AYI-2012.11.30 - 10Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
Form 10-Q
_____________________________________________
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(Mark One) | | |
R | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | For the quarterly period ended November 30, 2012. |
OR |
o | | 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)
_____________________________________________
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| | |
Delaware | | 58-2632672 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
1170 Peachtree Street, N.E., Suite 2400, Atlanta, Georgia (Address of principal executive offices) | | 30309-7676 (Zip Code) |
(404) 853-1400
(Registrant’s telephone number, including area code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
_____________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer þ | Accelerated Filer o | Non-accelerated Filer o | Smaller Reporting Company o |
| | (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 o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock — $0.01 par value — 42,799,359 shares as of January 7, 2013.
ACUITY BRANDS, INC.
Table of Contents
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EX-31.A |
EX-31.B |
EX-32.A |
EX-32.B |
EX-101.INSTANCE DOCUMENT |
EX-101.SCHEMA DOCUMENT |
EX-101.CALCULATION LINKBASE DOCUMENT |
EX-101.LABELS LINKBASE DOCUMENT |
EX-101.PRESENTATION LINKBASE DOCUMENT |
PART I. FINANCIAL INFORMATION
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Item 1. | Financial Statement |
ACUITY BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per-share data)
|
| | | | | | | |
| November 30, 2012 | | August 31, 2012 |
| (unaudited) | | |
ASSETS | | | |
Current Assets: | |
| | |
Cash and cash equivalents | $ | 267.5 |
| | $ | 284.5 |
|
Accounts receivable, less reserve for doubtful accounts of $1.4 at November 30, 2012 and August 31, 2012 | 270.5 |
| | 263.8 |
|
Inventories | 193.7 |
| | 194.1 |
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Deferred income taxes | 12.6 |
| | 13.0 |
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Prepayments and other current assets | 29.0 |
| | 23.6 |
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Total Current Assets | 773.3 |
| | 779.0 |
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Property, Plant, and Equipment, at cost: | |
| | |
Land | 7.4 |
| | 7.3 |
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Buildings and leasehold improvements | 119.1 |
| | 115.5 |
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Machinery and equipment | 354.4 |
| | 345.7 |
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Total Property, Plant, and Equipment | 480.9 |
| | 468.5 |
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Less — Accumulated depreciation and amortization | 337.1 |
| | 329.3 |
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Property, Plant, and Equipment, net | 143.8 |
| | 139.2 |
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Other Assets: | |
| | |
Goodwill | 555.1 |
| | 554.9 |
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Intangible assets | 228.1 |
| | 230.8 |
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Deferred income taxes | 4.0 |
| | 4.1 |
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Other long-term assets | 27.4 |
| | 28.9 |
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Total Other Assets | 814.6 |
| | 818.7 |
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Total Assets | $ | 1,731.7 |
| | $ | 1,736.9 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current Liabilities: | |
| | |
Accounts payable | $ | 204.6 |
| | $ | 232.7 |
|
Accrued compensation | 21.6 |
| | 44.9 |
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Accrued pension liabilities, current | 1.2 |
| | 1.2 |
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Other accrued liabilities | 93.9 |
| | 86.0 |
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Total Current Liabilities | 321.3 |
| | 364.8 |
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Long-Term Debt | 353.5 |
| | 353.5 |
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Accrued Pension Liabilities, less current portion | 93.8 |
| | 90.1 |
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Deferred Income Taxes | 31.7 |
| | 33.4 |
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Self-Insurance Reserves, less current portion | 6.7 |
| | 6.6 |
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Other Long-Term Liabilities | 58.6 |
| | 54.5 |
|
Commitments and Contingencies (see Commitments and Contingencies footnote) | | | |
Stockholders’ Equity: | |
| | |
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued | — |
| | — |
|
Common stock, $0.01 par value; 500,000,000 shares authorized; 51,961,454 issued and 42,242,199 outstanding at November 30, 2012; 51,508,358 issued and 41,789,103 outstanding at August 31, 2012 | 0.5 |
| | 0.5 |
|
Paid-in capital | 715.4 |
| | 703.1 |
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Retained earnings | 655.9 |
| | 635.3 |
|
Accumulated other comprehensive loss items | (85.5 | ) | | (84.7 | ) |
Treasury stock, at cost, 9,719,255 shares at November 30, 2012 and August 31, 2012 | (420.2 | ) | | (420.2 | ) |
Total Stockholders’ Equity | 866.1 |
| | 834.0 |
|
Total Liabilities and Stockholders’ Equity | $ | 1,731.7 |
| | $ | 1,736.9 |
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per-share data)
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| | | | | | | |
| Three Months Ended |
| November 30, |
| 2012 | | 2011 |
Net Sales | $ | 481.1 |
| | $ | 474.3 |
|
Cost of Products Sold | 291.6 |
| | 280.7 |
|
Gross Profit | 189.5 |
| | 193.6 |
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Selling, Distribution, and Administrative Expenses | 140.6 |
| | 140.3 |
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Special Charge | 0.7 |
| | 2.7 |
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Operating Profit | 48.2 |
| | 50.6 |
|
Other Expense (Income): | |
| | |
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Interest Expense, net | 7.7 |
| | 7.7 |
|
Miscellaneous (Income) Expense, net | 0.1 |
| | (2.9 | ) |
Total Other Expense | 7.8 |
| | 4.8 |
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Income before Provision for Income Taxes | 40.4 |
| | 45.8 |
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Provision for Income Taxes | 14.3 |
| | 15.9 |
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Net Income | $ | 26.1 |
| | $ | 29.9 |
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Earnings Per Share: | |
| | |
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Basic Earnings per Share | $ | 0.61 |
| | $ | 0.71 |
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Basic Weighted Average Number of Shares Outstanding | 41.8 |
| | 41.2 |
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Diluted Earnings per Share | $ | 0.61 |
| | $ | 0.70 |
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Diluted Weighted Average Number of Shares Outstanding | 42.3 |
| | 41.7 |
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Dividends Declared per Share | $ | 0.13 |
| | $ | 0.13 |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
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| | | | | | | |
| Three Months Ended |
| November 30, |
| 2012 | | 2011 |
Net Income | $ | 26.1 |
| | $ | 29.9 |
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| | | |
Other Comprehensive Income/(Expense) Items: | | | |
Foreign Currency Translation Adjustments | 1.3 |
| | (9.1 | ) |
Defined Benefit Pension Plans: | | | |
Prior service cost from plan amendment during period | (5.5 | ) | | — |
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Less: Amortization of prior service cost and actuarial loss included in net periodic pension cost | 1.8 |
| | 1.0 |
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Defined Benefit Pension Plans, net | (3.7 | ) | | 1.0 |
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Other Comprehensive Income/(Expense) Items before Provision for Income Taxes | (2.4 | ) | | (8.1 | ) |
Income Tax (Expense)/Benefit related to Other Comprehensive Income/(Expense) Items | 1.6 |
| | (0.3 | ) |
Other Comprehensive Income/(Expense) Items after Provision for Income Taxes | (0.8 | ) | | (8.4 | ) |
| | | |
Comprehensive Income | $ | 25.3 |
| | $ | 21.5 |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
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| Three Months Ended |
| November 30, |
| 2012 | | 2011 |
Cash (Used for)/Provided by Operating Activities: | | | |
Net income | $ | 26.1 |
| | $ | 29.9 |
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Adjustments to reconcile net income to net cash provided by (used for) operating activities: | | | |
Depreciation and amortization | 10.0 |
| | 10.1 |
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Share-based compensation expense | 4.3 |
| | 4.2 |
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Excess tax benefits from share-based payments | (5.4 | ) | | (1.1 | ) |
Loss on the sale or disposal of property, plant, and equipment | — |
| | 0.1 |
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Deferred income taxes | 1.1 |
| | (2.2 | ) |
Change in assets and liabilities, net of effect of acquisitions, divestitures and effect of exchange rate changes: | | | |
Accounts receivable | (6.6 | ) | | (1.7 | ) |
Inventories | 0.5 |
| | 2.9 |
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Prepayments and other current assets | (5.3 | ) | | (5.5 | ) |
Accounts payable | (28.4 | ) | | (4.2 | ) |
Other current liabilities | (9.9 | ) | | (7.2 | ) |
Other | (0.9 | ) | | 2.4 |
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Net Cash (Used for)/Provided by Operating Activities | (14.5 | ) | | 27.7 |
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Cash Used for Investing Activities: | |
| | |
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Purchases of property, plant, and equipment | (11.2 | ) | | (4.2 | ) |
Proceeds from sale of property, plant, and equipment | — |
| | — |
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Acquisitions of businesses and intangible assets, net of cash acquired | — |
| | (3.8 | ) |
Net Cash Used for Investing Activities | (11.2 | ) | | (8.0 | ) |
Cash Provided by/(Used for) Financing Activities: | |
| | |
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Repurchases of common stock | — |
| | (9.2 | ) |
Proceeds from stock option exercises and other | 8.2 |
| | 0.8 |
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Excess tax benefits from share-based payments | 5.4 |
| | 1.1 |
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Dividends paid | (5.5 | ) | | (5.5 | ) |
Net Cash Provided by/(Used for) Financing Activities: | 8.1 |
| | (12.8 | ) |
Effect of Exchange Rate Changes on Cash | 0.6 |
| | (4.4 | ) |
Net Change in Cash and Cash Equivalents | (17.0 | ) | | 2.5 |
|
Cash and Cash Equivalents at Beginning of Period | 284.5 |
| | 170.2 |
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Cash and Cash Equivalents at End of Period | $ | 267.5 |
| | $ | 172.7 |
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Supplemental Cash Flow Information: | |
| | |
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Income taxes paid during the period | $ | 7.6 |
| | $ | 7.5 |
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Interest paid during the period | $ | 9.7 |
| | $ | 9.2 |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)
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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.
Since fiscal 2010, the Company has made several acquisitions to expand and enhance its portfolio of lighting solutions, including the following:
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.
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.
The unaudited interim consolidated financial statements included herein have been prepared by the Company in accordance with U.S. GAAP and present the financial position, results of operations, and cash flows of the Company. These interim consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of November 30, 2012, the consolidated results of operations for the three months ended November 30, 2012 and 2011, and the consolidated cash flows for the three months ended November 30, 2012 and 2011. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. However, the Company believes that the disclosures included herein are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited consolidated financial statements of the Company as of and for the three years ended August 31, 2012 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October 26, 2012 (File No. 001-16583) (“Form 10-K”).
The results of operations for the three months ended November 30, 2012 and 2011 are not necessarily indicative of the results to be expected for the full fiscal year because the net sales and net income of the Company historically have been higher in the second half of its fiscal year and because of the continued uncertainty of general economic conditions that may impact the key end markets of the Company for the remainder of fiscal 2013.
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2. | Significant Accounting Policies |
Use of Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Reclassifications
Certain prior-period amounts have been reclassified to conform to the current year presentation. No material reclassifications have occurred during the current period.
Subsequent Events
The Company has evaluated subsequent events for recognition and disclosure for occurrences and transactions after the date of the consolidated financial statements at November 30, 2012. No material events or transactions have occurred during the current period that require disclosure in the Notes to Consolidated Financial Statements.
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3. | New Accounting Pronouncements |
Accounting Standards Adopted in Fiscal 2013
In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 Income and the Statement of Comprehensive Income. 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 results of operations, financial condition, and cash flows.
In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”). This update defers the provisions within ASU 2011-05 requiring the presentation on the face of the financial statements of the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income. The deferral will allow the FASB further time to deliberate on operational concerns expressed by constituents. ASU 2011-12 is effective concurrently with the adoption of ASU 2011-05. The Company adopted ASU 2011-12 in the first quarter of fiscal 2013. The provisions of ASU 2011-12 did not have a material effect on the Company’s results of operations, financial condition, 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" or "ASC"). 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 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 results of operations, financial condition, and cash flows.
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 results of operations, financial condition, and cash flows.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The Company has actively pursued opportunities for investment and growth through acquisitions. Since fiscal 2010, the Company has acquired a number of businesses that participate in the North American lighting market, as discussed below. As with previous acquisitions, 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 as compared with the Company’s financial condition, results of operations, or cash flows in any of the periods in which control was obtained.
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 as of November 30, 2012. 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 optimized lighting performance through the use of sustainable and energy-efficient solutions for retail, industrial, warehouse, educational, governmental, 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 as of November 30, 2012. There were no material changes to the Company’s financial statements as a result of the finalization of the acquisition accounting.
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 first quarter of fiscal 2012, the Company ceased operations at one manufacturing facility and is currently actively marketing the site for sale. As of November 30, 2012, the carrying value of the property held for sale equaled $4.8 and is included in Prepayments and other current assets on the Consolidated Balance Sheets.
Further details regarding the Company’s other assets held for sale are included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
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6. | 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).
The following table presents information about assets and liabilities required to be carried at fair value and measured on a recurring basis as of November 30, 2012 and August 31, 2012:
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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| | | | | | | | | | | | | | | | |
| Fair Value Measurements as of: |
| November 30, 2012 | | August 31, 2012 |
| Level 1 | | Total Fair Value | | Level 1 | | Total Fair Value |
Assets: | |
| | |
| | |
| | |
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Cash and cash equivalents | $ | 267.5 |
| | $ | 267.5 |
| | $ | 284.5 |
| | $ | 284.5 |
|
Short-term investments(1) | 0.6 |
| | 0.6 |
| | 0.6 |
| | 0.6 |
|
Long-term investments(1) | 0.7 |
| | 0.7 |
| | 0.7 |
| | 0.7 |
|
Liabilities: | | | | | | | |
Deferred compensation plan obligations(1) (current portion) | $ | 0.6 |
| | $ | 0.6 |
| | $ | 0.6 |
| | $ | 0.6 |
|
Deferred compensation plan obligations(1) (long-term portion) | $ | 0.7 |
| | $ | 0.7 |
| | $ | 0.7 |
| 1,300,000 |
| $ | 0.7 |
|
_______________________________________
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(1) | The Company maintains certain investments that generate returns that offset changes in certain liabilities related to a self-directed, non-qualified deferred compensation plan structured as a rabbi trust primarily for certain retired executives and other highly compensated employees. |
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:
Cash and cash equivalents are classified as Level 1 assets. The carrying amounts for cash reflect the assets’ fair values, and the fair values for cash equivalents are determined based on quoted market prices.
Short-term and long-term investments are classified as Level 1 assets. These investments consist primarily of publicly traded marketable equity securities and fixed income securities, and the fair values are obtained through market observable pricing.
Deferred compensation plan liabilities are classified as Level 1 liabilities within the hierarchy. The fair values of the liabilities are directly related to the valuation of the short-term and long-term investments held in trust for the plan. Hence, the carrying value of the deferred compensation liability represents the fair value of the investment assets.
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.
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 November 30, 2012 and August 31, 2012:
|
| | | | | | | | | | | | | | | |
| November 30, 2012 | | August 31, 2012 |
| Carrying Value | | Fair Value | | Carrying Value | | Fair Value |
Liabilities: | | | | | |
| | |
|
Senior unsecured public notes, net of unamortized discount | $ | 349.5 |
| | $ | 404.4 |
| | $ | 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 the discounted future cash flows using rates currently available for debt of similar terms and maturity (Level 2).
The tax-exempt industrial revenue bond is carried at the outstanding balance as of the end of the reporting period. The industrial revenue bond is a variable-rate instrument that resets on a weekly basis, and, therefore, the Company estimates that
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
the face amount of the bond approximates fair value as of November 30, 2012 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.
| |
7. | Goodwill and Intangible Assets |
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.
Current year increases in the gross carrying amounts for acquired intangible assets, including goodwill, of $0.2 were due primarily to the impact of foreign currency changes during the period.
The Company recorded amortization expense of $2.6 and $3.2 related to intangible assets with finite lives during the three months ended November 30, 2012 and 2011, respectively. Amortization expense is generally recorded on a straight-line basis and is expected to be approximately $10.3 in fiscal 2013, $10.2 in fiscal 2014, $10.0 in fiscal 2015, $9.4 in fiscal 2016, and $9.1 in fiscal 2017.
Further discussion of the Company’s goodwill and other intangible assets is included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
Inventories include materials, 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:
|
| | | | | | | |
| November 30, 2012 | | August 31, 2012 |
Raw materials, supplies, and work in process(1) | $ | 118.8 |
| | $ | 120.2 |
|
Finished goods | 85.8 |
| | 84.6 |
|
| 204.6 |
| | 204.8 |
|
Less: Reserves | (10.9 | ) | | (10.7 | ) |
Total Inventory | $ | 193.7 |
| | $ | 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, supplies, and work in process to be meaningful information.
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 other distributions related to deferred stock agreements were incurred. Stock options of approximately 94,363 and 269,659 (whole units) were excluded from the diluted earnings per share calculation for the three months ended November 30, 2012 and 2011, respectively, as the effect of inclusion would have been antidilutive. Further discussion of the Company’s stock options and restricted stock awards is included within the Common Stock and Related Matters and Share-Based Payments footnotes of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
The following table calculates basic earnings per common share and diluted earnings per common share for the three months ended November 30, 2012 and 2011:
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
|
| | | | | | | |
| Three Months Ended |
| November 30, |
| 2012 | | 2011 |
Basic Earnings per Share: | |
| | |
|
Net income | $ | 26.1 |
| | $ | 29.9 |
|
Less: Income attributable to participating securities | (0.5 | ) | | (0.6 | ) |
Net income available to common shareholders | $ | 25.6 |
| | $ | 29.3 |
|
Basic weighted average shares outstanding | 41.8 |
| | 41.2 |
|
Basic earnings per share | $ | 0.61 |
| | $ | 0.71 |
|
Diluted Earnings per Share: | |
| | |
|
Net income | $ | 26.1 |
| | $ | 29.9 |
|
Less: Income attributable to participating securities | (0.5 | ) | | (0.6 | ) |
Net income available to common shareholders | $ | 25.6 |
| | $ | 29.3 |
|
Basic weighted average shares outstanding | 41.8 |
| | 41.2 |
|
Common stock equivalents | 0.5 |
| | 0.5 |
|
Diluted weighted average shares outstanding | 42.3 |
| | 41.7 |
|
Diluted earnings per share | $ | 0.61 |
| | $ | 0.70 |
|
10. 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 includes foreign currency translation and pension adjustments.
The following table presents the changes in each component of Accumulated Other Comprehensive Loss Items.
|
| | | | | | | | | | | |
| Foreign currency items | | Defined Benefit Pension Plans | | Accumulated Other Comprehensive Loss Items |
Beginning Balance, August 31, 2012 | $ | (16.9 | ) | | $ | (67.8 | ) | | $ | (84.7 | ) |
Current period Other Comprehensive Income/(Expense) | 1.3 |
| | (2.1 | ) | | (0.8 | ) |
Ending Balance, November 30, 2012 | $ | (15.6 | ) | | $ | (69.9 | ) | | $ | (85.5 | ) |
The following table presents the tax (expense)/benefit allocated to each component of Other Comprehensive Income.
|
| | | | | | | | | | | |
| Before Tax Amount | | Tax (Expense) or Benefit | | Net of Tax Amount |
Foreign Currency Translation Adjustments | $ | 1.3 |
| | $ | — |
| | $ | 1.3 |
|
Defined Benefit Pension Plans: | | | | | |
Prior service cost from plan amendment during period | (5.5 | ) | | 2.2 |
| | (3.3 | ) |
Less: Amortization of prior service cost and actuarial loss included in net periodic pension cost | 1.8 |
| | (0.6 | ) | | 1.2 |
|
Defined Benefit Pension Plans, net | (3.7 | ) | | 1.6 |
| | (2.1 | ) |
Other Comprehensive Income/(Expense) | $ | (2.4 | ) | | $ | 1.6 |
| | $ | (0.8 | ) |
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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. The Company was in compliance with all financial covenants under the Revolving Credit Facility as of November 30, 2012. At November 30, 2012, 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. As of November 30, 2012, 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, including $5.7 issued under the Revolving Credit Facility.
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 1.65%.
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 0.35% of the aggregate $250.0 commitment of the lenders under the Revolving Credit Facility.
Notes
At November 30, 2012, the Company had $350.0 of publicly-traded, senior unsecured notes outstanding at a 6% interest rate that are scheduled to mature in December 2019 (the “Notes”) and $4.0 of tax-exempt industrial revenue bonds that are scheduled to mature in 2021. Further discussion of the Company’s debt is included within the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
Interest Expense
Interest expense, net, is comprised primarily of interest expense on long-term debt, obligations in connection with non-qualified retirement benefits, and Revolving Credit Facility borrowings, partially offset by interest income on cash and cash equivalents.
The following table summarizes the components of interest expense, net:
|
| | | | | | | |
| Three Months Ended |
| November 30, 2012 | | November 30, 2011 |
Interest expense | $ | 7.9 |
| | $ | 7.8 |
|
Interest income | (0.2 | ) | | (0.1 | ) |
Interest expense, net | $ | 7.7 |
| | $ | 7.7 |
|
Cash paid for interest as reported on the Consolidated Statements of Cash Flows as supplemental cash flow information for the three months ended November 30, 2012 and 2011 totaled $9.7 and $9.2, respectively. The prior-year period amount was revised for consistency with the first three months of fiscal 2013 to properly reflect interest paid related to obligations associated with a non-qualified retirement plan.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
| |
12. | Commitments and Contingencies |
In the normal course of business, the Company is subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance reserves and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. The Company establishes reserves when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended November 30, 2012, no material changes have occurred in the Company's reserves for self-insurance, litigation, environmental matters, or guarantees and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to the Consolidated Financial Statements within the Company’s Form 10-K.
For more information on the Company’s commitments and contingencies, please refer to the Commitments and Contingencies footnote of the Notes to the Consolidated Financial Statements within the Company’s Form 10-K.
Product Warranty and Recall Costs
Acuity Brands records an allowance for the estimated amount of future warranty claims 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 experience. Estimated recall costs are recognized upon such time that the Company becomes aware of product defects and other issues. If actual future warranty costs exceed historical amounts or unforeseen recall costs occur, additional allowances may be required, which could have a material adverse impact on the Company’s results of operations and cash flows in future periods.
As of August 31, 2012, the Company had product warranty and recall reserves of $4.0. During the three month period ended November 30, 2012, the Company made payments or provided replacement materials in the aggregate amount of $2.5 related to warranty claims and recognized additional estimated warranty and recall liabilities of $2.9. As of November 30, 2012, the Company had remaining product warranty and recall reserves of $4.4 (included in Other accrued liabilities on the Consolidated Balance Sheets).
The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors of the Company, including stock options and restricted shares (all part of the Long-Term Incentive Plan), and share units representing certain deferrals into the Director Deferred Compensation Plan or the Supplemental Deferred Savings Plan. Each of these award programs is more fully discussed within the Company’s Form 10-K. The Company recorded $4.3 and $4.2 of share-based expense for the three months ended November 30, 2012 and 2011, respectively. 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, and amounted to $5.4 and $1.1 for the three months ended November 30, 2012 and 2011, respectively. Shares issued upon exercise of stock options were 285,381 and 57,379 for the three months ended November 30, 2012 and 2011, respectively.
| |
14. | Pension and Profit Sharing Plans |
The Company has several pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the final years of employment. Plan assets are invested primarily in equity and fixed income securities.
Net periodic pension cost for the Company’s defined benefit pension plans during the three months ended November 30, 2012 and 2011, included the following components:
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
|
| | | | | | | |
| Three Months Ended |
| November 30, |
| 2012 | | 2011 |
Service cost | $ | 0.9 |
| | $ | 0.7 |
|
Interest cost | 2.0 |
| | 2.1 |
|
Expected return on plan assets | (2.2 | ) | | (2.0 | ) |
Amortization of prior service cost | 0.2 |
| | — |
|
Recognized actuarial loss | 1.6 |
| | 1.0 |
|
Net periodic pension cost | $ | 2.5 |
| | $ | 1.8 |
|
On October 23, 2012, the Board of Directors of the Company, following a competitive assessment of executive retirement benefits and with an objective to ensure such company benefits were sufficient to retain and attract executive talent, approved certain amendments to the Acuity Brands, Inc. 2002 Supplemental Retirement Plan (“2002 SERP”). The amendments to the 2002 SERP increased participant benefits requiring the recognition of an additional pre-tax pension liability of $5.5 included in the Consolidated Balance Sheets. The amendments are estimated to increase fiscal 2013 pension expense by $1.1.
Fiscal 2008-2010 Actions
In previous fiscal years, the Company commenced actions to streamline and simplify its organizational structure and operations. 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 for certain terminated employees. Further details regarding the Company’s previous streamlining activities are included within the Special Charge footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
At August 31, 2012, the Company had severance reserves of $0.2 related to fiscal 2008 - 2010 actions. The Company made payments of approximately $0.1 related to severance costs during the three month period ended November 30, 2012. As of November 30, 2012, the Company had remaining severance reserves of $0.1 related to fiscal 2008 - 2010 actions, which are included in Accrued Compensation on the Consolidated Balance Sheets.
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 continued investment in future growth initiatives, such as new products, expanded market presence, and technology and innovation. The Company expects to incur future charges related to the actions initiated during fiscal 2012.
In addition to the $2.7 pre-tax special charge recorded in the first quarter of fiscal 2012 related to the realignment of responsibilities primarily within various SD&A departments, the Company recorded a net 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 are 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; closure is expected to be principally completed by the end of the second quarter of fiscal 2013. The Company will transition 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 Charges in the Consolidated Statements of
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Income. In addition, the Company also recorded related pre-tax expenses of $4.4 in fiscal 2012, which were included in Cost of Products Sold in the Consolidated Statements of Income. These related expenses consisted of directly attributable temporary 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 the first quarter of fiscal 2013, approximately $0.7 of pre-tax special charges related to fiscal 2012 actions, consisting primarily of net severance and employee-related costs of $0.1 and production transfer expenses of $0.6, were recognized and were included in Special Charges in the Consolidated Statements of Income. In addition, related pre-tax expenses of $4.8 directly attributable to temporary manufacturing inefficiencies were recorded in the first quarter of fiscal 2013 and are included in Cost of Products Sold in the Consolidated Statements of Income.
At August 31, 2012, the Company had severance reserves of $5.6 related to fiscal 2012 actions. Additional charges consisting primarily of net severance and employee-related costs of $0.1 related to fiscal 2012 actions were recognized in the first quarter of fiscal 2013 and are included in Special Charges in the Consolidated Statements of Income. In addition, the Company made payments of $3.1 related to severance and employee-related costs during the three month period ended November 30, 2012. As of November 30, 2012, the Company had remaining severance reserves of $2.6 related to restructuring activities initiated in fiscal 2012, which are included in Accrued Compensation on the Consolidated Balance Sheets.
| |
16. | Supplemental Guarantor Condensed Consolidating Financial Statements |
In December 2009, ABL, the wholly-owned and principal operating subsidiary of the Company, refinanced the then current outstanding debt through the issuance of the Notes. See Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K for further information.
In accordance with the registration rights agreement by and between ABL and the guarantors to the Notes and the initial purchasers of the Notes, ABL and the guarantors to the Notes filed a registration statement with the SEC for an offer to exchange the Notes for an issue of SEC-registered notes with identical terms. Due to the filing of the registration statement and offer to exchange, the Company determined the need for compliance with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”). In lieu of providing separate audited financial statements for ABL and ABL IP Holding, the Company has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(d) of SEC Regulation S-X. 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 our financial condition, results of operations, or cash flows for any purpose other than to comply with the specific requirements for parent-subsidiary guarantor reporting.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING BALANCE SHEETS
|
| | | | | | | | | | | | | | | | | | | | | | | |
| November 30, 2012 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
ASSETS |
Current Assets: | |
| | |
| | |
| | |
| | |
| | |
|
Cash and cash equivalents | $ | 228.6 |
| | $ | — |
| | $ | — |
| | $ | 38.9 |
| | $ | — |
| | $ | 267.5 |
|
Accounts receivable, net | — |
| | 231.5 |
| | — |
| | 39.0 |
| | — |
| | 270.5 |
|
Inventories | — |
| | 184.1 |
| | — |
| | 9.6 |
| | — |
| | 193.7 |
|
Other current assets | 11.5 |
| | 22.5 |
| | — |
| | 7.6 |
| | — |
| | 41.6 |
|
Total Current Assets | 240.1 |
| | 438.1 |
| | — |
| | 95.1 |
| | — |
| | 773.3 |
|
Property, Plant, and Equipment, net | — |
| | 113.8 |
| | — |
| | 30.0 |
| | — |
| | 143.8 |
|
Goodwill | — |
| | 516.1 |
| | 2.7 |
| | 36.3 |
| | — |
| | 555.1 |
|
Intangible assets | — |
| | 102.7 |
| | 121.3 |
| | 4.1 |
| | — |
| | 228.1 |
|
Other long-term assets | 2.6 |
| | 20.5 |
| | — |
| | 8.3 |
| | — |
| | 31.4 |
|
Investments in subsidiaries | 738.7 |
| | 92.4 |
| | — |
| | — |
| | (831.1 | ) | | — |
|
Total Assets | $ | 981.4 |
| | $ | 1,283.6 |
| | $ | 124.0 |
| | $ | 173.8 |
| | $ | (831.1 | ) | | $ | 1,731.7 |
|
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current Liabilities: | |
| | |
| | |
| | |
| | |
| | |
|
Accounts payable | $ | 0.5 |
| | $ | 192.4 |
| | $ | — |
| | $ | 11.7 |
| | $ | — |
| | $ | 204.6 |
|
Intercompany payable (receivable) | 66.2 |
| | (7.2 | ) | | (102.7 | ) | | 43.7 |
| | — |
| | — |
|
Other accrued liabilities | 9.5 |
| | 87.9 |
| | — |
| | 19.3 |
| | — |
| | 116.7 |
|
Total Current Liabilities | 76.2 |
| | 273.1 |
| | (102.7 | ) | | 74.7 |
| | — |
| | 321.3 |
|
Long-Term Debt | — |
| | 353.5 |
| | — |
| | — |
| | — |
| | 353.5 |
|
Deferred Income Taxes | (33.7 | ) | | 68.2 |
| | — |
| | (2.8 | ) | | — |
| | 31.7 |
|
Other Long-Term Liabilities | 72.8 |
| | 61.3 |
| | — |
| | 25.0 |
| | — |
| | 159.1 |
|
Total Stockholders’ Equity | 866.1 |
| | 527.5 |
| | 226.7 |
| | 76.9 |
| | (831.1 | ) | | 866.1 |
|
Total Liabilities and Stockholders’ Equity | $ | 981.4 |
| | $ | 1,283.6 |
| | $ | 124.0 |
| | $ | 173.8 |
| | $ | (831.1 | ) | | $ | 1,731.7 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING BALANCE SHEETS
|
| | | | | | | | | | | | | | | | | | | | | | | |
| August 31, 2012 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
ASSETS |
Current Assets: | |
| | |
| | |
| | |
| | |
| | |
|
Cash and cash equivalents | $ | 246.6 |
| | $ | — |
| | $ | — |
| | $ | 37.9 |
| | $ | — |
| | $ | 284.5 |
|
Accounts receivable, net | — |
| | 228.2 |
| | — |
| | 35.6 |
| | — |
| | 263.8 |
|
Inventories | — |
| | 183.8 |
| | — |
| | 10.3 |
| | — |
| | 194.1 |
|
Other current assets | 4.5 |
| | 26.2 |
| | — |
| | 5.9 |
| | — |
| | 36.6 |
|
Total Current Assets | 251.1 |
| | 438.2 |
| | — |
| | 89.7 |
| | — |
| | 779.0 |
|
Property, Plant, and Equipment, net | — |
| | 109.6 |
| | — |
| | 29.6 |
| | — |
| | 139.2 |
|
Goodwill | — |
| | 516.1 |
| | 2.7 |
| | 36.1 |
| | — |
| | 554.9 |
|
Intangible assets | — |
| | 104.5 |
| | 122.0 |
| | 4.3 |
| | — |
| | 230.8 |
|
Other long-term assets | 3.6 |
| | 20.8 |
| | — |
| | 8.6 |
| | — |
| | 33.0 |
|
Investments in subsidiaries | 705.1 |
| | 87.3 |
| | — |
| | — |
| | (792.4 | ) | | — |
|
Total Assets | $ | 959.8 |
| | $ | 1,276.5 |
| | $ | 124.7 |
| | $ | 168.3 |
| | $ | (792.4 | ) | | $ | 1,736.9 |
|
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current Liabilities: | |
| | |
| | |
| | |
| | |
| | |
|
Accounts payable | $ | 0.8 |
| | $ | 218.0 |
| | $ | — |
| | $ | 13.9 |
| | $ | — |
| | $ | 232.7 |
|
Intercompany payable (receivable) | 83.4 |
| | (28.3 | ) | | (98.1 | ) | | 43.0 |
| | — |
| | — |
|
Other accrued liabilities | 12.6 |
| | 103.2 |
| | — |
| | 16.3 |
| | — |
| | 132.1 |
|
Total Current Liabilities | 96.8 |
| | 292.9 |
| | (98.1 | ) | | 73.2 |
| | — |
| | 364.8 |
|
Long-Term Debt | — |
| | 353.5 |
| | — |
| | — |
| | — |
| | 353.5 |
|
Deferred Income Taxes | (32.0 | ) | | 68.2 |
| | — |
| | (2.8 | ) | | — |
| | 33.4 |
|
Other Long-Term Liabilities | 61.0 |
| | 64.7 |
| | — |
| | 25.5 |
| | — |
| | 151.2 |
|
Total Stockholders’ Equity | 834.0 |
| | 497.2 |
| | 222.8 |
| | 72.4 |
| | (792.4 | ) | | 834.0 |
|
Total Liabilities and Stockholders’ Equity | $ | 959.8 |
| | $ | 1,276.5 |
| | $ | 124.7 |
| | $ | 168.3 |
| | $ | (792.4 | ) | | $ | 1,736.9 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2012 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net Sales: | |
| | |
| | |
| | |
| | |
| | |
|
External sales | $ | — |
| | $ | 422.8 |
| | $ | — |
| | $ | 58.3 |
| | $ | — |
| | $ | 481.1 |
|
Intercompany sales | — |
| | — |
| | 7.3 |
| | 23.1 |
| | (30.4 | ) | | — |
|
Total Sales | — |
| | 422.8 |
| | 7.3 |
| | 81.4 |
| | (30.4 | ) | | 481.1 |
|
Cost of Products Sold | — |
| | 254.9 |
| | — |
| | 59.8 |
| | (23.1 | ) | | 291.6 |
|
Gross Profit | — |
| | 167.9 |
| | 7.3 |
| | 21.6 |
| | (7.3 | ) | | 189.5 |
|
Selling, Distribution, and Administrative Expenses | 7.7 |
| | 123.0 |
| | 0.8 |
| | 16.4 |
| | (7.3 | ) | | 140.6 |
|
Intercompany charges | (0.9 | ) | | 0.6 |
| | — |
| | 0.3 |
| | — |
| | — |
|
Special Charge | — |
| | 0.4 |
| | — |
| | 0.3 |
| | — |
| | 0.7 |
|
Operating Profit | (6.8 | ) | | 43.9 |
| | 6.5 |
| | 4.6 |
| | — |
| | 48.2 |
|
Interest expense (income), net | 2.3 |
| | 5.5 |
| | — |
| | (0.1 | ) | | — |
| | 7.7 |
|
Equity earnings in subsidiaries | (31.4 | ) | | (3.9 | ) | | — |
| | 0.1 |
| | 35.2 |
| | — |
|
Miscellaneous (income) expense, net | — |
| | (0.2 | ) | | — |
| | 0.3 |
| | — |
| | 0.1 |
|
Income from Continuing Operations before Provision for Income Taxes | 22.3 |
| | 42.5 |
| | 6.5 |
| | 4.3 |
| | (35.2 | ) | | 40.4 |
|
Provision for Income Taxes | (3.8 | ) | | 14.3 |
| | 2.6 |
| | 1.2 |
| | — |
| | 14.3 |
|
Net Income | $ | 26.1 |
| | $ | 28.2 |
| | $ | 3.9 |
| | $ | 3.1 |
| | $ | (35.2 | ) | | $ | 26.1 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2011 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net Sales: | |
| | |
| | |
| | |
| | |
| | |
|
External sales | $ | — |
| | $ | 422.8 |
| | $ | — |
| | $ | 51.5 |
| | $ | — |
| | $ | 474.3 |
|
Intercompany sales | — |
| | — |
| | 7.4 |
| | 16.1 |
| | (23.5 | ) | | — |
|
Total Sales | — |
| | 422.8 |
| | 7.4 |
| | 67.6 |
| | (23.5 | ) | | 474.3 |
|
Cost of Products Sold | — |
| | 244.7 |
| | — |
| | 52.1 |
| | (16.1 | ) | | 280.7 |
|
Gross Profit | — |
| | 178.1 |
| | 7.4 |
| | 15.5 |
| | (7.4 | ) | | 193.6 |
|
Selling, Distribution, and Administrative Expenses | 6.7 |
| | 125.6 |
| | 0.9 |
| | 14.5 |
| | (7.4 | ) | | 140.3 |
|
Intercompany charges | (0.9 | ) | | 0.6 |
| | — |
| | 0.3 |
| | — |
| | — |
|
Special Charge | — |
| | 2.7 |
| | — |
| | — |
| | — |
| | 2.7 |
|
Operating Profit | (5.8 | ) | | 49.2 |
| | 6.5 |
| | 0.7 |
| | — |
| | 50.6 |
|
Interest expense (income), net | 2.3 |
| | 5.5 |
| | — |
| | (0.1 | ) | | — |
| | 7.7 |
|
Equity earnings in subsidiaries | (34.9 | ) | | (3.0 | ) | | — |
| | — |
| | 37.9 |
| | — |
|
Miscellaneous (income) expense, net | (0.1 | ) | | 0.2 |
| | — |
| | (3.0 | ) | | — |
| | (2.9 | ) |
Income from Continuing Operations before Provision for Income Taxes | 26.9 |
| | 46.5 |
| | 6.5 |
| | 3.8 |
| | (37.9 | ) | | 45.8 |
|
Provision for Income Taxes | (3.0 | ) | | 15.3 |
| | 2.5 |
| | 1.1 |
| | — |
| | 15.9 |
|
Net Income | $ | 29.9 |
| | $ | 31.2 |
| | $ | 4.0 |
| | $ | 2.7 |
| | $ | (37.9 | ) | | $ | 29.9 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF OTHER COMPREHENSIVE INCOME |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2012 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net Income | $ | 26.1 |
| | $ | 28.2 |
| | $ | 3.9 |
| | $ | 3.1 |
| | $ | (35.2 | ) | | $ | 26.1 |
|
| | | | | | | | | | | |
Other Comprehensive Income/(Expense) Items: | | | | | | | | | | | |
Foreign Currency Translation Adjustments | 1.3 |
| | 1.3 |
| | — |
| | — |
| | (1.3 | ) | | 1.3 |
|
Defined Benefit Pension Plans: | | | | | | | | | | | |
Prior service cost from plan amendment during period | (5.5 | ) | | — |
| | — |
| | — |
| | — |
| | (5.5 | ) |
Less: Amortization of prior service cost and actuarial loss included in net periodic pension cost | 1.8 |
| | 1.1 |
| | — |
| | 0.5 |
| | (1.6 | ) | | 1.8 |
|
Defined Benefit Pension Plans, net | (3.7 | ) | | 1.1 |
| | — |
| | 0.5 |
| | (1.6 | ) | | (3.7 | ) |
Other Comprehensive Income/(Expense) Items before Provision for Income Taxes | (2.4 | ) | | 2.4 |
| | — |
| | 0.5 |
| | (2.9 | ) | | (2.4 | ) |
Income Tax (Expense)/Benefit related to Other Comprehensive Income/(Expense) Items | 1.6 |
| | (0.4 | ) | | — |
| | (0.1 | ) | | 0.5 |
| | 1.6 |
|
Other Comprehensive Income/(Expense) Items after Provision for Income Taxes | (0.8 | ) | | 2.0 |
| | — |
| | 0.4 |
| | (2.4 | ) | | (0.8 | ) |
| | | | | | | | | | |
|
Comprehensive Income | $ | 25.3 |
| | $ | 30.2 |
| | $ | 3.9 |
| | $ | 3.5 |
| | $ | (37.6 | ) | | $ | 25.3 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF OTHER COMPREHENSIVE INCOME |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2011 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net Income | $ | 29.9 |
| | $ | 31.2 |
| | $ | 4.0 |
| | $ | 2.7 |
| | $ | (37.9 | ) | | $ | 29.9 |
|
| | | | | | | | | | | |
Other Comprehensive Income/(Expense) Items: | | | | | | | | | | | |
Foreign Currency Translation Adjustments | (9.1 | ) | | (9.1 | ) | | — |
| | — |
| | 9.1 |
| | (9.1 | ) |
Defined Benefit Pension Plans: | | | | | | | | | | | |
Prior service cost from plan amendment during period | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Less: Amortization of prior service cost and actuarial loss included in net periodic pension cost | 1.0 |
| | 0.8 |
| | — |
| | 0.2 |
| | (1.0 | ) | | 1.0 |
|
Defined Benefit Pension Plans, net | 1.0 |
| | 0.8 |
| | — |
| | 0.2 |
| | (1.0 | ) | | 1.0 |
|
Other Comprehensive Income/(Expense) Items before Provision for Income Taxes | (8.1 | ) | | (8.3 | ) | | — |
| | 0.2 |
| | 8.1 |
| | (8.1 | ) |
Income Tax (Expense)/Benefit related to Other Comprehensive Income/(Expense) Items | (0.3 | ) | | (0.2 | ) | | — |
| | (0.1 | ) | | 0.3 |
| | (0.3 | ) |
Other Comprehensive Income/(Expense) Items after Provision for Income Taxes | (8.4 | ) | | (8.5 | ) | | — |
| | 0.1 |
| | 8.4 |
| | (8.4 | ) |
| | | | | | | | | | | |
Other Comprehensive Income | $ | 21.5 |
| | $ | 22.7 |
| | $ | 4.0 |
| | $ | 2.8 |
| | $ | (29.5 | ) | | $ | 21.5 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2012 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net Cash Provided by (Used for) Operating Activities | $ | (26.1 | ) | | $ | 10.3 |
| | $ | — |
| | $ | 1.3 |
| | $ | — |
| | $ | (14.5 | ) |
Cash Provided by (Used for) Investing Activities: | |
| | |
| | |
| | |
| | |
| | |
|
Purchases of property, plant, and equipment | — |
| | (10.5 | ) | | — |
| | (0.7 | ) | | — |
| | (11.2 | ) |
Investments in subsidiaries | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Acquisitions of business and intangible assets | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Net Cash Used for Investing Activities | — |
| | (10.5 | ) | | — |
| | (0.7 | ) | | — |
| | (11.2 | ) |
Cash Provided by (Used for) Financing Activities: | |
| | |
| | |
| | |
| | |
| | |
|
Proceeds from stock option exercises and other | 8.2 |
| | — |
| | — |
| | — |
| | — |
| | 8.2 |
|
Repurchases of common stock | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Excess tax benefits from share-based payments | 5.4 |
| | — |
| | — |
| | — |
| | — |
| | 5.4 |
|
Intercompany dividends | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Intercompany capital | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Dividends paid | (5.5 | ) | | — |
| | — |
| | — |
| | — |
| | (5.5 | ) |
Net Cash (Used for) Provided by Financing Activities | 8.1 |
| | — |
| | — |
| | — |
| | — |
| | 8.1 |
|
Effect of Exchange Rate Changes on Cash | — |
| | 0.2 |
| | — |
| | 0.4 |
| | — |
| | 0.6 |
|
Net Change in Cash and Cash Equivalents | (18.0 | ) | | — |
| | — |
| | 1.0 |
| | — |
| | (17.0 | ) |
Cash and Cash Equivalents at Beginning of Period | 246.6 |
| | — |
| | — |
| | 37.9 |
| | — |
| | 284.5 |
|
Cash and Cash Equivalents at End of Period | $ | 228.6 |
| | $ | — |
| | $ | — |
| | $ | 38.9 |
| | $ | — |
| | $ | 267.5 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2011 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net Cash (Used for) Provided by Operating Activities | $ | 29.9 |
| | $ | 6.5 |
| | $ | — |
| | $ | (8.7 | ) | | $ | — |
| | $ | 27.7 |
|
Cash Provided by (Used for) Investing Activities: | |
| | |
| | |
| | |
| | |
| | |
|
Purchases of property, plant, and equipment | — |
| | (3.8 | ) | | — |
| | (0.4 | ) | | — |
| | (4.2 | ) |
Investments in subsidiaries | (3.8 | ) | | — |
| | — |
| | — |
| | 3.8 |
| | — |
|
Acquisitions of business and intangible assets | — |
| | (3.8 | ) | | — |
| | — |
| | — |
| | (3.8 | ) |
Net Cash Used for Investing Activities | (3.8 | ) | | (7.6 | ) | | — |
| | (0.4 | ) | | 3.8 |
| | (8.0 | ) |
Cash Provided by (Used for) Financing Activities: | |
| | |
| | |
| | |
| | |
| | |
|
Proceeds from stock option exercises and other | 0.8 |
| | — |
| | — |
| | — |
| | — |
| | 0.8 |
|
Repurchases of common stock | (9.2 | ) | | — |
| | — |
| | — |
| | — |
| | (9.2 | ) |
Excess tax benefits from share-based payments | 1.1 |
| | — |
| | — |
| | — |
| | — |
| | 1.1 |
|
Intercompany dividends | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Intercompany capital | — |
| | 3.8 |
| | — |
| | — |
| | (3.8 | ) | | — |
|
Dividends paid | (5.5 | ) | | — |
| | — |
| | — |
| | — |
| | (5.5 | ) |
Net Cash (Used for) Provided by Financing Activities | (12.8 | ) | | 3.8 |
| | — |
| | — |
| | (3.8 | ) | | (12.8 | ) |
Effect of Exchange Rate Changes on C |