Atkore Inc. - Quarter Report: 2017 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________

FORM 10-Q

_________________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37793

_________________________________________

Atkore International Group Inc.

(Exact name of registrant as specified in its charter)

_________________________________________



Delaware		90-0631463
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

16100 South Lathrop Avenue, Harvey, Illinois 60426

(Address of principal executive offices) (Zip Code)

708-339-1610

(Registrant's telephone number, including area code)

_________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	o		Accelerated filer	o

Non-accelerated filer	x	(Do not check if a smaller reporting company)	Smaller reporting company	o

			Emerging growth company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of July 21, 2017, there were 64,076,230 shares of the registrant's common stock, $0.01 par value per share, outstanding.

Table of Contents



	Page No.

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	2
Condensed Consolidated Statements of Operations	2
Condensed Consolidated Statements of Comprehensive Income	3
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures about Market Risk	29
Item 4. Controls and Procedures	30

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	32
Signatures	33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATKORE INTERNATIONAL GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	June 30, 2017		June 24, 2016		June 30, 2017			June 24, 2016
Net sales	$	397,745	$	395,724	$	1,108,127		$	1,107,145
Cost of sales	304,920		284,203		835,348			831,805
Gross profit	92,825		111,521		272,779			275,340
Selling, general and administrative	42,455		64,392		138,036			162,412
Intangible asset amortization	5,546		5,566		16,628			16,655
Operating income	44,824		41,563		118,115			96,273
Interest expense, net	5,811		10,169		20,872			30,617
Loss (gain) on extinguishment of debt	—		—		9,805			(1,661		)
Other expense (income), net (See Note 14)	117		—		(5,657		)	—
Income before income taxes	38,896		31,394		93,095			67,317
Income tax expense	11,431		10,749		29,313			24,093
Net income	$	27,465	$	20,645	$	63,782		$	43,224

Weighted-average common shares outstanding
Basic	63,817		62,492		63,239			62,491
Diluted	66,939		62,492		66,613			62,491
Net income per share (see Note 9)
Basic	$	0.43	$	0.33	$	1.01		$	0.69
Diluted	$	0.41	$	0.33	$	0.96		$	0.69

See Notes to unaudited condensed consolidated financial statements.

ATKORE INTERNATIONAL GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended					Nine Months Ended
(in thousands)	June 30, 2017		June 24, 2016			June 30, 2017			June 24, 2016
Net income	$	27,465	$	20,645		$	63,782		$	43,224
Other comprehensive income:
Change in foreign currency translation adjustment	916		(155		)	(75		)	(216		)
Change in unrecognized loss related to pension benefit plans (See Note 8)	326		180			977			541
Total other comprehensive income (loss)	1,242		25			902			325
Comprehensive income	$	28,707	$	20,670		$	64,684		$	43,549

See Notes to unaudited condensed consolidated financial statements.

ATKORE INTERNATIONAL GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



(in thousands, except share and per share data)	June 30, 2017			September 30, 2016
Assets
Current Assets:
Cash and cash equivalents	$	96,200		$	200,279
Accounts receivable, less allowance for doubtful accounts of $1,073 and $1,006, respectively	210,290			192,090
Inventories, net (see Note 3)	180,499			161,465
Assets held for sale (see Note 13)	—			6,680
Prepaid expenses and other current assets	32,373			22,407
Total current assets	519,362			582,921
Property, plant and equipment, net (see Note 4)	199,153			202,692
Intangible assets, net (see Note 5)	249,037			254,937
Goodwill (see Note 5)	118,790			115,829
Deferred income taxes	941			945
Non-trade receivables	6,999			7,244
Total Assets	$	1,094,282		$	1,164,568
Liabilities and Equity
Current Liabilities:
Short-term debt and current maturities of long-term debt (see Note 6)	$	4,215		$	1,267
Accounts payable	118,231			114,118
Income tax payable	1,069			2,326
Accrued compensation and employee benefits	22,579			34,331
Other current liabilities	44,629			52,780
Total current liabilities	190,723			204,822
Long-term debt (see Note 6)	487,921			629,046
Deferred income taxes	11,539			12,834
Other long-term tax liabilities	6,838			6,838
Pension liabilities	34,395			35,172
Other long-term liabilities	19,495			18,610
Total Liabilities	750,911			907,322
Equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 64,075,590 and 62,458,367 shares issued and outstanding, respectively	642			626
Treasury stock, held at cost, 260,900 and 260,900 shares, respectively	(2,580		)	(2,580		)
Additional paid-in capital	419,717			398,292
Accumulated deficit	(49,360		)	(113,142		)
Accumulated other comprehensive loss	(25,048		)	(25,950		)
Total Equity	343,371			257,246
Total Liabilities and Equity	$	1,094,282		$	1,164,568

See Notes to unaudited condensed consolidated financial statements.

ATKORE INTERNATIONAL GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Nine months ended
(in thousands)	June 30, 2017			June 24, 2016
Operating activities:
Net income	$	63,782		$	43,224
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	40,242			40,064
Deferred income taxes	(1,748		)	2,951
Loss (gain) on extinguishment of debt	9,805			(1,661		)
Stock-based compensation expense	9,368			16,897
Other adjustments to net income	(2,457		)	4,726
Changes in operating assets and liabilities, net of effects from acquisitions
Accounts receivable	(16,481		)	(19,485		)
Inventories	(17,486		)	(4,680		)
Other, net	(19,242		)	2,982
Net cash provided by operating activities	65,783			85,018
Investing activities:
Capital expenditures	(15,284		)	(13,496		)
Acquisition of businesses, net of cash acquired	(19,606		)	—
Proceeds from sale of assets held for sale	3,024			—
Other, net	74			520
Net cash used for investing activities	(31,792		)	(12,976		)
Financing activities:
Repayments of short-term debt	(4,200		)	(1,619		)
Repayments of long-term debt	(639,850		)	(20,075		)
Issuance of long-term debt	498,750			—
Payment for debt financing costs and fees	(4,375		)	—
Issuance of common shares	12,069			52
Other, net	(15		)	(25		)
Net cash used for financing activities	(137,621		)	(21,667		)
Effects of foreign exchange rate changes on cash and cash equivalents	(449		)	136
(Decrease) increase in cash and cash equivalents	(104,079		)	50,511
Cash and cash equivalents at beginning of period	200,279			80,598
Cash and cash equivalents at end of period	$	96,200		$	131,109
Supplementary Cash Flow information
Capital expenditures, not yet paid	$	90		$	406

See Notes to unaudited condensed consolidated financial statements.

ATKORE INTERNATIONAL GROUP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(dollars and shares in thousands, except per share data)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Ownership Structure — Atkore International Group Inc. (the "Company" or "Atkore") was incorporated in the State of Delaware on November 4, 2010. Atkore is the sole stockholder of Atkore International Holdings Inc. ("AIH"), which in turn is the sole stockholder of Atkore International, Inc. ("AII").

Description of Business — The Company is a leading manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Pipe &Solutions ("MP&S") for the construction and industrial markets. Electrical Raceway products form the critical infrastructure that enables the deployment, isolation and protection of a structure's electrical circuitry from the original power source to the final outlet. MP&S frame, support and secure component parts in a broad range of structures, equipment and systems in electrical, industrial and construction applications.

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These unaudited condensed consolidated financial statements have been prepared in accordance with the Company's accounting policies and on the same basis as those financial statements included in the Company's latest Annual Report on Form 10-K for the year ended September 30, 2016 filed with the U.S. Securities and Exchange Commission (the "SEC") on November 29, 2016, and should be read in conjunction with those consolidated financial statements and the notes thereto. Certain information and disclosures normally included in the Company's annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.

The unaudited condensed consolidated financial statements include the assets and liabilities used in operating the Company's business. All intercompany balances and transactions have been eliminated in the consolidation. The results of companies acquired or disposed of are included in the unaudited condensed consolidated financial statements from the effective date of acquisition or up to the date of disposal.

These statements include all adjustments (consisting of normal recurring adjustments) that the Company considered necessary to present a fair statement of its results of operations, financial position and cash flows. The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year.

Fiscal Periods — The Company has a fiscal year that ends on September 30. It is the Company's practice to establish quarterly closings using a 4-5-4 calendar. The Company's fiscal quarters end on the last Friday in December, March and June.

Use of Estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the condensed consolidated financial statements and report the associated amounts of revenues and expenses. Actual results could differ materially from these estimates.

Fair Value Measurements — Authoritative guidance for fair value measurements establishes a three-level hierarchy that ranks the quality and reliability of information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. In cases where two or more levels of inputs are used to determine fair value, a financial instrument’s level is determined based on the lowest level input that is considered significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are summarized as follows:

Level 1-inputs are based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible as of the measurement date.

Level 2-inputs are based upon quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations for the asset or liability that are derived principally from or corroborated by market data for which the primary inputs are observable, including forward interest rates, yield curves, credit risk and exchange rates.

Level 3-inputs for the valuations are unobservable and are based on management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques such as option pricing models and discounted cash flow models.

See Note 15, ''Fair Value Measurements'' for further detail.

Recent Accounting Pronouncements — On May 10, 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting," which does not requires an entity to apply modification accounting if the fair value, vesting conditions and classification of the awards do not change. The effective date for public entities will be annual periods beginning after December 15, 2017, the Company's fiscal 2019. Early adoption is permitted. The Company adopted this standard during the three months ended June 30, 2017 and it did not have an impact on the financial statements.

On March 10, 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which requires an entity to report the service cost component of pension cost and postretirement benefit cost as compensation expense during the employee's service period. The other components of net periodic pension benefit costs will be presented outside a subtotal of income from operations. The effective date for public entities will be annual periods beginning after December 15, 2017, the Company's fiscal 2019. Early adoption is permitted. The new guidance will only impact presentation on the statements of operations.

On January 26, 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which allows an entity to perform its goodwill impairment test by comparing the fair value of a reporting segment with its carrying amount. If the carrying amount exceeds the fair value, the Company would recognize an impairment charge not to exceed the total amount of goodwill allocated to that reporting segment. The Company adopted this new standard beginning with fiscal 2017, and it did not have a material impact on the financial statements.

On January 5, 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business," which clarifies the definition of a business to assist entities in evaluating whether a transaction should be accounted for as an acquisition or disposal. The effective date for public entities will be annual periods beginning after December 15, 2017, the Company's fiscal 2019. Early adoption is permitted. The Company adopted this standard during the three months ended June 30, 2017 and it did not have an impact on the financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," which provides guidance for revenue recognition. The update’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The effective date for public entities will be annual periods beginning after December 15, 2017, the Company's fiscal 2019. Early adoption is permitted but not prior to periods beginning after December 15, 2016. The Company continues to evaluate the impact of the guidance on its consolidated results of operations and financial condition. The Company has developed a multi-phase plan to (i) assess the impact of its adoption on its material revenue streams, (ii) evaluate the new disclosure requirements and (iii) identify and implement appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new guidance. The Company is currently in the process of completing its initial analysis and performing detailed reviews of significant contracts to determine if any adjustments will be necessary to existing accounting policies, and to support an evaluation of the impact on its results of operations and financial condition.

2. ACQUISITION

On May 18, 2017, the Company acquired all of the outstanding stock of Marco Cable Management, a designer and manufacturer of wire basket cable trays, PVC trunking and aluminum power poles. Marco Cable Management's product portfolio adds value to the Company's customers in the U.K. and expands its presence in the U.K. and Europe. The condensed consolidated financial statements include the results of the acquired company from the acquisition date. Net sales and net income of the acquired company included in the condensed consolidated statement of operations for the three and nine months ended June 30, 2017, were insignificant.

3. INVENTORIES, NET

The Company records inventory at the lower of cost (primarily last in, first out, or "LIFO") or market for a majority of its inventories. Approximately 82% and 87% of the Company's inventories were valued at the lower of LIFO cost or market at June 30, 2017 and September 30, 2016, respectively. Interim LIFO determinations, including those at June 30, 2017, are based on management's estimates of future inventory levels and costs for the remainder of the current fiscal year.



(in thousands)	June 30, 2017		September 30, 2016
Purchased materials and manufactured parts, net	$	41,575	$	39,921
Work in process, net	15,103		11,889
Finished goods, net	123,821		109,655
Inventories, net	$	180,499	$	161,465

Total inventories would be $5,859 and $18,433 higher than reported as of June 30, 2017 and September 30, 2016, respectively, if the first-in, first-out method was used for all inventories. As of June 30, 2017 and September 30, 2016, the excess and obsolete inventory reserve was $8,121 and $8,447, respectively.

4. PROPERTY, PLANT AND EQUIPMENT

As of June 30, 2017 and September 30, 2016, property, plant and equipment at cost and accumulated depreciation were as follows:



(in thousands)	June 30, 2017			September 30, 2016
Land	$	13,295		$	12,804
Buildings and related improvements	104,053			103,256
Machinery and equipment	253,778			245,011
Leasehold improvements	6,661			6,498
Construction in progress	10,884			6,148
Property, plant and equipment	388,671			373,717
Accumulated depreciation	(189,518		)	(171,025		)
Property, plant and equipment, net	$	199,153		$	202,692

Depreciation expense for the three months ended June 30, 2017 and June 24, 2016 totaled $7,795 and $7,756, respectively. Depreciation expense for the nine months ended June 30, 2017 and June 24, 2016 totaled $23,614 and $23,409, respectively.

5. GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill are as follows:



(in thousands)	Electrical Raceway		Mechanical Products & Solutions		Total
Balance as of October 1, 2016	$	76,640	$	39,189	$	115,829
Goodwill acquired during the year	—		2,912		2,912
Exchange rate effects	—		49		49
Balance as of June 30, 2017	$	76,640	$	42,150	$	118,790

Goodwill acquired during the year from the Marco Cable Management acquisition is based on a preliminary purchase price allocation and is subject to final valuations of intangible assets and property, plant and equipment. Goodwill balances as of October 1, 2016 and June 30, 2017 include $3,924 and $43,000 of accumulated impairment losses for Electrical Raceway and MP&S, respectively.

The Company assesses the recoverability of goodwill and indefinite-lived trade names on an annual basis in accordance with Accounting Standards Codification ("ASC") 350, "Intangibles - Goodwill and Other." The measurement date is the first day of the fourth fiscal quarter, or more frequently, if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than the carrying value. During the nine months ended June 30, 2017, there were no such events or circumstances in accordance with ASC 350; therefore, the Company did not perform a test to assess the recoverability of goodwill or indefinite-lived trade names.

The following table provides the gross carrying value, accumulated amortization and net carrying value for each major class of intangible assets:



		June 30, 2017							September 30, 2016
($ in thousands)	Weighted Average Useful Life (Years)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Amortizable intangible assets:
Customer relationships	12	$	258,884	$	(112,890	)	$	145,994	$	249,245	$	(97,484	)	$	151,761
Other	7	18,031		(8,868		)	9,163		16,943		(7,647		)	9,296
Total		276,915		(121,758		)	155,157		266,188		(105,131		)	161,057
Indefinite-lived intangible assets:
Trade names		93,880		—			93,880		93,880		—			93,880
Total		$	370,795	$	(121,758	)	$	249,037	$	360,068	$	(105,131	)	$	254,937

Other intangible assets consist of definite-lived trade names, technology, non-compete agreements and backlogs.

Amortization expense for the three months ended June 30, 2017 and June 24, 2016 was $5,546 and $5,566, respectively. Amortization expense for the nine months ended June 30, 2017and June 24, 2016 was $16,628 and $16,655, respectively. Expected amortization expense for intangible assets for the remainder of 2017 and over the next five years and thereafter is as follows:



(in thousands)
Remaining 2017	$	5,504
2018	22,612
2019	22,443
2020	22,395
2021	21,579
2022	20,767
Thereafter	39,857

Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets and other events.

6. DEBT

Debt as of June 30, 2017 and September 30, 2016 was as follows:



(in thousands)	June 30, 2017			September 30, 2016
First Lien Term Loan Facility due December 22, 2023	$	496,340		$	—
Initial First Lien Term Loan Facility due April 9, 2021	—			409,200
Second Lien Term Loan Facility due October 9, 2021	—			229,460
Deferred financing costs	(4,692		)	(8,347		)
Other	488			—
Total debt	$	492,136		$	630,313
Less: Current portion	4,215			1,267
Long-term debt	$	487,921		$	629,046

Term Loan Facilities — On April 9, 2014, AII entered into a credit agreement (the "Initial Credit Agreement") for a $420,000 First Lien Term Loan Facility (the "Initial First Lien Term Loan Facility") and a credit agreement for a $250,000 Second Lien Term Loan Facility (the "Second Lien Term Loan Facility"). The Initial First Lien Term Loan Facility was priced at 99.5% and carried an interest rate of LIBOR plus 3.5% with a LIBOR floor of 1.00%. The Second Lien Term Loan Facility was priced at 99.0% and carried an interest rate of LIBOR plus 6.75% with a LIBOR floor of 1.00%.

On December 22, 2016, AII entered into an amendment to the Initial Credit Agreement, which amended and restated the Initial Credit Agreement and provided for a new $500,000 first lien term loan facility (the "First Lien Term Loan Facility"). Loans under the First Lien Term Loan Facility bear interest at either LIBOR plus an applicable margin equal to 3.0% or an alternate base rate plus an applicable margin equal to 2.0% and are guaranteed by AIH and the U.S. operating companies owned by AII. The First Lien Term Loan Facility matures on December 22, 2023, amortizes at a rate of 1.0% per annum and was priced at 99.75%. AII used proceeds from the First Lien Term Loan Facility and approximately $155 million of available cash to (i) repay all outstanding loans under the Initial First Lien Term Loan Facility and the Second Lien Term Loan Facility and (ii) pay related fees and expenses, including accrued interest. For the nine months ended June 30, 2017, the Company recorded a $9,805 loss on the extinguishment of the Initial First Lien Term Loan Facility and the Second Lien Term Loan Facility.

The First Lien Term Loan Facility contains customary covenants typical for this type of financing, including without limitation, limitations on indebtedness, restricted payments including dividends, liens, restrictions on distributions from restricted subsidiaries, sales of assets, affiliate transactions, mergers and consolidations. The First Lien Term Loan Facility also contains customary events of default typical for this type of financing, including, without limitation, failure to pay principal and/or interest when due, failure to observe covenants, certain events of bankruptcy, the rendering of certain judgments, or the loss of any guarantee.

ABL Credit Facility — On December 22, 2016, AII entered into the Fifth Amendment to Credit Agreement and Third Amendment to and Reaffirmation of Guarantee and Collateral Agreement to amend its asset based credit facility (the "ABL Credit Facility"). The amendment, among other things, extended the maturity of the facility to December 22, 2021 and decreased the interest rate margins applicable to loans under the facility to (i) in the case of U.S. dollar-denominated loans, either (x) LIBOR plus an applicable margin ranging from 1.25% to 1.75%, or (y) an alternate base rate plus an applicable margin ranging from 0.25% to 0.75% or (ii) in the case of Canadian dollar-denominated loans, either (x) the BA rate plus an applicable margin ranging from 1.25% to 1.75% or (y) a Canadian prime rate plus an applicable margin ranging from 0.25% to 0.75% . The ABL Credit Facility has aggregate commitments of $325,000 and is guaranteed by AIH and the U.S. operating companies owned by AII. AII's availability under the ABL Credit Facility was $237,875 and $206,917 as of June 30, 2017 and September 30, 2016, respectively. Availability under the ABL Credit Facility is subject to a borrowing base equal to the sum of 85% of eligible accounts receivable plus the lesser of (i) 80% of eligible inventory of each borrower and guarantor and (ii) 85% of the net orderly liquidation value of eligible inventory, subject to certain limitations. There were no borrowings outstanding under the ABL Credit Facility as of June 30, 2017 and September 30, 2016, respectively.

The ABL Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. Affirmative covenants include, without limitation, the timely delivery of quarterly and annual financial statements, certifications to be made by AIH, AII and each of its restricted subsidiaries, payment of obligations, maintenance of corporate existence and insurance, notices, compliance with environmental laws, and the grant of liens. The negative covenants include, without limitation: limitations on indebtedness, dividends and distributions, investments, prepayments or redemptions of subordinated indebtedness, amendments of subordinated indebtedness, transactions with affiliates, asset sales, mergers, consolidations and sales of all or substantially all assets, liens, negative pledge clauses, changes in fiscal periods, changes in line of business and changes in charter documents. Additionally, if the availability under the ABL Credit Facility falls below certain levels, AII would subsequently be required to maintain a minimum fixed charge coverage ratio. AII has not been subject to the minimum fixed charge coverage ratio during any period subsequent to the establishment of the ABL Credit Facility.

7. INCOME TAXES

For the three months ended June 30, 2017 and June 24, 2016, the Company's effective tax rate attributable to income before income taxes was 29.4% and 34.2%, respectively. For the three months ended June 30, 2017 and June 24, 2016, the Company's income tax expense was $11,431 and $10,749, respectively. The decrease in the effective tax rate was primarily due to the excess tax benefit associated with the exercise of stock options which is recognized as a reduction in tax expense in the current period.

For the nine months ended June 30, 2017 and June 24, 2016, the Company's effective tax rate attributable to income before income taxes was 31.5% and 35.8% respectively. For the nine months ended June 30, 2017 and June 24, 2016, the Company's income tax expense was $29,313 and $24,093, respectively. The decrease in the effective tax rate was primarily due to the excess tax benefit associated with the exercise of stock options, which is reflected as a reduction in tax expense in the current period and the impact of nondeductible transaction costs in the prior period, not incurred in the current period.

The Company has recorded a valuation allowance against net operating losses in certain foreign jurisdictions. A valuation allowance is recorded when it is determined to be more likely than not that these deferred tax assets will not be fully realized in the foreseeable future. The realization of deferred tax assets is dependent upon whether the Company can generate future taxable income in the appropriate character and jurisdiction to utilize the assets. The amount of the deferred tax assets considered realizable is subject to adjustment in future periods.

The Company recognizes the benefits of uncertain tax positions taken or expected to be taken in tax returns in the provision for income taxes only for those positions that it has determined are more likely than not to be realized upon examination. The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company is fully indemnified by its former parent for uncertain tax positions taken prior to December 22, 2010.

For the nine months ended June 30, 2017, the Company made no additional provision for U.S. or non-U.S. income taxes on the undistributed income of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to basis differences in investments in subsidiaries, as such income is expected to be indefinitely reinvested, the investments are essentially permanent in duration, or the Company has concluded that no additional tax liability will arise as a result of the distribution of such income.

8. POSTRETIREMENT BENEFITS

The Company provides pension benefits through a number a noncontributory and contributory defined benefit retirement plans covering eligible U.S. employees. Through fiscal 2016, four of the Company's five plans were frozen. During the three months ended June 30, 2017, the fifth plan was frozen. The net periodic benefit cost for the three and nine months ended June 30, 2017 and June 24, 2016 was as follows:



	Three Months Ended						Nine Months Ended
(in thousands)	June 30, 2017			June 24, 2016			June 30, 2017			June 24, 2016
Service cost	$	512		$	474		$	1,536		$	1,420
Interest cost	948			1,036			2,845			3,107
Expected return on plan assets	(1,650		)	(1,580		)	(4,950		)	(4,738		)
Amortization of actuarial loss	326			180			977			541
Net periodic benefit cost	$	136		$	110		$	408		$	330

The amortization of actuarial loss is included as a component of cost of sales on the Company's condensed consolidated statements of operations.

9. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period, adjusted to include the number of shares of common stock that would have been outstanding had potentially dilutive shares of common stock been issued. The dilutive effect of stock options, performance stock units and restricted stock units are reflected in diluted earnings per share by applying the treasury stock method. There are no other potentially dilutive instruments outstanding. For the three and nine months ended June 24, 2016, as the Company settled all employee stock options in cash, the potential issuance of shares of common stock related to these options did not affect diluted shares. Holders of certain stock-based compensation awards are eligible to receive dividends. Net earnings allocated to participating securities were not significant for the three and nine months ended June 30, 2017 and June 24, 2016.



	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	June 30, 2017		June 24, 2016		June 30, 2017		June 24, 2016
Basic:
Net income	$	27,465	$	20,645	$	63,782	$	43,224
Weighted-average shares outstanding	63,817		62,492		63,239		62,491
Basic earnings per share	$	0.43	$	0.33	$	1.01	$	0.69

Diluted:
Net income	$	27,465	$	20,645	$	63,782	$	43,224
Weighted-average shares outstanding	63,817		62,492		63,239		62,491
Effect of dilutive securities: Stock compensation plans⁽¹⁾	3,122		—		3,374		—
Weighted-average shares outstanding - diluted	66,939		62,492		66,613		62,491
Diluted earnings per share	$	0.41	$	0.33	$	0.96	$	0.69


(1) Stock options to purchase approximately 2.2 million shares of common stock and 0.2 million shares of restricted stock were outstanding during the three months ended June 30, 2017, but were not included in the calculation of diluted earnings per share as the impact of these options would have been anti-dilutive.
Stock options to purchase 2.6 million shares of common stock and 0.1 million shares of restricted stock were outstanding during the nine months ended June 30, 2017, but were not included in the calculation of diluted earnings per share as the impact of these options would have been anti-dilutive.

10. RESTRUCTURING CHARGES

The liability for restructuring reserves is included within other current liabilities in the Company's condensed consolidated balance sheets as follows:



	Electrical Raceway						MP&S						Other/Corporate
(in thousands)	Severance			Other			Severance			Other			Severance			Other			Total
Balance as of September 25, 2015	$	—		$	—		$	3,717		$	620		$	15		$	61		$	4,413
Charges	28			—			1,468			2,583			—			199			4,278
Utilization	(28		)	—			(4,157		)	(2,542		)	(11		)	(260		)	(6,998		)
Reversal	—			—			(184		)	(122		)	(4		)	—			(310		)
Exchange rate effects	—			—			(3		)	—			—			—			(3		)
Balance as of September 30, 2016	—			—			841			539			—			—			1,380
Charges	102			17			705			63			71			—			958
Utilization	(102		)	(17		)	(877		)	(334		)	(71		)	—			(1,401		)
Reversal	—			—			—			(258		)	—			—			(258		)
Exchange rate effects	—			—			(5		)	—			—			—			(5		)
Balance as of June 30, 2017	$	—		$	—		$	664		$	10		$	—		$	—		$	674

The Company anticipates settling these restructuring liabilities within the next 12 months. The net restructuring charges included as a component of selling, general and administrative expenses in the Company's condensed consolidated statements of operations were as follows:



	Three Months Ended					Nine Months Ended
(in thousands)	June 30, 2017			June 24, 2016		June 30, 2017		June 24, 2016
Total restructuring charges, net	$	(101	)	$	326	$	700	$	2,395

11. COMMITMENTS AND CONTINGENCIES

The Company has obligations related to commitments to purchase certain goods. As of June 30, 2017, such obligations were $104,371 for the rest of fiscal year 2017, $13,448 for fiscal year 2018 and $674 thereafter. These amounts represent open purchase orders for materials used in production.

Legal Contingencies — The Company is a defendant in a number of pending legal proceedings, some of which were inherited from its former parent, Tyco International Ltd. ("Tyco"), including certain product liability claims. Several lawsuits have been filed against the Company and the Company has also received other claim demand letters alleging that the Company's anti-microbial coated steel sprinkler pipe ("ABF"), which the Company has not manufactured or sold for several years, is incompatible with chlorinated polyvinyl chloride ("CPVC") and caused stress cracking in such pipe manufactured by third parties when installed together in the same sprinkler system, which the Company refers to collectively as the "Special Products Claims." After an analysis of claims experience, the Company reserved its best estimate of the probable and reasonably estimable losses related to these matters. The Company's total product liability reserves for Special Products Claims and other product liability matters were $6,079 and $4,950 as of June 30, 2017 and September 30, 2016, respectively. As of June 30, 2017, the Company believes that the range of probable losses for Special Products Claims and other product liabilities is between $3,000 and $10,000.

At this time, the Company does not expect the outcome of the Special Products Claims proceedings, either individually or in the aggregate, to have a material adverse effect on its business, financial condition, results of operations or cash flows, and the Company believes that its reserves are adequate for all claims, including for Special Products Claims contingencies. However, it is possible that additional reserves could be required in the future that could have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. This additional loss or range of losses cannot be recorded at this time, as it is not reasonably estimable.

During the nine months ended June 30, 2017, the U.S. Department of Commerce ruled on a scope request in relation to an Antidumping Duty Order for Malleable Iron Pipe Fittings from China. The ruling subjects certain of the Company's imports of conduit fittings within the Atkore Steel Components Inc. business (acquired in November 2014) to antidumping duties, which are incremental to the duties previously paid upon importation. The Company is appealing the scope decision and has established an accrual of $7,501 for the related contingent liability during the three months ended March 31, 2017 with the related expense recorded in selling, general and administrative in the Company's condensed consolidated statements of operations which covers the post-acquisition period through the date of the scope ruling.

In addition to the matters discussed above, from time to time, the Company is subject to a number of disputes, administrative proceedings and other claims arising out of the ordinary conduct of the Company's business. These matters generally relate to disputes arising out of the use or installation of the Company's products, product liability litigation, contract disputes, patent infringement accusations, employment matters and similar matters. On the basis of information currently available to the Company, it does not believe that existing proceedings and claims will have a material adverse effect on its business, financial condition, results of operations or cash flows. However, litigation is unpredictable, and the Company could incur judgments or enter into settlements for current or future claims that could adversely affect its business, financial condition, results of operations or cash flows.

12. GUARANTEES

The Company has outstanding letters of credit totaling $8,560 supporting workers' compensation and general liability insurance policies as of June 30, 2017. The Company also has surety bonds primarily related to performance guarantees on supply agreements and construction contracts, and payment of duties and taxes totaling $30,176 as of June 30, 2017.

As of September 30, 2016, the Company had outstanding letters of credit totaling $9,121 as collateral for advance payments it received pursuant to the sale of its minority ownership share in Abahsain-Cope Saudi Arabia Ltd. The bank guarantees were canceled during the second quarter of fiscal 2017 when the transfer of ownership was completed.

In disposing of assets or businesses, the Company often provides representations, warranties and indemnities to cover various risks including unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. The Company does not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, the Company has no reason to believe that these uncertainties would have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

In the normal course of business, the Company is liable for product performance and contract completion. In the opinion of management, such obligations will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

13. ASSETS HELD FOR SALE



(in thousands)	June 30, 2017		September 30, 2016
Assets held for sale	$	—	$	6,680

In May 2012, the Company entered into a share purchase agreement pursuant to which the Company would sell its minority ownership share in Abahsain-Cope Saudi Arabia Ltd. for cash consideration of $9,087. The total carrying value of the investment was $3,313. During the second quarter of fiscal 2017, the Company recognized a pre-tax gain of $5,774 ($3,102, net of tax) on the sale when transfer of ownership was completed.

During the first quarter of fiscal 2017, the Company sold a parcel of land and a building related to the exit of a manufacturing facility in Philadelphia, PA at a loss of $329. The assets were previously classified as held for sale and had a carrying value of $3,367.

14. OTHER EXPENSE (INCOME), NET

Other expense (income), net consisted of the following:



	Three Months Ended			Nine Months Ended
(in thousands)	June 30, 2017			June 30, 2017
Gain on sale of joint venture (see Note 12)	$	—		$	(5,774	)
Undesignated foreign currency derivate instruments	243			243
Foreign exchange (gain) loss on intercompany loans	(126		)	(126		)
Other expense (income), net	$	117		$	(5,657	)

15. FAIR VALUE MEASUREMENTS

Certain assets and liabilities are required to be recorded at fair value on a recurring basis.

The Company uses forward currency contracts to hedge the effects of foreign exchange relating to certain of the Company’s intercompany receivables denominated in a foreign currency. These derivative instruments are not formally designated as hedges by the Company and the terms of these instruments range from 6 months to 5 years. Short-term forward currency contracts are recorded in other current liabilities and long-term forward currency contracts are recorded in other long-term liabilities in the condensed consolidated balance sheet. The fair value gains and losses are included in other expense (income), net within the condensed consolidated statements of operations. See Note 14, ''Other Expense (Income), Net'' for further detail.

The total notional amount of undesignated forward currency contracts were £14.7 million and £0 million as of June 30, 2017 and September 30, 2016, respectively. Cash flows associated with derivative financial instruments are recognized in the operating section of the condensed consolidated statements of cash flows. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

The following table presents the Company's assets and liabilities measured at fair value:



	June 30, 2017							September 30, 2016
(in thousands)	Level 1		Level 2			Level 3		Level 1		Level 2		Level 3
Cash equivalents	$	67,992	$	—		$	—	$	167,006	$	—	$	—
Forward currency contracts	—		(434		)	—		—		—		—

The Company's remaining financial instruments consist primarily of cash, accounts receivable and accounts payable whose carrying value approximate their fair value due to their short-term nature.

The estimated fair value of financial instruments not carried at fair value in the condensed consolidated balance sheets were as follows:



	June 30, 2017				September 30, 2016
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
First Lien Term Loan Facility due December 22, 2023	$	497,500	$	500,187	$	—	$	—
Initial First Lien Term Loan Facility due April 9, 2021	—		—		410,550		411,084
Second Lien Term Loan Facility due October 9, 2021	—		—		231,000		231,092
Total debt	$	497,500	$	500,187	$	641,550	$	642,176

In determining the approximate fair value of its long-term debt, the Company used the trading value among financial institutions, which were classified within Level 2 of the fair value hierarchy.

16. SEGMENT INFORMATION

The Company has two operating segments, which are also its reportable segments. The Company's operating segments are organized based upon primary market channels and, in most instances, the end use of products.

Through its Electrical Raceway segment, the Company manufactures products that deploy, isolate and protect a structure's electrical circuitry from the original power source to the final outlet. These products, which include electrical conduit, armored cable, cable trays, mounting systems and fittings, are critical components of the electrical infrastructure for new construction and maintenance, repair and remodel ("MR&R") markets. The vast majority of the Company's Electrical Raceway net sales are made to electrical distributors, who then serve electrical contractors, and the Company considers both to be customers.

Through the MP&S segment, the Company provides products and services that frame, support and secure component parts in a broad range of structures, equipment and systems in electrical, industrial and construction applications. The Company's principal products in this segment are metal framing products and in-line galvanized mechanical tube. Through its metal framing business, the Company designs, manufactures and installs metal strut and fittings used to assemble mounting structures that support heavy equipment and electrical content in buildings and other structures.

Both segments use Adjusted EBITDA as the primary measure of profit and loss. Segment Adjusted EBITDA is the sum of income before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, loss (gain) on extinguishment of debt, interest expense (net), restructuring and impairments, stock-based compensation, certain legal matters, consulting fees, transaction costs, gain on sale of joint venture and other items, such as lower-of-cost-or-market inventory adjustments, realized or unrealized gain (loss) on foreign currency transactions and the impact from the Fence and Sprinkler exit. Prior to fiscal 2017, income before income taxes was also adjusted to exclude net periodic pension benefit cost and ABF product liability. Beginning in fiscal 2017, these costs are no longer excluded. Prior fiscal years have not been restated for this change due to the relative insignificance and nature of these amounts.

Intersegment transactions primarily consist of product sales at designated transfer prices on an arms-length basis. Gross profit earned and reported within the segment is eliminated in the Company's consolidated results. Certain manufacturing and distribution expenses are allocated between the segments due to the shared nature of activities. Recorded amounts represent a proportional amount of the quantity of product produced for each segment.



	Three Months Ended
	June 30, 2017							June 24, 2016
(in thousands)	External Net Sales		Intersegment Sales			Adjusted EBITDA		External Net Sales		Intersegment Sales			Adjusted EBITDA
Electrical Raceway	$	266,103	$	172		$	48,026	$	259,270	$	556		$	52,438
MP&S	131,642		37			$	18,986	136,454		28			$	23,024
Eliminations	—		(209		)			—		(584		)
Consolidated operations	$	397,745	$	—				$	395,724	$	—



	Nine months ended
	June 30, 2017							June 24, 2016
(in thousands)	External Net Sales		Intersegment Sales			Adjusted EBITDA		External Net Sales		Intersegment Sales			Adjusted EBITDA
Electrical Raceway	$	739,345	$	1,001		$	133,210	$	713,410	$	1,314		$	129,057
MP&S	368,782		102			$	53,831	393,735		94			$	64,725
Eliminations	—		(1,103		)			—		(1,408		)
Consolidated operations	$	1,108,127	$	—				$	1,107,145	$	—

Presented below is a reconciliation of operating segment Adjusted EBITDA to Income before income taxes:



	Three Months Ended						Nine Months Ended
(in thousands)	June 30, 2017			June 24, 2016			June 30, 2017			June 24, 2016
Operating segment Adjusted EBITDA
Electrical Raceway	$	48,026		$	52,438		$	133,210		$	129,057
MP&S	18,986			23,024			53,831			64,725
Total	67,012			75,462			187,041			193,782
Unallocated expenses ^(a)	(4,979		)	(8,238		)	(18,995		)	(20,144		)
Interest expense, net	(5,811		)	(10,169		)	(20,872		)	(30,617		)
Depreciation and amortization	(13,341		)	(13,322		)	(40,242		)	(40,064		)
Gain (loss) on extinguishment of debt	—			—			(9,805		)	1,661
Restructuring & impairments^(b)	101			(326		)	(700		)	(2,395		)
Net periodic pension benefit cost^(c)	—			(110		)	—			(330		)
Stock-based compensation^(d)	(3,064		)	(4,854		)	(9,368		)	(16,897		)
ABF product liability impact^(e)	—			(212		)	—			(637		)
Legal matters^(f)	—			(1,300		)	(7,501		)	(1,300		)
Consulting fee^(g)	—			(13,675		)	—			(15,425		)
Transaction costs^(h)	(845		)	(1,917		)	(2,543		)	(5,348		)
Gain on sale of joint venture⁽ⁱ⁾	—			—			5,774			—
Other^(j)	(177		)	10,055			10,306			5,842
Impact of Fence and Sprinkler exit^(k)	—			—			—			(811		)
Income before income taxes	$	38,896		$	31,394		$	93,095		$	67,317

(a) Represents unallocated selling, general and administrative activities and associated expenses including, in part, executive, legal, finance, human resources, information technology, business development and communications, as well as certain costs and earnings of employee-related benefits plans, such as stock-based compensation and a portion of self-insured medical costs.

(b) Restructuring amounts represent exit or disposal costs including termination benefits and facility closure costs. Impairment amounts represent write-downs of goodwill, intangible assets and/or long-lived assets. See Note 10, ''Restructuring Charges''.

(c) Through fiscal 2016, represents pension costs in excess of cash funding for pension obligations in the period. Beginning in fiscal 2017, the Company has not excluded net periodic pension benefit cost from Adjusted EBITDA. Fiscal 2016 has not been restated for this change due to the relative insignificance and nature of these amounts. See Note 8, ''Postretirement Benefits''.

(d) Represents stock-based compensation expenses related to stock option awards, performance stock awards and restricted stock awards.

(e) Through fiscal 2016, represents changes in the Company's estimated exposure to ABF matters. Beginning in fiscal 2017, the company has excluded the costs incurred with the ABF product liability from Adjusted EBITDA. Fiscal 2016 has not been restated for this change due to the relative insignificance and nature of these amounts. See Note 11, ''Commitments and Contingencies''.

(f) Represents certain legal matters. See Note 11, ''Commitments and Contingencies''.

(g) Represents amounts paid to CD&R under a consulting agreement which was terminated on June 15, 2016.

(h) Represents expenses related to the Company's initial public offering and secondary offerings and acquisition and divestiture-related activities. See Note 2, ''Acquisition''.

(i) Represents gain on sale of Abahsain-Cope Saudi Arabia Ltd. joint venture. See Note 13, ''Assets Held for Sale''.

(j) Represents other items, such as lower-of-cost-or-market inventory adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions.

(k) Represents historical performance of Fence and Sprinkler and related operating costs.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward- looking statements. Factors that could cause or contribute to these differences include those factors discussed below and included or referenced elsewhere in this report, particularly in the sections entitled "Forward-Looking Statements" and "Risk Factors".

Use of Non-GAAP Measures

Adjusted EBITDA and Adjusted EBITDA Margin

We use Adjusted EBITDA and Adjusted EBITDA Margin in evaluating the performance of our business, and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe Adjusted EBITDA and Adjusted EBITDA Margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.

We define Adjusted EBITDA as net income before: depreciation and amortization, loss (gain) on extinguishment of debt, interest expense (net), income tax expense, restructuring and impairments, stock-based compensation, certain legal matters, consulting fees, transaction costs, gain on sale of joint venture, other items, and the impact from our Fence and Sprinkler exit. Prior to fiscal 2017, net income was also adjusted to exclude net periodic pension benefit costs and the impact from anti-microbial coated sprinkler pipe, or "ABF" product liability. These costs are no longer an adjustment to EBITDA beginning in fiscal 2017. Prior fiscal years have not been restated for this change due to the relative insignificance and nature of the amounts. We believe Adjusted EBITDA, when presented in conjunction with comparable accounting principles generally accepted in the United States of America ("GAAP") measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Adjusted net sales.

Adjusted EBITDA is not considered a measure of financial performance under GAAP and the items excluded therefrom are significant components in understanding and assessing our financial performance. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as an alternative to such GAAP measures as net income (loss), cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Some of these limitations are:


•	Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs;


•	Adjusted EBITDA does not reflect interest expense, or the requirements necessary to service interest or principal payments on debt;


•	Adjusted EBITDA does not reflect income tax expense (benefit) or the cash requirements to pay taxes;


•	Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and


•	although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for the three and nine months ended June 30, 2017 and June 24, 2016:



	Three Months Ended						Nine months ended
(in thousands)	June 30, 2017			June 24, 2016			June 30, 2017			June 24, 2016
Net income	$	27,465		$	20,645		$	63,782		$	43,224
Interest expense, net	5,811			10,169			20,872			30,617
Income tax expense	11,431			10,749			29,313			24,093
Depreciation and amortization	13,341			13,322			40,242			40,064
Loss (gain) on extinguishment of debt	—			—			9,805			(1,661		)
Restructuring & impairments^(a)	(101		)	326			700			2,395
Net periodic pension benefit cost^(b)	—			110			—			330
Stock-based compensation ^(c)	3,064			4,854			9,368			16,897
ABF product liability impact^(d)	—			212			—			637
Consulting fee ^(e)	—			13,675			—			15,425
Legal matters^(f)	—			1,300			7,501			1,300
Transaction costs ^(g)	845			1,917			2,543			5,348
Gain on sale of joint venture ^(h)	—			—			(5,774		)	—
Other ⁽ⁱ⁾	177			(10,055		)	(10,306		)	(5,842		)
Impact of Fence and Sprinkler exit ^(j)	—			—			—			811
Adjusted EBITDA	$	62,033		$	67,224		$	168,046		$	173,638

(a) Restructuring amounts represent exit or disposal costs including termination benefits and facility closure costs. Impairment amounts represent write-downs of goodwill, intangible assets and/or long-lived assets. See Note 10, ''Restructuring Charges'' to our unaudited condensed consolidated financial statements for further detail.

(b) Through fiscal 2016, represents pension costs in excess of cash funding for pension obligations in the period. Beginning in fiscal 2017, the Company has not excluded net periodic pension benefit cost from Adjusted EBITDA. Fiscal 2016 has not been restated for this change due to the relative insignificance and nature of these amounts. See Note 8, ''Postretirement Benefits'' to our unaudited condensed consolidated financial statements for further detail.

(c) Represents stock-based compensation expenses related to stock option awards, performance stock awards and restricted stock awards.

(d) Through fiscal 2016, represents changes in our estimated exposure to ABF matters. Beginning in fiscal 2017, the company has excluded the costs incurred with the ABF product liability from Adjusted EBITDA. Fiscal 2016 has not been restated for this change due to the relative insignificance and nature of these amounts. See Note 11, ''Commitments and Contingencies'' to our unaudited condensed consolidated financial statements for further detail.

(e) Represents amounts paid to CD&R under a consulting agreement which was terminated on June 15, 2016.

(f) Represents certain legal matters. See Note 11, ''Commitments and Contingencies'' to our unaudited condensed consolidated financial statements for further detail.

(g) Represents expenses related to our initial public offering ("IPO") and secondary offerings and acquisition and divestiture-related activities. See Note 2, ''Acquisition'' to our unaudited condensed consolidated financial statements for further detail.

(h) Represents gain on sale of Abahsain-Cope Saudi Arabia Ltd. joint venture. See Note 13, ''Assets Held for Sale'' to our unaudited condensed consolidated financial statements for further detail.

(i) Represents other items, such as lower-of-cost-or-market inventory adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions.

(j) Represents historical performance of Fence and Sprinkler and related operating costs.

Adjusted net sales

We present Adjusted net sales to facilitate comparisons of reported net sales from period to period within our MP&S segment. In August 2015, we announced plans to exit Fence and Sprinkler in order to re-align our long-term strategic focus. These product lines were discontinued during the three months ended December 25, 2015.

We define Adjusted net sales as reported net sales excluding net sales directly attributable to Fence and Sprinkler. We believe Adjusted net sales is useful for investors because management uses Adjusted net sales as a profitability measure to evaluate our ongoing business operations, which no longer include Fence and Sprinkler. Adjusted net sales has limitations as an analytical tool, and should not be considered in isolation or as an alternative to measures based on accounting principles generally accepted in the United States of America ("GAAP"), such as net sales or other financial statement data presented in our consolidated financial statements as an indicator of revenue. Because Adjusted net sales is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted net sales, as presented, may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of net sales to Adjusted net sales for the nine months ended June 24, 2016:



	Nine Months Ended
(in thousands)	June 24, 2016
Net sales	$	1,107,145
Impact of Fence and Sprinkler exit	(7,816		)
Adjusted net sales	$	1,099,329

Results of Operations

The results of operations for the three months ended June 30, 2017 and June 24, 2016 were as follows:



	Three Months Ended
($ in thousands)	June 30, 2017			June 24, 2016			Change			% Change
Net sales	$	397,745		$	395,724		$	2,021		0.5	%
Cost of sales	304,920			284,203			20,717			7.3	%
Gross profit	92,825			111,521			(18,696		)	(16.8	)%
Selling, general and administrative	42,455			64,392			(21,937		)	(34.1	)%
Intangible asset amortization	5,546			5,566			(20		)	(0.4	)%
Operating income	44,824			41,563			3,261			7.8	%
Interest expense, net	5,811			10,169			(4,358		)	(42.9	)%
Other expense (income), net (See Note 14)	117			—			117			*
Income before income taxes	38,896			31,394			7,502			23.9	%
Income tax expense	11,431			10,749			682			6.3	%
Net income	$	27,465		$	20,645		$	6,820		33.0	%
Non-GAAP financial data
Adjusted EBITDA	$	62,033		$	67,224		$	(5,191	)	(7.7	)%
Adjusted EBITDA Margin	15.6		%	17.0		%
* Not meaningful

Net sales

Net sales increased $2.0 million, or 0.5% to $397.7 million for the three months ended June 30, 2017 compared to $395.7 million for the prior-year period. The increase was due to higher net average selling prices of $23.6 million primarily resulting from the pass-through impacts of higher steel, resin and copper costs during the three months ended June 30, 2017 and $0.6 million of insignificant items. The increase in sales is partially offset by lower sales volume of $20.0 million, primarily due to lower demand for mechanical pipe products from the solar end-market and metal electrical conduit and fittings products. Net sales also decreased $2.2 million due to the impact of a stronger U.S. dollar.

Cost of sales

Cost of sales increased by $20.7 million, or 7.3% to $304.9 million for the three months ended June 30, 2017 compared to $284.2 million for the prior-year period. The increase was due to $35.2 million of higher steel, resin and copper costs, including the impact resulting from lower-of-cost-or-market adjustments. Cost of sales also increased $1.7 million increase of other costs, partially offset by $12.3 million of lower volume of products sold, primarily related to lower demand for mechanical pipe products from the solar end-market and metal electrical conduit and fittings products and $2.1 million of lower freight and warehouse costs. A stronger U.S. dollar provided a favorable foreign currency translation impact, lowering cost of sales by $1.8 million.

Gross profit

Gross profit decreased by $18.7 million, or 16.8% to $92.8 million for the three months ended June 30, 2017 compared to $111.5 million for the prior-year period. The net decrease was primarily attributable to an increase in input costs that exceeded the increase in average selling prices for flexible electrical conduit and fittings, armored cable and fittings and mechanical pipe product categories driven by timing and the impact resulting from lower-of-cost-or-market adjustments. The decrease is partially offset by improved productivity.

Selling, general and administrative

Selling, general and administrative expenses decreased $21.9 million, or 34.1% to $42.5 million for the three months ended June 30, 2017 compared to $64.4 million for the prior-year period. The decrease was primarily due to consulting fees and a termination fee related to the termination of the CD&R consulting agreement totaling $13.7 million and lower professional services of $4.2 million, including IPO-related costs and $4.0 million of other selling, general and administrative costs.

Intangible asset amortization

Intangible asset amortization expense of $5.5 million for the three months ended June 30, 2017 remained relatively flat compared to the prior-year period.

Operating income

Operating income increased $3.3 million or 7.8% to $44.8 million for the three months ended June 30, 2017 compared to $41.6 million for the prior-year period. The increase was due primarily to a decrease in selling, general, and administrative expenses of $21.9 million offset in part by lower gross profit of $18.7 million.

Interest expense, net

Interest expense, net, decreased $4.4 million, or 42.9% to $5.8 million for the three months ended June 30, 2017 compared to $10.2 million for the prior-year period. The decrease is due to our refinancing transactions on December 22, 2016, which resulted in $4.8 million of lower interest expense resulting from lower levels of debt and lower interest rates. See Note 6, ''Debt'' to our unaudited condensed consolidated financial statements for further detail. The decrease in interest expense is partially offset by lower interest income of $0.4 million compared to the prior-year period.

Other expense (income), net

Other expense, net was $0.1 million for the three months ended June 30, 2017 and remained relatively flat compared to the prior-year period.

Income tax expense

Our income tax rate decreased to 29.4% for the three months ended June 30, 2017 compared to 34.2% for the prior-year period. The decrease in the effective tax rate was primarily due to the excess tax benefit associated with the exercise of stock options which is recognized as a reduction in tax expense in the current period.

Net income

Net income increased by $6.8 million, or 33.0% to $27.5 million for the three months ended June 30, 2017 compared to $20.6 million for the three months ended June 24, 2016 primarily due to a decrease in selling, general and administrative costs and lower interest expense, partially offset by a decrease in gross profit.

Adjusted EBITDA

Adjusted EBITDA decreased by $5.2 million, or 7.7% to $62.0 million for the three months ended June 30, 2017 compared to $67.2 million for the three months ended June 24, 2016. The net decrease was primarily due to an increase in input costs that exceeded the increase in average selling prices for flexible electrical conduit and fittings, armored cable and fittings and mechanical pipe products driven by timing and lower volume of products sold partially offset by improved productivity.

Segment results

Electrical Raceway



	Three Months Ended
($ in thousands)	June 30, 2017			June 24, 2016			Change			% Change
Net sales	$	266,275		$	259,826		$	6,449		2.5	%
Adjusted EBITDA	$	48,026		$	52,438		$	(4,412	)	(8.4	)%
Adjusted EBITDA margin	18.0		%	20.2		%

Net sales

Net sales increased $6.4 million, or 2.5%, to $266.3 million for the three months ended June 30, 2017 compared to $259.8 million for the three months ended June 24, 2016. The increase was due primarily to higher average selling prices of $15.4 million resulting from the pass-through impact of higher steel, copper and resin costs. The increase was partially offset by $8.2 million of volume reduction from lower demand for metal electrical conduit and fittings products, $0.3 million due to the impact of a stronger U.S. dollar and $0.5 million resulting from insignificant items.

Adjusted EBITDA

Adjusted EBITDA for the three months ended June 30, 2017 decreased $4.4 million, or 8.4%, to $48.0 million from $52.4 million for the three months ended June 24, 2016. Adjusted EBITDA decreased due to lower volume of metal electrical conduit and fittings products sold and lower margins for flexible electrical conduit and fittings and armored cable and fittings products resulting from an increase in input costs that exceeded our increase in sales prices, partially offset by improved productivity.

Mechanical Products & Solutions



	Three Months Ended
($ in thousands)	June 30, 2017			June 24, 2016			Change			% Change
Net sales	$	131,679		$	136,482		$	(4,803	)	(3.5	)%
Adjusted EBITDA	$	18,986		$	23,024		$	(4,038	)	(17.5	)%
Adjusted EBITDA margin	14.4		%	16.9		%

Net sales

Net sales decreased $4.8 million, or 3.5%, for the three months ended June 30, 2017 to $131.7 million compared to $136.5 million for the three months ended June 24, 2016. The decrease was primarily due to lower volume of $11.8 million, primarily related to lower demand for mechanical pipe products. Net sales also decreased $1.9 million related to negative foreign currency translation impact. The decrease in net sales was partially offset by increased average selling prices of $8.2 million resulting from the pass-through impact of higher input costs and $0.7 million of other insignificant items.

Adjusted EBITDA

Adjusted EBITDA decreased $4.0 million, or 17.5%, to $19.0 million for the three months ended June 30, 2017 compared to $23.0 million for the three months ended June 24, 2016. Adjusted EBITDA decreased primarily due to lower volumes of mechanical pipe products within the solar end-market, which are typically higher margin products and reduced gross margins, partially offset by improved productivity.

The results of operations for the nine months ended June 30, 2017 and June 24, 2016 were as follows:



	Nine months ended
($ in thousands)	June 30, 2017			June 24, 2016			Change			% Change
Net sales	$	1,108,127		$	1,107,145		$	982		0.1	%
Cost of sales	835,348			831,805			3,543			0.4	%
Gross profit	272,779			275,340			(2,561		)	(0.9	)%
Selling, general and administrative	138,036			162,412			(24,376		)	(15.0	)%
Intangible asset amortization	16,628			16,655			(27		)	(0.2	)%
Operating income	118,115			96,273			21,842			22.7	%
Interest expense, net	20,872			30,617			(9,745		)	(31.8	)%
Loss (gain) on extinguishment of debt	9,805			(1,661		)	11,466			(690.3	)%
Other expense (income), net (See Note 14)	(5,657		)	—			(5,657		)	*
Income before income taxes	93,095			67,317			25,778			38.3	%
Income tax expense	29,313			24,093			5,220			21.7	%
Net income	$	63,782		$	43,224		$	20,558		47.6	%
Non-GAAP financial data
Adjusted net sales	$	1,108,127		$	1,099,329		$	8,798		0.8	%
Adjusted EBITDA	$	168,046		$	173,638		$	(5,592	)	(3.2	)%
Adjusted EBITDA Margin	15.2		%	15.8		%
* Not meaningful

Net sales

Net sales increased $1.0 million, or 0.1% to $1,108.1 million for the nine months ended June 30, 2017 compared to $1,107.1 million for the nine months ended June 24, 2016. The increase was due to higher net average selling prices of $77.5 million resulting from the pass-through of higher input costs of steel, resin and copper. The increase in sales is partially offset by lower volume of $59.8 million primarily related to lower demand for mechanical pipe products within the solar end-market and lower demand for metal electrical conduit and fittings products. Net sales also decreased $7.8 million related to the Fence and Sprinkler exit in November 2015, $6.1 million due to the impact of a stronger U.S. dollar and $2.8 million resulting from insignificant items.

Cost of sales

Cost of sales increased by $3.5 million, or 0.4% to $835.3 million for the nine months ended June 30, 2017 compared to $831.8 million for the nine months ended June 24, 2016. The increase was primarily due to higher input costs across all product categories of $63.8 million, including lower-of-cost-or-market charges and $5.3 million of other costs. The increase in cost of sales was partially offset by lower volume of $42.7 million primarily related to lower demand for our mechanical pipe products within the solar end-market and lower demand for metal electrical conduit and fittings products. Cost of sales also decreased $11.1 million due to lower freight and warehouse costs resulting from productivity efficiencies, $6.7 million resulting from the Fence and Sprinkler exit and $5.1 million resulting from the favorable foreign currency translation impact of a stronger U.S. dollar.

Gross profit

Gross profit decreased by $2.6 million, or 0.9% to $272.8 million for the nine months ended June 30, 2017 compared to $275.3 million for the nine months ended June 24, 2016. The net decrease was primarily attributable to lower demand for our mechanical pipe products which are typically higher margin products, partially offset by lower freight and warehouse costs.

Selling, general and administrative

Selling, general and administrative expenses decreased $24.4 million, or 15.0% to $138.0 million for the nine months ended June 30, 2017 compared to $162.4 million for the nine months ended June 24, 2016. The decrease was primarily due to consulting fees and a termination fee related to the termination of the CD&R consulting agreement totaling $15.4 million during fiscal 2016, lower stock-based compensation expense of $7.5 million due to the revaluation of our outstanding stock option award in the prior year resulting from mark-to-market adjustments and lower professional services, including IPO-related costs of $6.6 million. The decrease in selling, general and administrative expense was partially offset by a legal contingency of $7.5 million related to antidumping duties recorded in the second quarter of fiscal 2017. See Note 11, ''Commitments and Contingencies'' to our unaudited condensed consolidated financial statements for further detail.

Intangible asset amortization

Intangible asset amortization expense of $16.6 million for the nine months ended June 30, 2017 remained relatively flat compared to the prior year.

Operating income

Operating income increased $21.8 million or 22.7% to $118.1 million for the nine months ended June 30, 2017 compared to $96.3 million for the nine months ended June 24, 2016. The increase was due primarily to a decrease in selling, general, and administrative expenses of $24.4 million.

Interest expense, net

Interest expense, net, decreased $9.7 million, or 31.8% to $20.9 million for the nine months ended June 30, 2017 compared to $30.6 million for the nine months ended June 24, 2016. The decrease is due to our debt refinancing transactions on December 22, 2016, which resulted in $10.0 million of lower interest expense resulting from lower levels of debt and lower interest rates. See Note 6, ''Debt'' to our unaudited condensed consolidated financial statements for further detail. The decrease in interest expense was partially offset by lower interest income of $0.3 million.

Loss (gain) on extinguishment of debt

The $9.8 million loss on extinguishment of debt in the nine months ended June 30, 2017 related to the December 22, 2016 debt refinancing transactions. See Note 6, ''Debt'' to our unaudited condensed consolidated financial statements for further detail.

The $1.7 million gain on extinguishment of debt in the nine months ended June 24, 2016 related to the January 22, 2016 redemption of a portion of the Second Lien Term Loan Facility.

Other expense (income), net

In May 2012, we entered into a share purchase agreement pursuant to which the Company would sell its minority ownership share in Abahsain-Cope Saudi Arabia Ltd. for cash consideration of $9.1 million. The total carrying value of the investment was $3.3 million. During the three months ended June 30, 2017, we recognized a pre-tax gain of $5.8 million on the sale when transfer of ownership was completed. See Note 13, ''Assets Held for Sale'' to our unaudited consolidated financial statements for further detail.

Income tax expense

Our income tax rate decreased to 31.5% for the nine months ended June 30, 2017 compared to 35.8% for the nine months ended June 24, 2016. The change in the effective tax rate was primarily due to the excess tax benefit associated with the exercise of stock options recognized which is reflected as a reduction in tax expense in the current period and the impact of the nondeductible transaction costs in the prior period, not incurred in the current period.

Net income

Net income increased by $20.6 million, or 47.6% to $63.8 million for the nine months ended June 30, 2017 compared to $43.2 million for the nine months ended June 24, 2016 primarily due to a decrease in selling, general, and administrative expenses of $24.4 million, a higher loss on extinguishment of debt of $11.5 million and higher income tax expense of $5.2 million, partially offset by lower interest expense of $9.7 million and a gain on the sale of the joint venture of $5.8 million.

Adjusted EBITDA

Adjusted EBITDA decreased by $5.6 million, or 3.2% to $168.0 million for the nine months ended June 30, 2017 compared to $173.6 million for the nine months ended June 24, 2016. The decrease is primarily due to lower volumes of mechanical pipe products within the solar end-market, which are typically higher margin products, partially offset by improved productivity.

Segment results

Electrical Raceway



	Nine months ended
($ in thousands)	June 30, 2017			June 24, 2016			Change		% Change
Net sales	$	740,346		$	714,724		$	25,622	3.6	%
Adjusted EBITDA	$	133,210		$	129,057		$	4,153	3.2	%
Adjusted EBITDA margin	18.0		%	18.1		%

Net sales

Net sales increased $25.6 million, or 3.6%, to $740.3 million for the nine months ended June 30, 2017 compared to $714.7 million for the nine months ended June 24, 2016. The increase was due primarily to higher average selling prices of $55.9 million resulting from the pass-through impact of higher input costs and our ability to earn a premium from meeting customer expectations of product availability, delivery service levels and co-loading capabilities, partially offset by lower sales volume of $29.5 million across all of our Electrical Raceway product lines and $0.8 million resulting from insignificant items.

Adjusted EBITDA

Adjusted EBITDA for the nine months ended June 30, 2017 increased $4.2 million, or 3.2%, to $133.2 million from $129.1 million for the nine months ended June 24, 2016.The primary driver of the increase was gross profit expansion due to improved productivity, selling higher value products and the pass-through impact of higher input costs.

Mechanical Products & Solutions



	Nine months ended
($ in thousands)	June 30, 2017			June 24, 2016			Change			% Change
Net sales	$	368,884		$	393,829		$	(24,945	)	(6.3	)%
Impact of Fence and Sprinkler exit	—			(7,816		)	7,816			(100.0	)%
Adjusted net sales	$	368,884		$	386,013		$	(17,129	)	(4.4	)%
Adjusted EBITDA	$	53,831		$	64,725		$	(10,894	)	(16.8	)%
Adjusted EBITDA margin	14.6		%	16.8		%

Net sales

Net sales decreased $24.9 million, or 6.3%, for the nine months ended June 30, 2017 to $368.9 million compared to $393.8 million for the nine months ended June 24, 2016. The decrease was primarily due to lower sales volume of $30.3 million, related to lower demand for mechanical pipe products within the solar end-market. Net sales decreased $7.8 million related to the Fence and Sprinkler exit in November 2016, negative foreign currency translation impact of $6.0 million and $2.4 million due to insignificant items. The decrease in net sales is partially offset by increased average selling prices of $21.6 million resulting from the pass-through impact of higher input costs.

Adjusted EBITDA

Adjusted EBITDA decreased $10.9 million, or 16.8%, to $53.8 million for the nine months ended June 30, 2017 compared to $64.7 million for the nine months ended June 24, 2016. Adjusted EBITDA decreased primarily due to higher input costs that exceeded the increase in average selling prices and lower volumes of mechanical pipe products within the solar end-market, which are typically higher margin products, partially offset by improved productivity.

Other Matters

Our collective bargaining agreement in Harvey, Illinois was set to expire in April 2017. During the three months ended June 30, 2017, the Company and the United Steelworkers Union reached agreement on the terms of a new collective bargaining agreement which expires in April 2020.

Liquidity and Capital Resources

We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders. Our cash and cash equivalents were $96.2 million as of June 30, 2017, of which $29.3 million was held at non-U.S. subsidiaries. Those cash balances at foreign subsidiaries may be subject to U.S. or local country taxes if the Company's intention to permanently reinvest such income in the applicable foreign jurisdictions were to change and the cash was repatriated to the U.S. Our cash and cash equivalents decreased $104.1 million from September 30, 2016 primarily due to the debt refinancing activities. See Note 6, ''Debt'' to our unaudited condensed consolidated financial statements for further detail.

In general, we require cash to fund working capital, capital expenditures, debt repayment, interest payments and taxes. We have access to the ABL Credit Facility to fund operational needs. As of June 30, 2017, there were no outstanding borrowings under the ABL Credit Facility and $8.6 million of letters of credit were issued under the ABL Credit Facility. The borrowing base was estimated to be $246.4 million and approximately $237.9 million was available under the ABL Credit Facility as of June 30, 2017. Outstanding letters of credit count as utilization of the commitments under the ABL Credit Facility and reduce the amount available for borrowings.

The agreements governing the First Lien Term Loan Facility and the ABL Credit Facility (the "Credit Facilities") contain covenants that limit or restrict AII's ability to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates. AII has been in compliance with the covenants under the agreements for all periods presented.

We may from time to time repurchase our debt or take other steps to reduce our debt. These actions may include open market repurchases, negotiated repurchases or opportunistic refinancing of debt. The amount of debt, if any, that may be repurchased or refinanced will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations. Our affiliates may also purchase our debt from time to time, through open market purchases or other transactions.

Our use of cash may fluctuate during the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of commodities we purchase.

Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations. Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the Credit Facilities. We expect that cash provided from operations and available capacity under the ABL Credit Facility will provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for at least the next twelve months, including payment of interest and principal on our debt.

Limitations on Distributions and Dividends by Subsidiaries

Atkore and AII are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries. Each company depends on its respective subsidiaries to distribute funds to them so that they may pay obligations and expenses, including satisfying obligations with respect to indebtedness. The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial and general business conditions, as well as restrictions under the laws of our subsidiaries' jurisdictions.

The agreements governing the Credit Facilities significantly restrict the ability of our subsidiaries, including AII, to pay dividends, make loans or otherwise transfer assets from Atkore International and, in turn, to us. Further, AII's subsidiaries are permitted under the terms of the Credit Facilities to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AII and, in turn, to us. The First Lien Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness. The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt. See Note 6, ''Debt'' to our unaudited condensed consolidated financial statements for further detail.

The table below summarizes cash flow information derived from our statements of cash flows for the periods indicated:



	Nine months ended
(in thousands)	June 30, 2017			June 24, 2016
Cash flows provided by (used in):
Operating activities	$	65,783		$	85,018
Investing activities	(31,792		)	(12,976		)
Financing activities	(137,621		)	(21,667		)

Operating activities

During the nine months ended June 30, 2017, $65.8 million was provided by operating activities compared to $85.0 million during the nine months ended June 24, 2016. The $19.2 million decrease in cash provided was primarily due to an increase in income taxes resulting from higher taxable income and greater inventory levels resulting from higher input costs, partially offset by higher pre-tax income.

Investing activities

During the nine months ended June 30, 2017, the Company used $31.8 million for investing activities compared to $13.0 million during the nine months ended June 24, 2016. The $18.8 million increase in cash used for investing activities is primarily due to the acquisition of Marco Cable Management during the three months ended June 30, 2017.

Financing Activities

During the nine months ended June 30, 2017, the Company used $137.6 million for financing activities compared to $21.7 million provided during the nine months ended June 24, 2016. The use of cash was primarily for the $649.9 million redemption of the Initial First Term Lien Loan Facility and the Second Term Lien Loan Facility partially offset by cash provided from the net borrowing of $498.8 million under the First Lien Term Loan Facility. See Note 6, ''Debt'' to our unaudited condensed consolidated financial statements for further detail. Additionally, the Company issued $12.1 million of common stock during the nine months ended June 24, 2016 pursuant to equity compensation plans.

Contractual Obligations and Commitments

There have been no material changes from the information provided in our Quarterly Report on Form 10-Q filed February 7, 2017.

Change in Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates since the filing of our Annual Report.

Recent Accounting Standards

See Note 1, ''Basis of Presentation and Summary of Significant Accounting Policies'' to our unaudited condensed consolidated financial statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and information currently available to management. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or class action litigation; and the impact of prevailing economic conditions.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this quarterly report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this quarterly report, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties discussed or referenced under the caption "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:


•	declines in, and uncertainty regarding, the general business and economic conditions in the U.S. and international markets in which we operate;


•	weakness or another downturn in the U.S. non-residential construction industry;


•	changes in prices of raw materials;


•	pricing pressure, reduced profitability, or loss of market share due to intense competition;


•	availability and cost of third-party freight carriers and energy;


•	high levels of imports of products similar to those manufactured by us;


•	changes in federal, state, local and international governmental regulations and trade policies;


•	adverse weather conditions;


•	failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business;


•	increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws;


•	reduced spending by, deterioration in the financial condition of, or other adverse developments with respect to, one or more of our top customers;


•	increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products;


•	work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons;


•	challenges attracting and retaining key personnel or high-quality employees;


•	changes in our financial obligations relating to pension plans that we maintain in the United States;


•	reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers;


•	loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate;


•	security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information;


•	possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand;


•	safety and labor risks associated with the manufacture and in the testing of our products;


•	product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings;


•	our ability to protect our intellectual property and other material proprietary rights;


•	risks inherent in doing business internationally;


•	our inability to introduce new products effectively or implement our innovation strategies;


•	the inability of our customers to pay off the credit lines extended to them by us in a timely manner and the negative impact on customer relations resulting from our collections efforts with respect to non-paying or slow-paying customers;


•	our inability to continue importing raw materials, component parts and/or finished goods;


•	changes in legislation, regulation and government policy as a result of the 2016 U.S. presidential and congressional elections;


•	the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures;


•	failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets;


•	the incurrence of liabilities in connection with violations of the FCPA and similar foreign anti-corruption laws;


•	the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"


•	disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures;


•	restrictions contained in our debt agreements;


•	failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt;


•	the significant influence the CD&R Investor will have continued to have over corporate decisions; and


•	other risks and factors described in this report and from time to time in documents that we file with the SEC.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements attributable to us or persons acting on our behalf that are made in this quarterly report are qualified in their entirety by these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Except as set forth in Item 3 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 as filed with the SEC on May 9, 2017, there have been no material changes to the quantitative and qualitative disclosures about market risks previously disclosed in our Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of certain litigation involving the Company, see Note 11, ''Commitments and Contingencies'' to our unaudited condensed consolidated financial statements for further detail.

Item 1A. Risk Factors

Except as set forth in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 as filed with the SEC on May 9, 2017, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



	10.1#*	Severance and Retention Policy for Senior Management, effective July 10, 2017.
	31.1#	Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2#	Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1#	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2#	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS#	XBRL Instance Document
	101.SCH#	XBRL Taxonomy Schema Linkbase Document
	101.CAL#	XBRL Taxonomy Calculation Linkbase Document
	101.DEF#	XBRL Taxonomy Definition Linkbase Document
	101.LAB#	XBRL Taxonomy Labels Linkbase Document
	101.PRE#	XBRL Taxonomy Presentation Linkbase Document
	#	Filed herewith
	*	Denotes management compensatory plan, contracts or arrangements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			ATKORE INTERNATIONAL GROUP INC.
			(Registrant)
Date:	August 8, 2017	By:	/s/ James A. Mallak
			Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)