, Inc. and Zep Inc.,
dated as of October 31, 2007.
EXHIBIT 3
(a) Restated Certificate of Incorporation of Acuity
Brands, Inc. (formerly Acuity Brands
Holdings, Inc.), dated as of September 26,
2007.
(b) Certificate of Amendment of Acuity Brands,
Inc. (formerly Acuity Brands Holdings, Inc.),
dated as of September 26, 2007.
(c) Amended and Restated Bylaws of Acuity
Brands, Inc., dated as of September 30, 2011.
EXHIBIT 4
(a) Form of Certificate representing Acuity
Brands, Inc. Common Stock.
EXHIBIT 10(i)
(b)
Indenture, dated December 8, 2009, among
Acuity Brands Lighting, Inc, as issuer, and
Acuity Brands, Inc. and ABL IP Holding LLC,
as guarantors, and Wells Fargo Bank, National
Association, as trustee.
(c) Form of 6.00% Senior Note due 2019.
(1) Tax Disaffiliation Agreement, dated as of
October 7, 2005, by and between National
Service Industries, Inc. and Acuity Brands,
Inc.
(2) 5-Year Revolving Credit Agreement, dated as
of January 31, 2012 among Acuity Brands,
Inc., the Subsidiary Borrowers from time to
time parties hereto, the Lenders from time to
time parties hereto, Bank of America, N.A.;
Branch Banking & Trust Company; JPMorgan
Chase Bank, N.A.; KeyBank National
Association; RBC Bank (USA); U.S. Bank
National Association; and Wells Fargo Bank,
National Association.
(3) Tax Disaffiliation Agreement between Acuity
Brands, Inc. and Zep Inc., dated as of October
31, 2007.
Reference is made to Exhibit 10.1 of
registrant’s Form 8-K as filed with the
Commission on September 26, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 2.1 of
registrant’s Form 8-K as filed with the
Commission on November 6, 2007, which is
incorporated herein by reference.
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.
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.
Reference is made to Exhibit 3.1 of
registrant’s Form 8-K as filed with the
Commission on October 5, 2011, which is
incorporated herein by reference.
Reference is made to Exhibit 4.1 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 4.1 of
registrant’s Form 8-K as filed with the
Commission on December 9, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 4.2 of
registrant’s Form 8-K as filed with the
Commission on December 9, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (i)A(17) of
the registrant’s Form 10-K as filed with the
Commission on November 1, 2005, which is
incorporated by reference.
Reference is made to Exhibit 10 of registrant’s
Form 10-Q as filed with the Commission on
April 4, 2012, which is incorporated herein by
reference.
Reference is made to Exhibit 10.1 of
registrant's Form 8-K as filed with the
Commission on November 6, 2007, which is
incorporated herein by reference.
83
EXHIBIT 10(iii)A
Management Contracts and Compensatory
Arrangements:
(1) Acuity Brands, Inc. 2001 Nonemployee
Directors’ Stock Option Plan.
(2) Amendment No. 1 to Acuity Brands, Inc.
Nonemployee Directors’ Stock Option Plan,
dated December 20, 2001.
(3) Form of Severance Agreement.
(4) Acuity Brands, Inc. Supplemental Deferred
Savings Plan.
(5) Acuity Brands, Inc. Executives’ Deferred
Compensation Plan.
(6) Acuity Brands, Inc. Senior Management
Benefit Plan.
(7) Acuity Brands, Inc. Executive Benefits Trust.
(8) Acuity Brands, Inc. Supplemental Retirement
Plan for Executives.
(9) Acuity Brands, Inc. Benefits Protection Trust.
(10) Form of Acuity Brands, Inc., Letter regarding
Bonuses.
(11) Amendment No. 1 to Acuity Brands, Inc.
Supplemental Deferred Savings Plan.
(12) Amendment No. 1 to Acuity Brands, Inc.
Executives’ Deferred Compensation Plan.
(13) Amendment No. 1 to Acuity Brands, Inc.
Supplemental Retirement Plan for Executives.
(14) Acuity Brands, Inc. 2002 Supplemental
Executive Retirement Plan.
(15) Letter Agreement relating to Supplemental
Executive Retirement Plan between Acuity
Brands, Inc. and Vernon J. Nagel.
84
Reference is made to Exhibit 10.6 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(3) of
registrant’s Form 10-Q as filed with the
Commission on January 14, 2002, which is
incorporated herein by reference.
Reference is made to Exhibit 10 of
registrant’s Form 8-K as filed with the
Commission on January 6, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10.14 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10.15 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10.16 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10.18 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10.19 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10.21 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10.25 of
registrant’s Form 8-K as filed with the
Commission on December 14, 2001, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(2) of
registrant’s Form 10-Q as filed with the
Commission on January 14, 2003, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(3) of
the registrant’s Form 10-Q as filed with the
Commission on January 14, 2003, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(2) of
the registrant’s Form 10-Q as filed with the
Commission on April 14, 2003, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(3)of the
registrant’s Form 10-Q as filed with the
Commission on April 14, 2003, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(4) of
the registrant’s Form 10-Q as filed with the
Commission on July 14, 2003, which is
incorporated by reference.
(16) Amendment No. 2 to Acuity Brands, Inc.
Supplemental Deferred Savings Plan.
(17) Employment Letter between Acuity Brands,
Inc. and Vernon J. Nagel, dated June 29, 2004.
(18) Amended and Restated Severance Agreement,
entered into as of January 20, 2004, by and
between Acuity Brands, Inc. and Vernon J.
Nagel.
(19) Amendment No. 3 to Acuity Brands, Inc.
Supplemental Deferred Savings Plan.
(20) Form of Incentive Stock Option Agreement
for Executive Officers.
(21) Form of Nonqualified Stock Option
Agreement for Executive Officers.
(22) Premium-Priced Nonqualified Stock Option
Agreement for Executive Officers between
Acuity Brands, Inc. and Vernon J. Nagel.
(23) Form of Restricted Stock Award Agreement
for Executive Officers.
(24) Acuity Brands, Inc. Matching Gift Program.
(25) Employment Letter dated November 16, 2005
between Acuity Brands, Inc. and Richard K.
Reece.
(26) Form of Nonqualified Stock Option
Agreement for Executive Officers.
(27) Form of Acuity Brands, Inc. Long-Term
Incentive Plan Restricted Stock Award.
Reference is made to Exhibit 10(iii)A(8) of
the registrant’s Form 10-Q as filed with the
Commission on July 14, 2003, which is
incorporated by reference.
Reference is made to Exhibit 10(III)A(1) of
the registrant’s Form 10-Q as filed with the
Commission on July 6, 2004, which is
incorporated by reference.
Reference is made to Exhibit 10(III)A(2) of
the registrant’s Form 10-Q as filed with the
Commission on July 6, 2004, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(36) of
the registrant’s Form 10-K as filed with the
Commission on October 29, 2004, which is
incorporated by reference.
Reference is made to Exhibit 10(III)A(3) of
the registrant’s Form 10-Q filed with the
Commission on January 6, 2005 incorporated
by reference.
Reference is made to Exhibit 10(III)A(4) of
the registrant’s Form 10-Q as filed with the
Commission on January 6, 2005, which is
incorporated by reference.
Reference is made to Exhibit 10(III)A(5) of
the registrant’s Form 10-Q as filed with the
Commission on January 6, 2005, which is
incorporated by reference.
Reference is made to Exhibit 10(III)A(6) of
the registrant’s Form 10-Q as filed with the
Commission on January 6, 2005, which is
incorporated by reference.
Reference is made to Exhibit 10(III)A(1) of
the registrant’s Form 10-Q as filed with the
Commission on April 4, 2005, which is
incorporated by reference.
Reference is made to Exhibit 10.1 of
registrant’s Form 8-K filed with the
Commission on November 18, 2005, which is
incorporated herein by reference.
Reference is made to Exhibit 99.1 of
registrant’s Form 8-K filed with the
Commission on December 2, 2005, which is
incorporated herein by reference.
Reference is made to Exhibit 99.2 of
registrant’s Form 8-K filed with the
Commission on December 2, 2005, which is
incorporated herein by reference.
(28) Amendment dated April 21, 2006 to the
Amended and Restated Severance Agreement
between Acuity Brands, Inc. and Vernon J.
Nagel.
Reference is made to Exhibit 99.3 of
registrant’s Form 8-K filed with the
Commission on April 27, 2006, which is
incorporated herein by reference.
(29) Amendment No. 4 to Acuity Brands, Inc.
Supplemental Deferred Savings Plan.
(30) 2005 Supplemental Deferred Savings Plan.
Reference is made to Exhibit 99.2 of
registrant’s Form 8-K filed with the
Commission on July 6, 2006, which is
incorporated herein by reference.
Reference is made to Exhibit 10.1 of
registrant’s Form 8-K filed with the
Commission on October 5, 2006, which is
incorporated herein by reference.
85
(31) Amendment No. 1 to Stock Option Agreement
for Nonemployee Director dated October 25,
2006.
(32) Acuity Brands, Inc. 2002 Executives’ Deferred
Compensation Plan as Amended on
December 30, 2002 and as Amended and
Restated January 1, 2005.
(33) Amendment No. 1 to Acuity Brands, Inc.
Long-Term Incentive Plan dated
September 29, 2006.
(34) Acuity Brands, Inc. 2002 Supplemental
Executive Retirement Plan as Amended and
Restated Effective January 1, 2005.
(35) Amendment No. 1 to Acuity Brands, Inc. 2002
Supplemental Executive Retirement Plan.
(36) Amendment No. 1 to Acuity Brands, Inc. 2005
Supplemental Deferred Savings Plan.
(37) Amendment No. 3 to Acuity Brands, Inc. 2001
Nonemployee Directors’ Stock Option Plans.
(38) Amendment No. 2 to Acuity Brands, Inc.
Long-Term Incentive Plan.
(39) Amendment No. 1 to Acuity Brands, Inc.
Senior Benefit Plan.
(40) Amendment No. 5 to Acuity Brands, Inc.
Supplemental Deferred Savings Plan.
(41) Amendment No. 2 to Acuity Brands, Inc.
Amended and Restated Severance Agreement.
(42) Amendment No. 2 to Acuity Brands, Inc. 2001
Non-employee Directors’ Stock Option Plan.
(43) Amendment No. 1 to Nonemployee Director
Stock Option Plan.
(44) Acuity Brands, Inc. Long-Term Incentive
Plan.
(45) Acuity Brands, Inc. Management
Compensation and Incentive Plan.
86
Reference is made to Exhibit 99.1 of
registrant’s Form 8-K filed with the
Commission on October 27, 2006, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(61) of
the registrant’s Form 10-K as filed with the
Commission on November 2, 2006, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(62) of
the registrant’s Form 10-K as filed with the
Commission on November 2, 2006, which is
incorporated by reference.
Reference is made to Exhibit 10(iii)A(63) of
the registrant’s Form 10-K as filed with the
Commission on November 2, 2006, which is
incorporated by reference.
Reference is made to Exhibit 99.1 of
registrant’s Form 8-K as filed with the
Commission on June 29, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 99.2 of
registrant’s Form 8-K as filed with the
Commission on June 29, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(3) of
registrant’s Form 10-Q as filed with the
Commission on July 10, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(4) of
registrant’s Form 10-Q as filed with the
Commission on July 10, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(5) of
registrant’s Form 10-Q as filed with the
Commission on July 10, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(6) of
registrant’s Form 10-Q as filed with the
Commission on July 10, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(2) of
registrant’s Form 10-Q as filed with the
Commission on January 4, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(2) of
registrant’s Form 10-Q as filed with the
Commission on April 4, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit 99.1 of
registrant’s Form 8-K as filed with the
Commission on October 27, 2006, which is
incorporated herein by reference.
Reference is made to Exhibit A of the
registrant’s Proxy Statement as filed with the
Commission on November 16, 2007, which is
incorporated herein by reference.
Reference is made to Exhibit B of the
registrant’s Proxy Statement as filed with the
Commission on November 16, 2007, which is
incorporated herein by reference.
(46) Acuity Brands, Inc. Long-Term Incentive Plan
Fiscal Year 2008 Plan Rules for Executive
Officers.
(47) Acuity Brands, Inc. Management
Compensation and Incentive Plan Fiscal Year
2008 Plan Rules for Executive Officers.
(48) Amendment No. 2 to Acuity Brands, Inc. 2002
Supplemental Executive Retirement Plan.
(49) Amendment No. 2 to Acuity Brands, Inc.
Nonemployee Director Deferred
Compensation Plan.
(50) Amendment No. 2 to Acuity Brands, Inc. 2002
Supplemental Executive Retirement Plan.
(51) Amendment No. 3 to Acuity Brands, Inc. 2002
Supplemental Executive Retirement Plan.
(52) Amendment No. 3 to Acuity Brands, Inc. 2005
Supplemental Deferred Savings Plan.
(53) Amendment No. 4 to Acuity Brands, Inc. 2005
Supplemental Deferred Savings Plan.
(54) Form of Restricted Stock Award Agreement.
(55) Form of Nonqualified Stock Option
Agreement for Key Employees effective
October 24, 2008.
(56) Form of Nonqualified Stock Option
Agreement for Executive Officers of Acuity
Brands, Inc. effective October 24, 2008.
(57) Employment Letter dated July 27, 2006
between Acuity Brands, Inc. and Mark A.
Black.
Reference is made to Exhibit 99.1 of the
registrant’s Form 8-K as filed with the
Commission on January 4, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 99.2 of the
registrant’s Form 8-K as filed with the
Commission on January 4, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(1) of
the registrant’s Form 10-Q as filed with the
Commission on January 8, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(86) of
the registrant’s Form 10-K as filed with the
Commission on October 27, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(87) of
the registrant’s Form 10-K as filed with the
Commission on October 27, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(88) of
the registrant’s Form 10-K as filed with the
Commission on October 27, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(89) of
the registrant’s Form 10-K as filed with the
Commission on October 27, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(90) of
the registrant’s Form 10-K as filed with the
Commission on October 27, 2008, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (h) of
registrant’s Form 10-Q as filed with the
Commission on April 8, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (i) of
registrant’s Form 10-Q as filed with the
Commission on April 8, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (j) of
registrant’s Form 10-Q as filed with the
Commission on April 8, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (f) of
registrant’s Form 10-Q as filed with the
Commission on April 8, 2009, which is
incorporated herein by reference.
(58) Amendment No. 3 to Acuity Brands, Inc.
Amended and Restated Severance Agreement,
between Acuity Brands, Inc. and Vernon J.
Nagel.
(59) Amendment No. 1 to Acuity Brands, Inc.
Amended and Restated Severance Agreement
between Acuity Brands, Inc. and Mark A.
Black.
(60) Amendment No. 1 to Acuity Brands, Inc.
Amended and Restated Severance Agreement
between Acuity Brands, Inc. and Richard K.
Reece.
Reference is made to Exhibit 10(iii)A(78) of
the registrant’s Form 10-K as filed with the
Commission on October 30, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(79) of
the registrant’s Form 10-K as filed with the
Commission on October 30, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(81) of
the registrant’s Form 10-K as filed with the
Commission on October 30, 2009, which is
incorporated herein by reference.
87
(61) Form of Severance Agreement.
(62) Amended and Restated Change in Control
Agreement.
(63) Form of Indemnification Agreement.
(64) Amended and Restated Acuity Brands, Inc.,
2005 Supplemental Deferred Savings Plan,
effective as of January 1, 2010.
(65) Amendment No. 2 to Acuity Brands, Inc.
Amended and Restated Severance Agreement
between Acuity Brands, Inc. and Mark A.
Black.
(66) Amendment No. 2 to Acuity Brands, Inc.
Amended and Restated Severance Agreement
between Acuity Brands, Inc. and Richard K.
Reece.
(67) Acuity Brands Inc. 2011 Nonemployee
Director Deferred Compensation Plan.
(68) Amended and Restated Acuity Brands Inc.
2011 Nonemployee Director Deferred
Compensation Plan, effective as of
December 1, 2012.
(69) Amendment No. 4 to Acuity Brands, Inc. 2002
Supplemental Executive Retirement Plan.
(70) Acuity Brands, Inc. 2012 Omnibus Stock
Incentive Compensation Plan.
(71) Acuity Brands, Inc. 2012 Management Cash
Incentive Plan.
Reference is made to Exhibit 10(iii)A(83) of
the registrant’s Form 10-K as filed with the
Commission on October 30, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(84) of
the registrant’s Form 10-K as filed with the
Commission on October 30, 2009, which is
incorporated herein by reference.
Reference is made to Exhibit 10.1 of
registrant’s Form 8-K as filed with the
Commission on February 9, 2010, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (c) of
registrant’s Form 10-Q as filed with the
Commission on March 31, 2010, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (d) of
registrant’s Form 10-Q as filed with the
Commission on March 31, 2010, which is
incorporated herein by reference.
Reference is made to Exhibit 10 (f) of
registrant’s Form 10-Q as filed with the
Commission on March 31, 2010, which is
incorporated herein by reference.
Reference is made to Exhibit A of the
registrant’s Proxy Statement as filed with the
Commission on November 21, 2011, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(68) of
the registrant's Form 10-K as filed with the
Commission on October 26, 2012, which is
incorporated herein by reference.
Reference is made to Exhibit 10(iii)A(69) of
the registrant's Form 10-K as filed with the
Commission on October 26, 2012, which is
incorporated herein by reference.
Reference is made to Exhibit A of the
registrant’s Proxy Statement as filed with the
Commission on November 19, 2012, which is
incorporated herein by reference.
Reference is made to Exhibit B of the
registrant’s Proxy Statement as filed with the
Commission on November 19, 2012, which is
incorporated herein by reference.
(72) Form of Stock Notification and Award
Agreement for restricted stock.
Filed with the Commission as part of this
Form 10-K.
(73) Form of Stock Notification and Award
Agreement for stock options.
Filed with the Commission as part of this
Form 10-K.
EXHIBIT 21
List of Subsidiaries.
Filed with the Commission as part of this
Form 10-K.
EXHIBIT 23
Consent of Independent Registered Public
Accounting Firm.
Filed with the Commission as part of this
Form 10-K.
88
EXHIBIT 24
Powers of Attorney.
Filed with the Commission as part of this
Form 10-K.
EXHIBIT 31
(a) Rule 13a-14(a)/15d-14(a) Certification, signed
by Vernon J. Nagel.
Filed with the Commission as part of this
Form 10-K.
(b) Rule 13a-14(a)/15d-14(a) Certification, signed
by Richard K. Reece.
Filed with the Commission as part of this
Form 10-K.
EXHIBIT 32
(a) Section 1350 Certification, signed by Vernon
J. Nagel.
Filed with the Commission as part of this
Form 10-K.
(b) Section 1350 Certification, signed by Richard
K. Reece.
Filed with the Commission as part of this
Form 10-K.
Filed with the Commission as part of this
Form 10-K.
EXHIBIT 101
The following financial information from the
Company's Annual Report on Form 10-K for
the year ended August 31, 2013, filed on
October 29, 2013, formatted in XBRL
(Extensible Business Reporting Language): (i)
the Consolidated Balance Sheets as of August
31, 2013 and 2012, (ii) the Consolidated
Statements of Comprehensive Income for the
years ended August 31, 2013, 2012, and 2011,
(iii) the Consolidated Statements of Cash
Flows for the years ended August 31, 2013,
2012, and 2011, (iv) the Consolidated
Statements of Stockholders' Equity for the
years ended August 31, 2013, 2012, and 2011
and (v) the Notes to Consolidated Financial
Statements.
______________________________________
* Acuity Brands, Inc., operated under the name L&C Spinco, Inc. from July 27, 2001 — November 9, 2001.
89
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: October 29, 2013
By:
/S/ VERNON J. NAGEL
Vernon J. Nagel
Chairman, President, and Chief Executive Officer
ACUITY BRANDS, INC.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ VERNON J. NAGEL
Vernon J. Nagel
/s/ RICHARD K. REECE
Richard K. Reece
*
Peter C. Browning
*
George C. (Jack) Guynn
*
Gordon D. Harnett
*
Robert F. McCullough
*
Julia B. North
*
Dominic J. Pileggi
*
Ray M. Robinson
*
Norman H. Wesley
Chairman, President, and Chief Executive
Officer
October 29, 2013
Executive Vice President and Chief Financial
Officer (Principle Financial and Accounting
Officer)
October 29, 2013
Director
Director
Director
Director
Director
Director
Director
Director
October 29, 2013
October 29, 2013
October 29, 2013
October 29, 2013
October 29, 2013
October 29, 2013
October 29, 2013
October 29, 2013
*BY:
/s/ RICHARD K. REECE
Richard K. Reece
Attorney-in-Fact
October 29, 2013
90
Schedule II
Acuity Brands, Inc.
Valuation and Qualifying Accounts
For the Years Ended August 31, 2013, 2012, and 2011
(In millions)
Year Ended August 31, 2013:
Reserve for doubtful accounts
Reserve for estimated warranty and recall costs
Reserve for estimated returns and allowances
Self-insurance reserve(2)
Year Ended August 31, 2012:
Reserve for doubtful accounts
Reserve for estimated warranty and recall costs
Reserve for estimated returns and allowances
Self-insurance reserve(2)
Year Ended August 31, 2011:
Reserve for doubtful accounts
Reserve for estimated warranty and recall costs
Reserve for estimated returns and allowances
Self-insurance reserve(2)
_______________________________________
Balance at
Additions and Reductions
Charged to
Beginning of
Year
Costs and
Expenses
Other
Accounts(1)
Deductions
Balance at
End of Year
$
$
$
$
$
$
$
$
$
$
$
$
1.4
4.0
3.9
8.5
1.8
4.2
4.9
9.1
2.0
3.6
4.8
9.5
0.2
6.7
48.9
7.3
0.4
5.6
39.6
5.8
0.4
5.1
45.5
6.0
—
—
—
0.4
—
—
—
0.5
0.1
0.6
—
—
0.1
4.8
48.1
7.0
0.8
5.8
40.6
6.9
0.7
5.1
45.4
6.4
$
$
$
$
$
$
$
$
$
$
$
$
1.5
5.9
4.7
9.2
1.4
4.0
3.9
8.5
1.8
4.2
4.9
9.1
(1)
(2)
Includes recoveries and adjustments credited to the reserve.
Includes reserves for workers’ compensation, auto, product, and general liability claims.
91