The purpose of this discussion and analysis is to enhance the understanding and
evaluation of the results of operations, financial position, cash flows,
indebtedness, and other key financial information of Acuity Brands, Inc.
("Acuity Brands") and its subsidiaries as of November 30, 2019 and for the three
months ended November 30, 2019 and 2018. The following discussion should be read
in conjunction with the Consolidated Financial Statements and Notes to
Consolidated Financial Statements included within this report. Also, please
refer to Acuity Brands' Annual Report on Form 10-K for the fiscal year ended
August 31, 2019, filed with the Securities and Exchange Commission (the "SEC")
on October 29, 2019 ("Form 10-K").

Overview

Company


Acuity Brands is the parent company of Acuity Brands Lighting, Inc. ("ABL") and
other subsidiaries (Acuity Brands, ABL, and such other subsidiaries are
collectively referred to herein as "we," "our," "us," "the Company," or similar
references). Our principal office is located in Atlanta, Georgia.
We are one of the world's leading providers of lighting and building management
solutions and services for commercial, institutional, industrial,
infrastructure, and residential applications throughout North America and select
international markets. Our lighting and building management solutions include
devices such as luminaires, lighting controls, controls for various building
systems, power supplies, prismatic skylights, and drivers, as well as integrated
systems designed to optimize energy efficiency and comfort for various indoor
and outdoor applications. Additionally, we continue to expand our solutions
portfolio, including software and services, to provide a host of other economic
benefits resulting from data analytics that enables the Internet of Things
("IoT"), supports the advancement of smart buildings, smart cities, and the
smart grid, and allows businesses to develop custom applications to scale their
operations. As of November 30, 2019, we operate 23 manufacturing facilities and
eight distribution facilities along with four warehouses to serve our extensive
customer base.
We do not consider acquisitions a critical element of our strategy but seek
opportunities to expand and enhance our portfolio of solutions, including the
following transactions:
On September 17, 2019, using cash on hand and borrowings under available
existing credit arrangements, we acquired all of the equity interests of The
Luminaires Group ("TLG"), a leading provider of specification-grade luminaires
for commercial, institutional, hospitality, and municipal markets, all of which
complements our current and dynamic lighting portfolio. TLG's indoor and outdoor
lighting fixtures are marketed to architects, landscape architects, interior
designers and engineers through five niche lighting
brands: A-light, Cyclone, Eureka, Luminaire LED, and Luminis.
On November 25, 2019, using cash on hand, we acquired all of the equity
interests of LocusLabs, Inc ("LocusLabs"). The LocusLabs software platform
supports navigation applications used on mobile devices, web browsers, and
digital displays in airports, event centers, multi-floor office buildings, and
campuses.
The results of operations for the three months ended November 30, 2019 and 2018
are not necessarily indicative of the results to be expected for the full fiscal
year due primarily to seasonality, which results in our net sales and net income
generally being higher in the second half of our fiscal year, the impact of any
acquisitions, and, among other reasons, the continued uncertainty of general
economic conditions that may impact our key end markets for the remainder of
fiscal 2020.
Liquidity and Capital Resources
Our principal sources of liquidity are operating cash flows generated primarily
from our business operations, cash on hand, and various sources of borrowings.
Our ability to generate sufficient cash flow from operations or to access
certain capital markets, including banks, is necessary to fund our operations
and capital expenditures, pay dividends, repurchase shares, meet obligations as
they become due, and maintain compliance with covenants contained in our
financing agreements.
For the first three months of fiscal 2020, we paid $11.6 million for property,
plant, and equipment, primarily for equipment, tooling, new and enhanced
information technology capabilities, and facility enhancements. We currently
expect to invest approximately 1.7% of net sales in capital expenditures during
fiscal 2020.
In March 2018, the Board of Directors (the "Board") authorized the repurchase of
up to six million shares of the Company's common stock. As of November 30, 2019,
1.45 million shares had been repurchased under this

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authorization. No shares were repurchased in fiscal 2020. We expect to
repurchase the remaining shares available for repurchase on an opportunistic
basis subject to various factors including stock price, Company performance,
market conditions, and other possible uses of cash.
Our short-term cash needs are expected to include funding operations as
currently planned; making capital investments as currently anticipated; paying
quarterly stockholder dividends as currently anticipated; paying principal and
interest on debt as currently scheduled, including our senior unsecured notes
that matured in December 2019, which we repaid on December 16, 2019 with
borrowings available under existing credit arrangements; making required
contributions to our employee benefit plans; funding possible acquisitions; and
potentially repurchasing shares of our outstanding common stock. We believe that
we will be able to meet our liquidity needs over the next 12 months based on our
cash on hand, current projections of cash flow from operations, and borrowing
availability under financing arrangements. Additionally, we believe that our
cash flows from operations and sources of funding, including, but not limited
to, future borrowings and capacity, will sufficiently support our long-term
liquidity needs.
Cash Flow
We use available cash and cash flow from operations, borrowings on credit
arrangements, and proceeds from the exercise of stock options to fund
operations, capital expenditures, and acquisitions if any; to repurchase Company
stock; and to pay dividends.
Our cash position at November 30, 2019 was $266.6 million, a decrease of $194.4
million from August 31, 2019. During the three months ended November 30, 2019,
we generated net cash flows from operations of $129.6 million. Cash generated
from operating activities, as well as cash on-hand, was used during the three
months ended November 30, 2019 primarily to fund acquisitions of $302.0 million,
to fund capital expenditures of $11.6 million, to pay dividends to stockholders
of $5.2 million, and to pay withholding taxes on the net settlement of equity
awards of $4.1 million.
We generated $129.6 million of cash flow from operating activities during the
three months ended November 30, 2019 compared with $131.8 million in the
prior-year period, a decrease of $2.2 million, due primarily to lower net
income, partially offset by lower working capital requirements.
We believe that investing in assets and programs that will over time increase
the overall return on our invested capital is a key factor in driving
stockholder value. We paid $11.6 million and $14.0 million in the first three
months of fiscal 2020 and 2019, respectively, primarily related to investments
in equipment, tooling, new and enhanced information technology capabilities, and
facility enhancements. We expect to invest approximately 1.7% of net sales
primarily for new equipment, tooling, facility enhancements, and information
technology capabilities during fiscal 2020.
Capitalization
As of November 30, 2019, our capital structure was comprised principally of
senior unsecured notes and equity of our stockholders. Total debt outstanding
was $356.3 million and $356.6 million at November 30, 2019 and August 31, 2019,
respectively, and consisted primarily of fixed-rate obligations.
On December 8, 2009, ABL issued $350.0 million of senior unsecured notes due in
December 2019 (the "Unsecured Notes") in a private placement transaction. The
Unsecured Notes were subsequently exchanged for SEC-registered notes with
substantially identical terms. The Unsecured Notes bore interest at a rate of 6%
per annum and were issued at a price equal to 99.797% of their face value for a
term of ten years. On December 16, 2019, we repaid the Unsecured Notes and
accrued interest in full with borrowings under our unsecured delayed draw term
loan facility described below (the "Term Loan Facility"). Because approximately
$341.2 million of the borrowings under the Term Loan Facility are due greater
than one year from the refinancing date, $341.2 million of the carrying value of
the Unsecured Notes is reflected within Long-term debt on the Consolidated
Balance Sheets as of November 30, 2019. See the Debt and Lines of Credit
footnote of the Notes to Consolidated Financial Statements for more information.
On June 29, 2018, we entered into a credit agreement ("Credit Agreement") with a
syndicate of banks that provides us with a $400.0 million five-year unsecured
revolving credit facility ("Revolving Credit Facility") and a $400.0 million
Term Loan Facility. On November 30, 2019, we had no borrowings outstanding under
the Revolving Credit Facility and no borrowings under the Term Loan Facility. We
were in compliance with all financial covenants under the Credit Agreement as of
November 30, 2019. At November 30, 2019, we had additional borrowing capacity
under the Credit Agreement of $796.2 million under the most restrictive covenant
in effect at the time, which represents the full amount of the Revolving Credit
Facility and the Term Loan Facility less the outstanding letters of credit of
$3.8 million issued on the Revolving Credit Facility. As of November 30, 2019,
we had outstanding letters of credit totaling $8.1 million, primarily for
securing collateral requirements under our casualty insurance programs and for
providing credit support

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


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Results of Operations
First Quarter of Fiscal 2020 Compared with First Quarter of Fiscal 2019
The following table sets forth information comparing the components of net
income for the three months ended November 30, 2019 and 2018 (in millions except
per share data):
                                                Three Months Ended
                                                                                     Increase
                                      November 30, 2019     November 30, 2018       (Decrease)        Percent Change
Net sales                            $          834.7      $           932.6     $      (97.9 )            (10.5 )%
Cost of products sold                           478.9                  565.1            (86.2 )            (15.3 )%
Gross profit                                    355.8                  367.5            (11.7 )             (3.2 )%
Percent of net sales                             42.6 %                 39.4 %            320     bps
Selling, distribution, and
administrative expenses                         265.3                  250.1             15.2                6.1  %
Special charges                                   6.9                    1.0              5.9                 NM
Operating profit                                 83.6                  116.4            (32.8 )            (28.2 )%
Percent of net sales                             10.0 %                 12.5 %           (250 )   bps
Other expense:
Interest expense, net                             8.3                    8.7             (0.4 )             (4.6 )%
Miscellaneous expense, net                        1.4                    1.3              0.1                 NM
Total other expense                               9.7                   10.0             (0.3 )               NM
Income before income taxes                       73.9                  106.4            (32.5 )            (30.5 )%
Percent of net sales                              8.9 %                 11.4 %           (250 )   bps
Income tax expense                               16.9                   26.8             (9.9 )               NM
Effective tax rate                               22.9 %                 25.2 %
Net income                           $           57.0      $            79.6     $      (22.6 )            (28.4 )%
Diluted earnings per share           $           1.44      $            1.98     $      (0.54 )            (27.3 )%
NM - not meaningful


Net sales were $834.7 million for the three months ended November 30, 2019
compared with $932.6 million reported for the three months ended November 30,
2018, a decrease of $97.9 million, or 10.5%. For the three months ended
November 30, 2019, we reported net income of $57.0 million, a decrease of $22.6
million, or 28.4%, compared with $79.6 million for the three months ended
November 30, 2018. For the first quarter of fiscal 2020, diluted earnings per
share decreased 27.3% to $1.44 compared with $1.98 reported in the year-ago
period.
The following table reconciles certain U.S. generally accepted accounting
principles ("U.S. GAAP") financial measures to the corresponding non-U.S. GAAP
measures referred to in the discussion of our results of operations, which
exclude the impact of acquisition related items, amortization of acquired
intangible assets, share-based payment expense, and special charges associated
primarily with continued efforts to streamline the organization and integrate
recent acquisitions. Although the impacts of some of these items have been
recognized in prior periods and could recur in future periods, we typically
exclude these charges during internal reviews of performance and use these
non-U.S. GAAP measures for baseline comparative operational analysis, decision
making, and other activities. These non-U.S. GAAP financial measures, including
adjusted gross profit and margin, adjusted selling, distribution, and
administrative ("SD&A") expenses and adjusted SD&A expenses as a percent of net
sales, adjusted operating profit and margin, adjusted net income, and adjusted
diluted earnings per share, are provided to enhance the user's overall
understanding of our current financial performance. Specifically, we believe
these non-U.S. GAAP measures provide greater comparability and enhanced
visibility into our results of operations. 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.

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(In millions, except per share data)               Three Months Ended
                                                                                        Increase
                                         November 30, 2019     November 30, 2018       (Decrease)    Percent Change
Gross profit                            $          355.8      $           367.5
Add-back: Acquisition-related items (1)              1.1                    1.2
Adjusted gross profit                   $          356.9      $           368.7     $      (11.8 )         (3.2 )%
Percent of net sales                                42.8 %                 39.5 %            330     bps

Selling, distribution, and
administrative expenses                 $          265.3      $

250.1


Less: Amortization of acquired
intangible assets                                   (9.6 )                 (7.7 )
Less: Share-based payment expense                  (16.7 )                 (7.8 )
Less: Acquisition-related items (1)                 (1.1 )

-


Adjusted selling, distribution, and
administrative expenses                 $          237.9      $           234.6     $        3.3            1.4  %
Percent of net sales                                28.5 %                 25.2 %            330     bps

Operating profit                        $           83.6      $           116.4
Add-back: Amortization of acquired
intangible assets                                    9.6

7.7


Add-back: Share-based payment expense               16.7

7.8


Add-back: Acquisition-related items (1)              2.2                    1.2
Add-back: Special charges                            6.9                    1.0
Adjusted operating profit               $          119.0      $           134.1     $      (15.1 )        (11.3 )%
Percent of net sales                                14.3 %                 14.4 %            (10 )   bps

Net income                              $           57.0      $

79.6


Add-back: Amortization of acquired
intangible assets                                    9.6

7.7


Add-back: Share-based payment expense               16.7

7.8


Add-back: Acquisition-related items (1)              2.2

1.2


Add-back: Special charges                            6.9

1.0


Total pre-tax adjustments to net income             35.4                   17.7
Income tax effects                                  (8.2 )                 (4.5 )
Adjusted net income                     $           84.2      $            92.8     $       (8.6 )         (9.3 )%

Diluted earnings per share              $           1.44      $            1.98
Adjusted diluted earnings per share     $           2.13      $

2.32 $ (0.19 ) (8.2 )%

______________________________


(1) Acquisition-related items include profit in inventory and professional fees.
Net Sales
Net sales for the three months ended November 30, 2019 decreased 10.5% compared
with the prior-year period due primarily to a 16% decrease in sales volumes,
partially offset by a 3% net favorable change in product prices and mix of
products sold ("price/mix") and a contribution from acquired businesses of
approximately 2.5%. Changes in foreign currency rates did not have a meaningful
impact on first quarter net sales. The volume decline from the prior year was a
result of several factors including an estimated market decline in the
low-to-mid single digits; the negative impact of a prior year volume increase
from a pull forward of orders in advance of announced price increases; the
elimination of certain products in our portfolio negatively impacted by the
increases in tariffs sold primarily through the retail sales channel that did
not meet our return objectives; and lower activity of large projects. Price/mix
was impacted by a favorable shift in sales channel mix and, to a lesser extent,
realization from price increases implemented in fiscal 2019 partially offset by
an unfavorable mix of products sold. Fiscal 2020 first quarter net sales
reflected a decline across all key sales channels compared with the prior year.

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Gross Profit
Gross profit for the first quarter of fiscal 2020 decreased $11.7 million, or
3.2%, to $355.8 million compared with $367.5 million in the prior-year period,
due primarily to lower sales volume and increased tariffs, partially offset by
favorable price/mix, lower costs for certain inputs, and the contribution from
acquisitions. Gross profit margin increased 320 basis points to 42.6% for the
three months ended November 30, 2019 compared with 39.4% in the prior-year
period. The improvement in gross profit margin was primarily due to favorable
sales channel mix, partially offset by the mix of products sold and lower net
sales volume. Adjusted gross profit margin for the three months ended
November 30, 2019 increased 330 basis points to 42.8% compared with 39.5% in the
prior year period.
Operating Profit
SD&A expenses for the three months ended November 30, 2019 were $265.3 million
compared with $250.1 million in the prior-year period, an increase of $15.2
million, or 6.1%. The increase in SD&A expenses was due primarily to higher
share-based payment expense, the addition of acquisitions, and higher
professional fees associated with recent acquisitions. Share-based payment
expense increased due to changes made to the equity incentive program as part of
the Company's comprehensive review of its compensation programs that occurred
during the past year, which resulted in the acceleration of share-based payment
expense in the first quarter of fiscal 2020. SD&A expenses for the first quarter
of fiscal 2020 were 31.8% of net sales compared with 26.8% for the prior-year
period. Adjusted SD&A expenses for the three months ended November 30, 2019 were
$237.9 million (28.5% of net sales) compared with $234.6 million (25.2% of net
sales) in the prior-year period.
We recognized pre-tax special charges of $6.9 million during the first quarter
of fiscal 2020 compared with pre-tax special charges of $1.0 million recorded
during the first quarter of fiscal 2019. Further details regarding our special
charges are included in the Special Charges footnote of the Notes to
Consolidated Financial Statements.
Operating profit for the first quarter of fiscal 2020 was $83.6 million (10.0%
of net sales) compared with $116.4 million (12.5% of net sales) for the
prior-year period, a decrease of $32.8 million, or 28.2%. The decrease in
operating profit was primarily due to lower gross profit, higher SD&A expenses,
and increased special charges.
Adjusted operating profit decreased $15.1 million, or 11.3%, to $119.0 million
for the first quarter of fiscal 2020 compared with $134.1 million for the first
quarter of fiscal 2019. Adjusted operating profit margin decreased to 14.3% for
the first quarter of fiscal 2020 compared with 14.4% for the year-ago period.
Other Expense
Other expense consists of net interest expense and net miscellaneous expense,
which includes non-service related components of net periodic pension cost,
gains and losses associated with foreign currency-related transactions, and
non-operating gains and losses. Interest expense, net, was $8.3 million and $8.7
million for the three months ended November 30, 2019 and 2018, respectively. We
reported net miscellaneous expense of $1.4 million and $1.3 million for the
three months ended November 30, 2019 and 2018, respectively.
Income Taxes and Net Income
Our effective income tax rate was 22.9% and 25.2% for the three months ended
November 30, 2019 and 2018, respectively. We currently estimate that our blended
consolidated effective income tax rate, before any discrete items, will be
approximately 23% for fiscal 2020, assuming the rates in our taxing
jurisdictions remain generally consistent throughout the year.
Net income for the first quarter of fiscal 2020 decreased $22.6 million to $57.0
million from $79.6 million reported for the prior-year period. The decrease in
net income resulted primarily from a decreased operating profit compared to the
prior-year period partially offset by lower income tax expense. Diluted earnings
per share for the three months ended November 30, 2019 decreased $0.54 to $1.44
compared with diluted earnings per share of $1.98 for the prior-year period.
This decrease reflects lower net income partially offset by a reduced share
count.
Adjusted net income for the first quarter of fiscal 2020 was $84.2 million,
compared with $92.8 million in the prior-year period, a decrease of $8.6
million, or 9.3%. Adjusted diluted earnings per share for the three months ended
November 30, 2019 decreased $0.19, or 8.2%, to $2.13 compared with $2.32 for the
prior-year period.
Outlook
We continue to believe the execution of our strategy will provide attractive
opportunities for profitable growth over the long-term. Our strategy is to
capitalize on market growth and share gain opportunities by continuing to expand
and leverage our industry-leading lighting and building management solutions
portfolio, coupled with our extensive market presence and financial strength, to
produce attractive financial performance over the long-term.
We remain cautious about overall market conditions within the lighting industry
for fiscal 2020 primarily due to continued year-to-year declines in private
non-residential construction spending, continued economic uncertainties caused
by global trade issues, including tariffs, as well as potential uncertainties
associated with the U.S. elections in November 2020. We expect market demand for
lighting products to remain sluggish until there is evidence of growth in
private construction spend as well as there is more clarity regarding these
uncertainties related to global trade and the political environment in the U.S.
Additionally, we expect that labor shortages for qualified trades in certain
markets will continue to dampen growth rates for both the construction and
lighting markets. Nonetheless, our focus for fiscal 2020 will be to drive market
share gains and enhance margins, while implementing appropriate cost containment
measures as necessitated by market demand.
We expect to continue to outperform the growth rates of the markets that we
serve in future periods, subject to quarterly volatility and excluding our
actions to prune less profitable portions of our product portfolio, by
continuing to execute our various strategies. These strategies focus on growth
opportunities for new construction and renovation projects, expansion into
underpenetrated geographies and channels, and growth from the continued
introduction of new lighting and building management solutions as part of our
integrated, tiered solutions strategy, including leveraging our unique,
technology driven solutions portfolio to capture market share in the nascent,
but rapidly growing, market for data capture, analytics, and other services,
assisting in transforming buildings and campuses from cost centers to strategic
assets.
We expect the pricing environment to continue to be challenging in portions of
the market and could negatively impact net sales and margins, particularly for
more basic, lesser-featured products sold through certain sales channels as well
as shifts in product mix, including product substitution trends to lower priced
alternatives. The impact of the challenging pricing environment. We expect to
continue to introduce products and solutions to more effectively compete in
these portions of the market and to accelerate programs to reduce product costs
in order to maintain our competitiveness and drive improved profitability.
Starting in calendar 2018, the U.S. federal government began imposing tariffs on
certain Chinese imports and threatened to impose tariffs on all products
imported from Mexico. We produce a meaningful percentage of our products in
Mexico. Additionally, we import components as well as certain finished products
from China that are impacted by the recently imposed Chinese tariffs. Our
efforts to mitigate the impact of these added costs include a variety of
activities, such as finding alternative suppliers, in-sourcing the production of
certain products, and raising prices. We believe that our mitigation activities
will assist to offset the added costs. Future U.S. policy changes that may be
implemented, including additional tariffs, could have a positive or negative
consequence on our financial performance depending on how the changes influence
many factors, including business and consumer sentiment.
In December 2019, we borrowed the full $400 million available under our existing
Term Loan Facility. The majority of the proceeds were used to refinance the
Unsecured Notes that matured on December 15, 2019. Borrowings under the Term
Loan Facility are based on short-term interest rates that are currently
approximately half the rate of the refinanced Unsecured Notes. The interest
savings associated with refinancing the Unsecured Notes is estimated between $7
million and $8 million for the remainder of fiscal 2020, assuming no meaningful
changes in short-term interest rates.
From a longer term perspective, we expect that our addressable markets have the
potential to experience solid growth over the next decade, particularly as
energy and environmental concerns continue to come to the forefront along with
emerging opportunities for digital lighting to play a key role in the IoT
through the use of intelligent networked lighting and building automation
systems that can collect and exchange data to increase efficiency as well as
provide a host of other economic benefits resulting from data analytics. We
remain positive about our future prospects and ability to outperform the markets
we serve.


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Critical Accounting Estimates
Management's Discussion and Analysis of Financial Condition and Results of
Operations addresses the financial condition and results of operations as
reflected in our Consolidated Financial Statements, which have been prepared in
accordance with U.S. GAAP. As discussed in the Description of Business and Basis
of Presentation footnote of the Notes to Consolidated Financial Statements, the
preparation of financial statements in conformity with U.S. GAAP requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenue and expense during the
reporting period. On an ongoing basis, we evaluate our estimates and judgments,
including those related to revenue recognition; inventory valuation;
amortization and the recoverability of long-lived assets, including goodwill and
intangible assets; share-based payment expense; medical, product warranty and
recall, and other reserves; retirement benefits; and litigation. We base our
estimates and judgments on our substantial historical experience and other
relevant factors, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from those estimates. We discuss the
development of accounting estimates with the Audit Committee of the Board.
There have been no material changes in our critical accounting estimates during
the current period. For a detailed discussion of other significant accounting
policies that may involve a higher degree of judgment, refer to our Form 10-K.
Cautionary Statement Regarding Forward-Looking Information
This filing contains forward-looking statements within the meaning of the
federal securities laws. Statements made herein that may be considered
forward-looking include statements incorporating terms such as "expects,"
"believes," "intends," "anticipates," and similar terms that relate to future
events, performance, or results of the Company. In addition, the Company, or the
executive officers on the Company's behalf, may from time to time make
forward-looking statements in reports and other documents we file with the U.S.
Securities and Exchange Commission or in connection with oral statements made to
the press, current and potential investors, or others. Forward-looking
statements include, without limitation: (a) our projections regarding financial
performance, liquidity, capital structure, capital expenditures, investments,
share repurchases, and dividends; (b) expectations about the impact of any
changes in demand as well as volatility and uncertainty in general economic
conditions and the pricing environment; (c) external forecasts projecting the
North American lighting and building management solutions market growth rate and
growth in our addressable markets; (d) our ability to execute and realize
benefits from initiatives related to streamlining our operations, capitalize on
growth opportunities, expand in key markets as well as underpenetrated
geographies and channels, and introduce new lighting and building management
solutions; (e) our estimate of our fiscal 2020 effective income tax rate,
results of operations, and cash flows; (f) our estimate of future amortization
expense; (g) our ability to achieve our long-term financial goals and measures
and outperform the markets we serve; (h) the impact of changes in the political
landscape and related policy changes, including monetary, regulatory, and trade
policies; (i) our expectations related to mitigating efforts around recently
imposed tariffs; and (j) our expectations about the resolution of patent
litigation, securities class action, trade compliance, and/or other legal
matters. You are cautioned not to place undue reliance on any forward-looking
statements, which speak only as of the date of this quarterly report. Except as
required by law, we undertake no obligation to publicly update or release any
revisions to these forward-looking statements to reflect any events or
circumstances after the date of this quarterly report or to reflect the
occurrence of unanticipated events. Our forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from our historical experience and management's present expectations
or projections. These risks and uncertainties include, but are not limited to,
customer and supplier relationships and prices; competition; ability to realize
anticipated benefits from initiatives taken and timing of benefits; market
demand; litigation and other contingent liabilities; and economic, political,
governmental, and technological factors affecting us. Also, additional risks
that could cause our actual results to differ materially from those expressed in
our forward-looking statements are discussed in Part I, Item 1a. Risk Factors of
our Form 10-K.


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