ACUITY BRANDS INC - Quarter Report: 2011 February (Form 10-Q)

ACUITY BRANDS, INC.

INDEX

						Page No.
PART I. FINANCIAL INFORMATION
ITEM 1.				CONSOLIDATED FINANCIAL STATEMENTS			3
				CONSOLIDATED BALANCE SHEETS — FEBRUARY 28, 2011 (Unaudited) AND AUGUST 31, 2010			3
				CONSOLIDATED STATEMENTS OF INCOME (Unaudited) — THREE AND SIX MONTHS ENDED FEBRUARY 28, 2011 AND 2010			4
				CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) — SIX MONTHS ENDED FEBRUARY 28, 2011 AND 2010			5
				NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)			6
ITEM 2.				MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
ITEM 3.				QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			33
ITEM 4.				CONTROLS AND PROCEDURES			33
PART II. OTHER INFORMATION
ITEM 1.				LEGAL PROCEEDINGS			34
ITEM 1a.				RISK FACTORS			34
ITEM 2.				UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			34
ITEM 6.				EXHIBITS			34
SIGNATURES							35
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

Item 1.   Financial Statements

ACUITY BRANDS, INC.

		February 28,				August 31,
		2011				2010
		(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	125.5			$	191.0
Accounts receivable, less reserve for doubtful accounts of $1.7 at February 28, 2011 and $2.0 at August 31, 2010			243.7				255.1
Inventories			174.1				149.0
Deferred income taxes			16.3				17.3
Prepayments and other current assets			22.3				13.9
Total Current Assets			581.9				626.3
Property, Plant, and Equipment, at cost:
Land			8.2				7.6
Buildings and leasehold improvements			120.2				113.7
Machinery and equipment			357.5				337.5
Total Property, Plant, and Equipment			485.9				458.8
Less – Accumulated depreciation and amortization			340.8				320.4
Property, Plant, and Equipment, net			145.1				138.4
Other Assets:
Goodwill			571.3				515.6
Intangible assets			212.5				199.5
Deferred income taxes			3.8				3.7
Other long-term assets			22.4				20.1
Total Other Assets			810.0				738.9
Total Assets		$	1,537.0			$	1,503.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	175.7			$	195.0
Accrued compensation			31.3				51.8
Accrued pension liabilities, current			1.1				1.1
Other accrued liabilities			79.1				73.4
Total Current Liabilities			287.2				321.3
Long-Term Debt			353.4				353.3
Accrued Pension Liabilities, less current portion			72.5				71.1
Deferred Income Taxes			15.1				10.2
Self-Insurance Reserves, less current portion			7.8				7.6
Other Long-Term Liabilities			53.0				45.7
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; 50,859,487 issued and 42,604,732 outstanding at February 28, 2011; and 50,441,634 issued and 42,116,473 outstanding at August 31, 2010			0.5				0.5
Paid-in capital			670.8				661.9
Retained earnings			491.0				459.0
Accumulated other comprehensive loss items			(61.5	)			(71.3	)
Treasury stock, at cost, 8,254,755 shares at February 28, 2011 and 8,325,161 shares at August 31, 2010			(352.8	)			(355.7	)
Total Stockholders’ Equity			748.0				694.4
Total Liabilities and Stockholders’ Equity		$	1,537.0			$	1,503.6

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

ACUITY BRANDS, INC.

		Three Months Ended								Six Months Ended
		February 28,								February 28,
		2011				2010				2011				2010
Net Sales		$	416.1			$	383.5			$	841.2			$	775.2
Cost of Products Sold			252.3				231.2				501.2				461.6
Gross Profit			163.8				152.3				340.0				313.6
Selling, Distribution, and Administrative Expenses			126.6				119.1				257.3				237.7
Special Charge			—				5.4				—				5.4
Operating Profit			37.2				27.8				82.7				70.5
Other Expense (Income):
Interest expense, net			7.5				8.1				15.0				14.8
Miscellaneous expense, net			0.7				(0.6	)			2.0				(0.1	)
Loss on early debt extinguishment			—				10.5				—				10.5
Total Other Expense			8.2				18.0				17.0				25.2
Income before Provision for Income Taxes			29.0				9.8				65.7				45.3
Provision for Income Taxes			9.1				2.6				21.4				14.8
Income from Continuing Operations			19.9				7.2				44.3				30.5
Income from Discontinued Operations			—				0.6				—				0.6
Net Income		$	19.9			$	7.8			$	44.3			$	31.1
Earnings Per Share:
Basic Earnings per Share from Continuing Operations		$	0.46			$	0.17			$	1.03			$	0.71
Basic Earnings per Share from Discontinued Operations			—				0.01				—				0.01
Basic Earnings per Share		$	0.46			$	0.18			$	1.03			$	0.72
Basic Weighted Average Number of Shares Outstanding			42.3				42.5				42.2				42.4
Diluted Earnings per Share from Continuing Operations		$	0.45			$	0.16			$	1.01			$	0.69
Diluted Earnings per Share from Discontinued Operations			—				0.01				—				0.01
Diluted Earnings per Share		$	0.45			$	0.17			$	1.01			$	0.70
Diluted Weighted Average Number of Shares Outstanding			43.0				43.3				42.9				43.2
Dividends Declared per Share		$	0.13			$	0.13			$	0.26			$	0.26

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

ACUITY BRANDS, INC.

		Six Months Ended
		February 28,
		2011				2010
Cash Provided by (Used for) Operating Activities:
Net income		$	44.3			$	31.1
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization			19.2				18.8
Noncash compensation expense, net			1.9				3.0
Excess tax benefits from share-based payments			(3.5	)			(0.3	)
Loss on early debt extinguishment			—				10.5
Loss on the sale or disposal of property, plant, and equipment			0.1				0.1
Asset impairments			—				3.7
Deferred income taxes			(0.9	)			(1.7	)
Other non-cash items			0.1				—
Change in assets and liabilities, net of effect of acquisitions, divestitures and effect of exchange rate changes:
Accounts receivable			21.9				2.3
Inventories			(14.4	)			(7.3	)
Prepayments and other current assets			(5.7	)			(12.3	)
Accounts payable			(22.6	)			(4.5	)
Other current liabilities			(16.7	)			(1.0	)
Other			5.0				5.0
Net Cash Provided by Operating Activities			28.7				47.4
Cash Provided by (Used for) Investing Activities:
Purchases of property, plant, and equipment			(11.8	)			(9.5	)
Acquisitions of businesses and intangible assets			(80.5	)			—
Net Cash Used for Investing Activities			(92.3	)			(9.5	)
Cash Provided by (Used for) Financing Activities:
Repayments of long-term debt			—				(237.9	)
Issuance of long-term debt			—				346.5
Repurchases of common stock			(2.9	)			—
Proceeds from stock option exercises and other			5.3				2.9
Excess tax benefits from share-based payments			3.5				0.3
Dividends paid			(11.2	)			(11.3	)
Net Cash (Used for) Provided by Financing Activities			(5.3	)			100.5
Effect of Exchange Rate Changes on Cash			3.4				(1.3	)
Net Change in Cash and Cash Equivalents			(65.5	)			137.1
Cash and Cash Equivalents at Beginning of Period			191.0				18.7
Cash and Cash Equivalents at End of Period		$	125.5			$	155.8
Supplemental Cash Flow Information:
Income taxes paid during the period		$	16.6			$	23.3
Interest paid during the period		$	7.5			$	15.8

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

ACUITY BRANDS, INC.

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 indoor and outdoor lighting fixtures and related products, including lighting controls, and services for commercial and institutional, industrial, infrastructure, and residential applications for various markets throughout North America and select international markets. The Company has one operating segment.

          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 since the date of acquisition are not material to the Company’s financial condition, results of operations, or cash flows.

          On October 14, 2010, the Company acquired for cash all of the outstanding capital stock of Winona Lighting, Inc. (“Winona Lighting”), a premier provider of architectural and high-performance indoor and outdoor lighting products headquartered in Minnesota. The operating results for Winona Lighting have been included in the Company’s consolidated financial statements since the date of acquisition.

          On July 26, 2010, the Company acquired for cash the remaining outstanding capital stock of Renaissance Lighting, Inc. (“Renaissance”), a privately-held innovator of solid-state light-emitting diode (“LED”) architectural lighting based in Herndon, Virginia. Previously, the Company entered into a strategic partnership with Renaissance, which included a noncontrolling interest in Renaissance and a license to Renaissance’s intellectual property estate. The operating results of Renaissance 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 February 28, 2011, the consolidated results of operations for the three and six months ended February 28, 2011 and 2010, and the consolidated cash flows for the six months ended February 28, 2011 and 2010. 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, 2010 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 29, 2010 (File No. 001-16583) (“Form 10-K”).

          The results of operations for the three and six months ended February 28, 2011 and 2010 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 2011.

2. Discontinued Operations

          Acuity Brands completed the spin-off of its specialty products business (the “Spin-off”), Zep Inc. (“Zep”) on October 31, 2007, by distributing all of the shares of Zep common stock, par value $0.01 per share, to the Company’s stockholders of record as of October 17, 2007. As a result of the Spin-off, the Company’s financial statements have been prepared with the results of operations and cash flows of the specialty products business presented as discontinued operations.

          In conjunction with the Spin-off, Acuity Brands and Zep entered into various agreements that address the allocation of assets and liabilities between them and that define their relationship after the separation, including a distribution agreement, a tax disaffiliation agreement, an employee benefits agreement, and a transition services agreement. During the second quarter of fiscal 2010, income from discontinued operations was recognized in the amount of $0.6 related to the revision of estimates of certain legal reserves established at the time of the Spin-off. As with the original reserve, the income from discontinued operations had no income tax effect.

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

3. Significant Accounting Policies

     Use of Estimates

          The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

     Reclassifications

          Certain prior-period amounts have been reclassified to conform to current year presentation.

     Subsequent Events

          The Company has evaluated subsequent events for recognition and disclosure for occurrences and transactions after the date of the condensed financial statements at February 28, 2011 and for the three and six months ended February 28, 2011.

     Revenue Recognition

          The Company records revenue when the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the Company’s price to the customer is fixed and determinable, and collectability is reasonably assured. Delivery is not considered to have occurred until the customer assumes the risks and rewards of ownership. Customers take delivery at the time of shipment for terms designated free on board shipping point. For sales designated free on board destination, customers take delivery when the product is delivered to the customer’s delivery site. Provisions for certain rebates, sales incentives, product returns, and discounts to customers are recorded in the same period the related revenue is recorded. The Company also maintains one-time or on-going marketing and trade-promotion programs with certain customers that require the Company to estimate and accrue the expected costs of such programs. These arrangements include cooperative marketing programs, merchandising of the Company’s products, and introductory marketing funds for new products and other trade-promotion activities conducted by the customer. Costs associated with these programs are reflected within the Company’s Consolidated Statements of Income in accordance with the Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition (“ASC 605”), which in most instances requires such costs be recorded as a reduction of revenue.

          The Company provides for limited product return rights to certain distributors and customers, primarily for slow moving or damaged items subject to certain defined criteria. The Company monitors product returns and, at the time revenue is recognized, records a provision for the estimated amount of future returns based primarily on historical experience and specific notification of pending returns. Although historical product returns generally have been within expectations, there can be no assurance that future product returns will not exceed historical amounts. A significant increase in product returns could have a material impact on the Company’s operating results in future periods.

          Revenue is earned on services and the sale of products. Revenue is recognized for services rendered in the period of performance.

     Revenue Recognition for Arrangements with Multiple Deliverables

          A small portion of the Company’s revenues are derived from (i) the sale and license of its products, (ii) fees associated with training, installation, and technical support services, and (iii) monitoring and control services. Certain agreements, particularly related to lighting controls systems, represent multiple-element arrangements that include tangible products that contain software that is essential to the functionality of the systems and undelivered elements that primarily relate to installation and monitoring and control services. The undelivered elements associated with installations and monitoring and control services are reviewed and analyzed to determine separability in relation to the delivered elements and appropriate pricing treatment based on (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimates. If deemed separate units of accounting, the revenue and associated cost of sales related to the delivered elements are realized at the time of delivery, while those related to the undelivered elements are recognized appropriately based on the period of performance. If the separation criterion for the undelivered elements is not met due to the undelivered elements being essential to the functionality of the lighting controls systems, all revenue and cost of sales attributable to the contract are deferred at the time of sale and are both generally recognized on a straight-line basis over the respective contract periods.

          For a description of other significant accounting policies, see the Summary of Significant Accounting Policies footnote to the Financial Statements included in the Company’s Form 10-K. There have been no material changes to the Company’s significant accounting policies since the filing of the Company’s Form 10-K, except as noted above and in the New Accounting Pronouncements footnote.

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

4. New Accounting Pronouncements

     Accounting Standards Adopted in Fiscal 2011

          In September 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-13, Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (“deliverables”) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, Revenue Recognition-Multiple-Element Arrangements, for separating consideration in multiple-deliverable arrangements. A selling price hierarchy is established for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. Additional disclosures related to a vendor’s multiple-deliverable revenue arrangements are also required by this update. ASU 2009-13 is effective prospectively for revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010 with early adoption permitted. Therefore, ASU 2009-13 became effective on a prospective basis for the Company on September 1, 2010. The adoption of ASU 2009-13 had an immaterial impact on the Company’s results of operations, financial condition, and cash flows.

          In September 2009, the FASB issued ASU No. 2009-14, Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements (“ASU 2009-14”). ASU 2009-14 changes the accounting model for revenue arrangements that include both tangible products and software elements to allow for alternatives when vendor-specific objective evidence does not exist. Under this guidance, tangible products containing software components and non-software components that function together to deliver the tangible product’s essential functionality and hardware components of a tangible product containing software components are excluded from the software revenue guidance in Subtopic 985-605, Software-Revenue Recognition; thus, these arrangements are excluded from this update. ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 with early adoption permitted. Therefore, ASU 2009-14 became effective on a prospective basis for the Company on September 1, 2010. The adoption of ASU 2009-14 had an immaterial impact on the Company’s results of operations, financial condition, and cash flows.

     Accounting Standards Yet to Be Adopted

          In December 2010, the FASB issued ASU No. 2010-29, Business Combinations (Topic 805) — Disclosure of Supplementary Pro Forma Information for Business Combinations (“ASU 2010-29”). This standard update clarifies that, when presenting comparative financial statements, SEC registrants should disclose revenue and earnings of the combined entity as though the current period business combinations had occurred as of the beginning of the comparable prior annual reporting period only. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for material (either on an individual or aggregate basis) business combinations entered into in fiscal years beginning on or after December 15, 2010 with early adoption permitted. ASU 2010-29 is therefore effective for the Company for acquisitions made after the beginning of fiscal 2012. The Company does not expect ASU 2010-29 to have a material effect on the Company’s results of operations, financial condition, and cash flows; however, the Company may have additional disclosure requirements if a material acquisition occurs.

5. Acquisitions

     Sunoptics Acquisition

          On February 23, 2011, the Company acquired for cash all of the ownership interests in Sunoptics, a premier provider of high-performance, prismatic daylighting solutions based in Sacramento, California. Sunoptics’ high-performance prismatic skylights optimize lighting performance through the use of sustainable and energy-efficient solutions for retail, industrial, warehouse, education, government, and office applications.

          Due to the provisions of ASC 805, Business Combinations (“ASC 805”), the Company expensed an immaterial amount in acquisition costs in current quarter earnings.

          The operating results of Sunoptics since the date of acquisition are not material to the Company’s financial condition, results of operations, or cash flows. Preliminary opening balance sheet amounts related to the acquisition are reflected in the Consolidated Balance Sheets as of February 28, 2011. These amounts are deemed to be provisional until disclosed otherwise as the Company continues to gather information related to the identification and valuation of intangible and other acquired assets and liabilities.

          Refer to the Goodwill and Intangible Assets footnote for preliminary details around the business combination.

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

     Winona Lighting Acquisition

          On October 14, 2010, the Company acquired for cash all of the outstanding capital stock of Winona Lighting, Inc. (“Winona Lighting”), a premier provider of architectural and high-performance indoor and outdoor lighting products headquartered in Minnesota. Recognized throughout the architectural design community, Winona Lighting served the commercial, retail, and institutional markets with a product portfolio of high-quality and design-oriented luminaires suitable for decorative, custom, asymmetric, and landscape lighting applications.

          Due to the provisions of ASC 805, the Company expensed an immaterial amount in acquisition costs during the first half of fiscal 2011.

          The operating results of Winona Lighting have been included in the Company’s consolidated financial statements since the date of acquisition and are not material to the Company’s financial condition, results of operations, or cash flows. Preliminary amounts related to the acquisition are reflected in the Consolidated Balance Sheets as of February 28, 2011. These amounts are deemed to be provisional until disclosed otherwise as the Company continues to gather information related to the identification and valuation of intangible and other acquired assets and liabilities.

          Refer to the Goodwill and Intangible Assets footnote for preliminary details around the business combination.

     Renaissance Acquisition

          On July 26, 2010, the Company acquired for cash the remaining outstanding capital stock of Renaissance. Renaissance, based in Herndon, Virginia, offered a full range of LED-based specification-grade downlighting luminaires and had developed an extensive intellectual property portfolio related to advanced LED optical solutions and technologies.

          The operating results of Renaissance have been included in the Company’s consolidated financial statements since the date of acquisition and are not material to the Company’s financial condition, results of operations, or cash flows. These amounts are deemed to be provisional until disclosed otherwise as the Company continues to gather information related to the identification and valuation of intangible and other acquired assets and liabilities. For a detailed discussion of the Renaissance acquisition, please refer to the Company’s Form 10-K.

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 820, Fair Value Measurements and Disclosures (“ASC 820”), established 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 February 28, 2011 and August 31, 2010:

		Fair Value Measurements as of:
		February 28, 2011								August 31, 2010
		Level 1				Total Fair Value				Level 1				Total Fair Value
Assets:
Cash and cash equivalents		$	125.5			$	125.5			$	191.0			$	191.0
Short-term investments (1)			0.8				0.8				1.3				1.3
Long-term investments (1)			1.3				1.3				1.8				1.8
Liabilities:
Deferred compensation plan (2)			2.1				2.1				3.1				3.1

          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

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

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 within the hierarchy. The fair values of the liabilities are directly related to the valuation of the 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.

          The Company does not have any assets or liabilities that are carried at fair value and measured on a recurring basis classified as Level 2 or Level 3 assets or liabilities. In addition, 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 Level 1, 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 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 February 28, 2011 and August 31, 2010:

		February 28, 2011								August 31, 2010
		Carrying Value				Fair Value				Carrying Value				Fair Value
Liabilities:
Senior unsecured public notes, net of unamortized discount		$	349.4			$	359.3			$	349.3			$	384.5
Industrial revenue bond			4.0				4.0				4.0				4.0

          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.

          The industrial revenue bond is carried at the outstanding balance as of the end of the reporting period. The industrial revenue bond is a tax-exempt, variable-rate instrument that resets on a weekly basis, and, therefore, the Company estimates that the face amount of the bond approximates fair value as of February 28, 2011.

          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 of 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 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.

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

          Summarized information for the Company’s acquired intangible assets is as follows:

		February 28, 2011								August 31, 2010
		Gross Carrying				Accumulated				Gross Carrying				Accumulated
		Amount				Amortization				Amount				Amortization
Amortized intangible assets:
Patents and trademarks		$	53.7			$	(17.9	)		$	49.4			$	(16.2	)
Distribution network and customer relationships			103.3				(26.3	)			89.9				(23.7	)
Other			5.7				(2.1	)			5.8				(1.8	)
Total		$	162.7			$	(46.3	)		$	145.1			$	(41.7	)
Unamortized trade names		$	96.1							$	96.1

          The current year increases in the gross carrying amounts for the acquired intangible assets were due to the acquisitions of Winona Lighting and Sunoptics (refer to the Acquisitions footnote). With regards to the recent acquisitions, the weighted average useful life of the intangible assets with finite lives acquired by the Company was estimated at 14.7 years, which consisted primarily of intangible assets related to trademarks and customer relationships. The weighted average useful lives of the trademarks and customer relationships with finite lives acquired by the Company in the current fiscal year were estimated at 20 and 13 years, respectively. The provisional amounts for the acquired intangible assets are deemed incomplete until disclosed otherwise as the Company continues to gather information related to the business combination.

          The Company recorded amortization expense of $2.3 and $1.7 related to intangible assets with finite lives during the three months ended February 28, 2011 and 2010, respectively. The Company recorded amortization expense of $4.7 and $3.6 related to intangible assets with finite lives during the six months ended February 28, 2011 and 2010, respectively. Amortization expense is expected to be approximately $9.3 in fiscal 2011, $8.3 in fiscal 2012, $7.5 in fiscal 2013, $7.5 in fiscal 2014, and $7.2 in fiscal 2015. The decrease in expected amortization expense in fiscal 2012 is due to the completion of the amortization during fiscal 2011 of certain acquired patented technology assets. The decrease in fiscal 2013 is due to the completion of the amortization during fiscal 2012 of certain acquired customer relationships.

          The changes in the carrying amount of goodwill during the year are summarized as follows:

Goodwill:
Balance as of September 1, 2010		$	515.6
Acquisitions			53.9
Currency translation adjustments			1.8
Balance as of February 28, 2011		$	571.3

          The increase in goodwill was attributable to completed business combinations during fiscal 2011. Additionally, $6.6 related to preliminary deferred tax liabilities was recorded to goodwill as part of the recent acquisitions. These amounts will not be final until completion of the identification and valuation of all intangible assets acquired.

          Further discussion of the Company’s goodwill and other intangible assets are included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

8. Inventories

          Inventories include materials, direct labor, and related manufacturing overhead. Inventories are stated at the lower of cost (on a first-in, first-out or average cost basis) or market and consist of the following:

		February 28,				August 31,
		2011				2010
Raw materials and supplies		$	93.3			$	76.4
Work in process			7.3				8.8
Finished goods			83.8				73.2
			184.4				158.4
Less: Reserves			(10.3	)			(9.4	)
Total Inventory		$	174.1			$	149.0

9. Earnings per share

          Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding, which has been modified to include the effects of all participating securities (unvested share-based payment awards with a right to receive nonforfeitable dividends) as prescribed by the two-class method under ASC 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 141,607 shares (whole units) and 152,334 shares (whole units) were excluded from the diluted earnings per share calculation for the three months ended February 28, 2011 and 2010, respectively, as the effect of inclusion would have been antidilutive. Stock options of 108,689 shares (whole units) and 152,334 shares (whole units) were excluded from the diluted earnings per share calculation for the six months ended February 28, 2011 and 2010, respectively, as the effect of inclusion would have been antidilutive. Further discussion of the Company’s stock options and restricted stock awards are 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.

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

          The following table calculates basic and diluted earnings per common share for the three and six months ended February 28, 2011 and 2010:

		Three Months Ended								Six Months Ended
		February 28,								February 28,
		2011				2010				2011				2010
Basic earnings per share from continuing operations:
Income from continuing operations		$	19.9			$	7.2			$	44.3			$	30.5
Basic weighted average shares outstanding			42.3				42.5				42.2				42.4
Basic earnings per share from continuing operations		$	0.46			$	0.17			$	1.03			$	0.71
Diluted earnings per share from continuing operations:
Income from continuing operations		$	19.9			$	7.2			$	44.3			$	30.5
Basic weighted average shares outstanding			42.3				42.5				42.2				42.4
Common stock equivalents			0.7				0.8				0.7				0.8
Diluted weighted average shares outstanding			43.0				43.3				42.9				43.2
Diluted earnings per share from continuing operations		$	0.45			$	0.16			$	1.01			$	0.69
Basic earnings per share from discontinued operations:
Income from discontinued operations		$	—			$	0.6			$	—			$	0.6
Basic weighted average shares outstanding			42.3				42.5				42.2				42.4
Basic earnings per share from discontinued operations		$	—			$	0.01			$	—			$	0.01
Diluted earnings per share from discontinued operations:
Income from discontinued operations		$	—			$	0.6			$	—			$	0.6
Basic weighted average shares outstanding			42.3				42.5				42.2				42.4
Common stock equivalents			0.7				0.8				0.7				0.8
Diluted weighted average shares outstanding			43.0				43.3				42.9				43.2
Diluted earnings per share from discontinued operations		$	—			$	0.01			$	—			$	0.01

10. Comprehensive Income

          Comprehensive income represents the measures 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 adjustments. The calculation of comprehensive income is as follows:

		Three Months Ended								Six Months Ended
		February 28,								February 28,
		2011				2010				2011				2010
Net income		$	19.9			$	7.8			$	44.3			$	31.1
Foreign currency translation adjustments			5.3				(2.9	)			9.8				0.8
Comprehensive income		$	25.2			$	4.9			$	54.1			$	31.9

11. Debt

     Lines of Credit

          On October 19, 2007, the Company executed a $250.0 revolving credit facility, which matures in October 2012 (the “Revolving Credit Facility”). At February 28, 2011, the Company had outstanding letters of credit totaling $10.7, primarily for securing collateral

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

requirements under the casualty insurance programs for Acuity Brands and for providing credit support for the Company’s industrial revenue bond. At February 28, 2011, a total of $6.5 of the letters of credit was issued under the Revolving Credit Facility, thereby reducing the total availability under the facility by such amount. At February 28, 2011, the Company had additional borrowing capacity of $243.5 under the most restrictive covenant in effect at the time, and was compliant with all financial covenants under the Revolving Credit Facility.

          Further details regarding the Company’s lines of credit are included within the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.

     Notes

          At February 28, 2011, the Company had $350.0 of publicly traded notes outstanding at a 6.0% interest rate that are scheduled to mature in December 2019, and $4.0 in a tax-exempt industrial revenue bond that is 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 plans, 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								Six Months Ended
		February 28,								February 28,
		2011				2010				2011				2010
Interest expense		$	7.6			$	8.2			$	15.3			$	14.9
Interest income			(0.1	)			(0.1	)			(0.3	)			(0.1	)
Interest expense, net		$	7.5			$	8.1			$	15.0			$	14.8

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 February 28, 2011, 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 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 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. If actual future warranty costs exceed historical amounts, additional allowances may be required, which could have a material adverse impact on the Company’s results of operations and cash flows in future periods.

          As of August 31, 2010, the Company had product warranty and recall reserves of $3.6. The Company made payments of $3.0 related to warranty claims and recognized additional estimated warranty and recall liabilities of $3.0 during the six-month period ended February 28, 2011. As of February 28, 2011, the Company had remaining product warranty and recall reserves of $3.6 (included in Other accrued liabilities on the Consolidated Balance Sheets).

13. Share-Based Payments

          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 are more fully discussed within the Company’s Form 10-K. The Company recorded $3.4 and $3.5 of share-based expense for the three months ended February 28, 2011 and 2010, respectively, and $6.5 and

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

$5.7 for the six months ended February 28, 2011 and 2010, 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 $0.6 and $0.2 for the three months ended February 28, 2011 and 2010, respectively, and $3.5 and $0.3 for the six months ended February 28, 2011 and 2010, respectively.

14. Pension Plans

          The Company has several pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the final years of employment. The Company makes annual contributions to the plans to the extent indicated by actuarial valuations and statutory requirements. The Company expects to contribute approximately $6.0 and $2.5 to its domestic and international defined benefit plans, respectively, during fiscal 2011. 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 and six months ended February 28, 2011 and 2010, included the following components:

		Three Months Ended								Six Months Ended
		February 28,								February 28,
		2011				2010				2011				2010
Service cost		$	0.8			$	0.8			$	1.6			$	1.6
Interest cost			2.1				2.1				4.2				4.3
Expected return on plan assets			(1.9	)			(1.8	)			(3.7	)			(3.7	)
Recognized actuarial loss			1.2				0.9				2.4				1.7
Net periodic pension cost		$	2.2			$	2.0			$	4.5			$	3.9

15. Special Charges

          During fiscal 2008, the Company commenced actions to streamline and simplify the Company’s 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 to accelerate vesting for certain terminated employees. These actions, including those taken in fiscal 2009 and 2010 as part of this program, are expected to allow the Company to better leverage efficiencies in its supply chain and support areas, while funding continued investments in other areas that support future growth opportunities.

          Cumulative special charges related to these activities of approximately $49.7 have been incurred through February 28, 2011.

          At August 31, 2010, the Company had severance and exit costs reserves of $6.9 and $0.7, respectively. The Company made payments of $2.3 and $0.1 related to severance and exit costs, respectively, during the six-month period ended February 28, 2011. As of February 28, 2011, the Company had remaining severance and exit costs reserves of $4.6 and $0.6, respectively, related to previous restructuring activities and included in Accrued Compensation on the Consolidated Balance Sheets.

16. Supplemental Guarantor Condensed Consolidating Financial Statements

          In fiscal 2010, ABL, the wholly-owned and principal operating subsidiary of Acuity Brands, refinanced its outstanding debt through a bond offering of a $350.0 aggregate principal amount of senior unsecured notes due in fiscal 2020.

          In accordance with the registration rights agreement by and between ABL, as issuer, and Acuity Brands and ABL IP Holding LLC, as guarantors (“ABL IP Holding”, and, together with Acuity Brands, the “Guarantors”)—a wholly-owned subsidiary of Acuity Brands—and the initial purchases of the Notes, ABL and the Guarantors to the Notes filed a registration statement with the SEC for an offer to exchange the Notes for an issue of SEC-registered notes with identical terms. Due to the filing of the registration statement and offer to exchange, the Company determined the need for compliance with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”). In lieu of providing separate audited financial statements for ABL and ABL IP Holding, the Company has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(d) of SEC Regulation S-X. The column marked “Parent” represents the financial condition, results of operations, and cash flows of Acuity Brands. The column marked “Subsidiary Issuer” represents the financial condition, results of operations, and cash flows of ABL. The column entitled “Subsidiary Guarantor” represents the financial condition, results of operations, and cash flows of ABL IP Holding. Lastly, the column listed as “Non-

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

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.

CONDENSED CONSOLIDATING BALANCE SHEETS

		At February 28, 2011
						Subsidiary				Subsidiary				Non-
		Parent				Issuer				Guarantor				Guarantors				Eliminations				Consolidated
ASSETS
Current Assets:
Cash and cash equivalents		$	97.4			$	1.0			$	—			$	27.1			$	—			$	125.5
Accounts receivable, net			—				205.1				—				38.6				—				243.7
Inventories			—				160.9				—				13.2				—				174.1
Other current assets			14.6				19.0				—				5.0				—				38.6
Total Current Assets			112.0				386.0				—				83.9				—				581.9
Property, Plant, and Equipment, net			—				110.1				—				35.0				—				145.1
Goodwill			—				496.5				2.7				72.1				—				571.3
Intangible assets			—				88.6				121.8				2.1				—				212.5
Other long-term assets			3.9				16.1				—				6.2				—				26.2
Investments in subsidiaries			763.0				146.8				—				0.1				(909.9	)			—
Total Assets		$	878.9			$	1,244.1			$	124.5			$	199.4			$	(909.9	)		$	1,537.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	0.6			$	160.8			$	—			$	14.3			$	—			$	175.7
Intercompany payable (receivable)			72.2				(19.4	)			(69.5	)			16.7				—				—
Other accrued liabilities			12.6				84.9				—				14.0				—				111.5
Total Current Liabilities			85.4				226.3				(69.5	)			45.0				—				287.2
Long-Term Debt			—				353.4				—				—				—				353.4
Deferred Income Taxes			(13.6	)			28.5				—				0.2				—				15.1
Other Long-Term Liabilities			59.1				55.0				—				19.2				—				133.3
Total Stockholders’ Equity			748.0				580.9				194.0				135.0				(909.9	)			748.0
Total Liabilities and Stockholders’ Equity		$	878.9			$	1,244.1			$	124.5			$	199.4			$	(909.9	)		$	1,537.0

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

CONDENSED CONSOLIDATING BALANCE SHEETS

		At August 31, 2010
						Subsidiary				Subsidiary				Non-
		Parent				Issuer				Guarantor				Guarantors				Eliminations				Consolidated
ASSETS
Current Assets:
Cash and cash equivalents		$	163.1			$	0.4			$	—			$	27.5			$	—			$	191.0
Accounts receivable, net			—				219.0				—				36.1				—				255.1
Inventories			—				139.5				—				9.5				—				149.0
Other current assets			7.2				19.0				—				5.0				—				31.2
Total Current Assets			170.3				377.9				—				78.1				—				626.3
Property, Plant, and Equipment, net			—				107.3				—				31.1				—				138.4
Goodwill			—				478.4				2.7				34.5				—				515.6
Intangible assets			—				72.8				124.3				2.4				—				199.5
Other long-term assets			4.6				7.2				—				12.0				—				23.8
Investments in subsidiaries			635.7				97.4				—				0.2				(733.3	)			—
Total Assets		$	810.6			$	1,141.0			$	127.0			$	158.3			$	(733.3	)		$	1,503.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	0.7			$	178.5			$	—			$	15.8			$	—			$	195.0
Intercompany payable (receivable)			63.8				(30.0	)			(60.2	)			26.4				—				—
Other accrued liabilities			15.6				97.6				—				13.1				—				126.3
Total Current Liabilities			80.1				246.1				(60.2	)			55.3				—				321.3
Long-Term Debt			—				353.3				—				—				—				353.3
Deferred Income Taxes			(18.5	)			28.5				—				0.2				—				10.2
Other Long-Term Liabilities			54.6				54.0				—				15.8				—				124.4
Total Stockholders’ Equity			694.4				459.1				187.2				87.0				(733.3	)			694.4
Total Liabilities and Stockholders’ Equity		$	810.6			$	1,141.0			$	127.0			$	158.3			$	(733.3	)		$	1,503.6

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

		Three Months Ended February 28, 2011
						Subsidiary				Subsidiary				Non-
		Parent				Issuer				Guarantor				Guarantors				Eliminations				Consolidated
Net Sales:
External sales		$	—			$	369.2			$	—			$	46.9			$	—			$	416.1
Intercompany sales			—				—				6.3				16.4				(22.7	)			—
Total Sales			—				369.2				6.3				63.3				(22.7	)			416.1
Cost of Products Sold			—				218.0				—				50.7				(16.4	)			252.3
Gross Profit			—				151.2				6.3				12.6				(6.3	)			163.8
Selling, Distribution, and Administrative Expenses			5.1				112.6				1.2				14.0				(6.3	)			126.6
Intercompany charges			(0.9	)			0.5				—				0.4				—				—
Operating (Loss) Profit			(4.2	)			38.1				5.1				(1.8	)			—				37.2
Interest expense (income), net			2.1				5.5				—				(0.1	)			—				7.5
Equity earnings in subsidiaries			(24.0	)			0.9				—				—				23.1				—
Miscellaneous (income) expense, net			(0.1	)			0.6				—				0.2				—				0.7
Income before Provision for Income Taxes			17.8				31.1				5.1				(1.9	)			(23.1	)			29.0
Provision for Income Taxes			(2.1	)			10.1				1.7				(0.6	)			—				9.1
Net Income		$	19.9			$	21.0			$	3.4			$	(1.3	)		$	(23.1	)		$	19.9

ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in millions, except per-share data and as indicated)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(in millions)

		Three Months Ended February 28, 2010
						Subsidiary				Subsidiary				Non-
		Parent				Issuer				Guarantor				Guarantors				Eliminations				Consolidated
Net Sales:
External sales		$	—			$	334.3			$	—			$	49.2			$	—			$	383.5
Intercompany sales			—				—				6.0				14.9				(20.9	)			—
Total Sales			—				334.3				6.0				64.1				(20.9	)			383.5
Cost of Products Sold			—				201.3				—				44.8				(14.9	)			231.2
Gross Profit			—				133.0				6.0				19.3				(6.0	)			152.3
Selling, Distribution, and Administrative Expenses			6.3				104.7				1.0				13.1				(6.0	)			119.1
Intercompany charges			(0.9	)			0.5				—				0.4				—				—
Special Charge			—				5.3				—				0.1				—				5.4
Operating (Loss) Profit			(5.4	)			22.5				5.0				5.7				0.0				27.8
Interest expense, net			2.0				6.1				—				—				—				8.1
Equity earnings in subsidiaries			(12.1	)			(3.8	)			—				—				15.9				—
Miscellaneous (income) expense, net			(0.1	)			(0.8	)			—				0.3				—				(0.6	)
Loss on early debt extinguishment			—				10.5				—				—				—				10.5
Income before Provision for Income Taxes			4.8				10.5				5.0				5.4				(15.9	)			9.8
Provision for Income Taxes			(2.4	)			1.5				1.7				1.8				—				2.6
Income from Continuing Operations			7.2				9.0				3.3				3.6				(15.9	)			7.2
Loss from Discontinued Operations			0.6				—				—				—				—				0.6
Net Income		$	7.8			$	9.0			$	3.3			$	3.6			$	(15.9	)		$	7.8