UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________

FORM 10-Q

_________________________________________

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

For the quarterly period ended March 26, 2021

OR

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

For the transition period from                      to

Commission file number 001-37793

 _________________________________________

Atkore 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)

Atkore International Group Inc.
(Former name)

_________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.01 par value per share	ATKR	New York Stock Exchange

_____________________

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

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.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
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 13(a) 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  ☐    No  ☒

_____________________

As of April 23, 2021, there were 46,984,297 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
Condensed Consolidated Statement of Changes in Shareholders' Equity	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures about Market Risk	31
Item 4. Controls and Procedures	31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3. Defaults Upon Senior Securities	32
Item 4. Mine Safety Disclosures	32
Item 5. Other Information	32
Item 6. Exhibits	33
Signatures	34

1

PART I. FINANCIAL INFORMATION

    Item 1. Financial Statements

ATKORE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		Three months ended				Six months ended
(in thousands, except per share data)	Note	March 26, 2021		March 27, 2020		March 26, 2021		March 27, 2020
Net sales		$	639,543	$	455,654	$	1,150,625	$	903,102
Cost of sales		399,694		324,051		721,585		654,655
Gross profit		239,849		131,603		429,040		248,447
Selling, general and administrative		67,340		62,360		128,418		118,575
Intangible asset amortization	11	8,096		8,071		16,356		16,184
Operating income		164,413		61,172		284,266		113,688
Interest expense, net		8,416		10,564		16,670		21,184
Other income, net	5	(7,240)		(1,685)		(7,671)		(1,919)
Income before income taxes		163,237		52,293		275,267		94,423
Income tax expense	6	38,304		13,100		65,268		20,440
Net income		$	124,933	$	39,193	$	209,999	$	73,983
Net income per share
Basic	7	$	2.62	$	0.81	$	4.39	$	1.53
Diluted	7	$	2.58	$	0.80	$	4.33	$	1.50

See Notes to unaudited condensed consolidated financial statements.

2

ATKORE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

		Three months ended				Six months ended
(in thousands)	Note	March 26, 2021		March 27, 2020		March 26, 2021		March 27, 2020
Net income		$	124,933	$	39,193	209,999		$	73,983
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustment		(818)		(6,229)		6,233		(1,120)
Change in unrecognized loss related to pension benefit plans	4	262		226		524		433
Total other comprehensive income (loss)	8	(556)		(6,003)		6,757		(687)
Comprehensive income		$	124,377	$	33,190	$	216,756	$	73,296

See Notes to unaudited condensed consolidated financial statements.

3

ATKORE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)	Note	March 26, 2021		September 30, 2020
Assets
Current Assets:
Cash and cash equivalents		$	304,469	$	284,471
Accounts receivable, less allowance for current and expected credit losses of $2,454 and $3,168, respectively		431,161		298,242
Inventories, net	9	237,892		199,095
Prepaid expenses and other current assets		44,895		46,868
Total current assets		1,018,417		828,676
Property, plant and equipment, net	10	256,216		243,891
Intangible assets, net	11	258,990		255,349
Goodwill	11	199,513		188,239
Right-of-use assets, net		35,034		38,692
Deferred tax assets	6	999		687
Other long-term assets		879		2,991
Total Assets		$	1,770,048	$	1,558,525
Liabilities and Equity
Current Liabilities:
Accounts payable		187,699		142,601
Income tax payable		605		1,360
Accrued compensation and employee benefits		33,980		32,836
Customer liabilities		43,615		35,802
Lease obligations		11,648		15,786
Other current liabilities		48,334		47,785
Total current liabilities		325,881		276,170
Long-term debt	12	765,049		803,736
Long-term lease obligations		24,280		24,143
Deferred tax liabilities	6	33,321		22,525
Other long-term tax liabilities		1,620		1,619
Pension liabilities		37,391		40,023
Other long-term liabilities		12,344		11,899
Total Liabilities		1,199,886		1,180,115
Equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 46,982,664 and 47,407,023 shares issued and outstanding, respectively		471		475
Treasury stock, held at cost, 260,900 and 260,900 shares, respectively		(2,580)		(2,580)
Additional paid-in capital		497,250		487,223
Retained earnings		110,818		(64,154)
Accumulated other comprehensive loss	8	(35,797)		(42,554)
Total Equity		570,162		378,410
Total Liabilities and Equity		$	1,770,048	$	1,558,525

See Notes to unaudited condensed consolidated financial statements.

4

ATKORE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

		Six months ended
(in thousands)	Note	March 26, 2021		March 27, 2020
Operating activities:
Net income		$	209,999	$	73,983
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		38,309		37,208
Deferred income taxes	6	4,692		1,036
Stock-based compensation		10,390		7,646
Amortization of right-of-use assets		7,025		7,384
Loss on disposal of property, plant and equipment		50		4,560
Other adjustments to net income		918		2,672
Changes in operating assets and liabilities, net of effects from acquisitions
Accounts receivable		(124,261)		7,757
Inventories		(31,424)		(22,719)
Accounts payable		42,130		(18,856)
Other, net		(4,583)		(51,387)
Net cash provided by operating activities		153,246		49,284
Investing activities:
Capital expenditures		(20,374)		(17,139)
Insurance proceeds for property, plant and equipment		3,117		—
Acquisition of businesses, net of cash acquired		(43,699)		—
Other, net		21		30
Net cash used in investing activities		(60,935)		(17,109)
Financing activities:
Repayments of long-term debt	12	(40,000)		—
Issuance of common stock, net of shares withheld for tax		(356)		(2,380)
Repurchase of common stock		(35,037)		(15,011)
Other, net		(11)		(30)
Net cash used for financing activities		(75,404)		(17,421)
Effects of foreign exchange rate changes on cash and cash equivalents		3,091		(967)
Increase in cash and cash equivalents		19,998		13,787
Cash and cash equivalents at beginning of period		284,471		123,415
Cash and cash equivalents at end of period		$	304,469	$	137,202
Supplementary Cash Flow information
Capital expenditures, not yet paid		$	1,023	$	713

See Notes to unaudited condensed consolidated financial statements.

5

ATKORE INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

	Common Stock			Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
(in thousands)	Shares	Amount		Amount
Balance as of September 30, 2020	47,407	$	475	$	(2,580)	$	487,223	$	(64,154)	$	(42,554)	$	378,410
Net income	—	—		—		—		85,066		—		85,066
Other comprehensive income	—	—		—		—		—		7,313		7,313
Stock-based compensation	—	—		—		5,522		—		—		5,522
Issuance of common stock, net of shares withheld for tax	358	3		—		(3,930)		—		—		(3,927)
Repurchase of common stock	(1,140)	(11)		—		—		(35,026)		—		(35,037)
Balance as of December 25, 2020	46,625	$	467	$	(2,580)	$	488,815	$	(14,114)	$	(35,241)	$	437,347
Net income	—	—		—		—		124,933		—		124,933
Other comprehensive income	—	—		—		—		—		(556)		(556)
Stock-based compensation	—	—		—		4,868		—		—		4,868
Issuance of common stock, net of shares withheld for tax	358	4		—		3,566		—		—		3,570
Balance as of March 26, 2021	46,983	$	471	$	(2,580)	$	497,249	$	110,819	$	(35,797)	$	570,162

	Common Stock			Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
(in thousands)	Shares	Amount		Amount
Balance as of September 30, 2019	46,955	$	471	$	(2,580)	$	477,139	$	(200,396)	$	(41,698)	$	232,936
Net income	—	—		—		—		34,790		—		34,790
Other comprehensive income	—	—		—		—		—		5,316		5,316
ASU 2016-02 modified retrospective adoption	—	—		—		—		(1,053)		—		(1,053)
Stock-based compensation	—	—		—		3,123		—		—		3,123
Issuance of common stock, net of shares withheld for tax	524	5		—		(2,986)		—		—		(2,981)
Balance as of December 27, 2019	47,479	$	476	$	(2,580)	$	477,276	$	(166,659)	$	(36,382)	$	272,131
Net income	—	—		—		—		39,193		—		39,193
Other comprehensive income	—	—		—		—		—		(6,003)		(6,003)
Stock-based compensation	—	—		—		4,523		—		—		4,523
Issuance of common stock, net of shares withheld for tax	91	1		—		600		—		—		601
Repurchase of common stock	(394)	(4)		—		—		(15,007)		—		(15,011)
Balance as of March 27, 2020	47,176	$	473	$	(2,580)	$	482,399	$	(142,473)	$	(42,385)	$	295,434

See Notes to unaudited condensed consolidated financial statements.

6

ATKORE 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

Basis of Presentation

Organization and Ownership Structure — Atkore Inc. (the "Company", "Atkore" or "AI") is a leading manufacturer of Electrical products primarily for the non-residential construction and renovation markets and Safety & Infrastructure solutions for the construction and industrial markets. Atkore was incorporated in the State of Delaware on November 4, 2010 under the name Atkore International Group, Inc. Atkore is the sole stockholder of Atkore International Holdings Inc. ("AIH"), which in turn is the sole stockholder of Atkore International Inc. ("AII").

Segment Redefinition — Effective in the first quarter of fiscal 2021, the Company renamed and redefined its reportable segments.

The Electrical Raceway segment was renamed as the Electrical segment. The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable, and installation accessories. This segment serves contractors, in partnership with the electrical wholesale channel.

The Mechanical Products & Solutions segment was renamed as the Safety & Infrastructure segment. This segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security, and cable management for the protection and reliability of critical infrastructure. These solutions are marketed to contractors, original equipment manufacturers and end users.

Segment Realignment & Reclassifications — Effective in the first quarter of fiscal 2021, the Company implemented a realignment (the “Realignment”) of its segment financial reporting structure. The Company’s domestic cable management and prefabrication modular businesses had historically been reported in the Electrical Raceway segment. Due to transitions in the Company’s Executive Leadership Team, these businesses are now reported in the Safety & Infrastructure segment. The Realignment reflects how the Company’s Chief Operating Decision Maker now assesses the operating performance and allocates resources to the Safety & Infrastructure segment. Goodwill was also reallocated on a relative fair value basis between the applicable reporting units.

The Company reflected these changes to its segment information retrospectively to the earliest period presented which resulted in a transfer of external net sales, intersegment sales, total assets, and Adjusted EBITDA from the Electrical segment to the Safety & Infrastructure segment. These changes had no impact on the Company’s previously reported consolidated net sales, operating income, net income or earnings per share. See Note 16, ''Segment Information'' for additional details.

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, 2020, filed with the U.S. Securities and Exchange Commission (the "SEC") on November 19, 2020, 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 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.

7

Fiscal Periods — The Company has a fiscal year that ends on September 30. The Company's fiscal quarters typically end on the last Friday in December, March and June as it follows a 4-5-4 calendar.

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.

Recent Accounting Pronouncements

A summary of recently adopted accounting guidance is as follows. Adoption dates are on the first day of the fiscal year indicated below, unless otherwise specified.

ASU	Description of ASU	Impact to Atkore	Adoption Date
2016-13 Financial Instruments - Credit Losses (Topic 326)	The ASU adds to GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses.	The Company adopted this standard in the first quarter of 2021. The adoption of the standard did not have a material impact on the Company's consolidated financial statements.	2021

A summary of accounting guidance not yet adopted is as follows. Effective dates are on the first day of the fiscal year indicated below, unless otherwise specified.

ASU	Description of ASU	Impact to Atkore	Effective Date
2019-12, Simplifying the accounting for income taxes (Topic 740)	The ASU eliminates certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim period accounting for year to date loss limitations and changes in tax laws and clarifying the accounting for transactions outside of a business combination that result in a step up in the tax basis of goodwill.	Under evaluation. Based on procedures performed to date, the Company does not anticipate the adoption of this ASU to be material to the financial statements.	2022
2020-04, Reference rate reform Topic 848: Facilitation of the effects of reference rate reform on financial reporting	The ASU addresses constituents’ concerns about certain accounting consequences that could result from the global markets’ anticipated transition away from the use of the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.	Under evaluation. Based on procedures performed to date, the Company does not anticipate the adoption of this ASU to be material to the financial statements.	Option to implement ASU expires in 2022

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company’s revenue arrangements primarily consist of a single performance obligation to transfer promised goods which is satisfied at a point in time when title, risks and rewards of ownership, and subsequently control have transferred to the customer. This generally occurs when the product is shipped to the customer, with an immaterial amount of transactions in which control transfers upon delivery. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations.

The Company has certain arrangements that require it to estimate at the time of sale the amounts of variable consideration that should not be recorded as revenue as certain amounts are not expected to be collected from customers, as well as an estimate of the value of products to be returned. The Company principally relies on historical experience, specific customer agreements, and anticipated future trends to estimate these amounts at the time of sale and to reduce the transaction price. These arrangements include sales discounts and allowances, volume rebates, and returned goods.

8

The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue. The Company does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year. The Company also expenses costs incurred to obtain a contract, primarily sales commissions, as all obligations will be settled in less than one year.

The Company typically receives payment 30 to 60 days from the point it has satisfied the related performance obligation. See Note 16, ''Segment Information'' for revenue disaggregated by geography and product categories.

3. ACQUISITIONS

From time to time, the Company enters into strategic acquisitions in an effort to better service existing customers and to obtain new customers.

On October 22, 2020, the Company acquired Queen City Plastics, Inc. ("Queen City Plastics"), a leading manufacturer of PVC conduit, elbows and fittings for the electrical market. The purchase price was allocated to tangible assets acquired and liabilities assumed based on their fair values for which the purchase accounting has been finalized. The purchase price of $6.2 million was deemed immaterial to the Company.

On February 24, 2021, the Company acquired FRE Composites Group, a leading manufacturer of fiberglass conduit for the electrical and industrial market. The purchase price was allocated to tangible and intangible assets acquired and liabilities assumed, based on their fair values. As of March 26, 2021, the purchase price allocation has not been finalized as the Company is refining its fair value estimates for working capital, fixed assets and intangible assets. The preliminary purchase price was $37.1 million. The following table summarizes the Level 3 fair values assigned to the net assets acquired and liabilities assumed as of the acquisition date:

(in thousands)
Fair value of consideration transferred:
Cash consideration	37,060
Fair value of assets acquired and liabilities assumed:
Accounts receivable	2,163
Inventories	4,311
Intangible assets	17,900
Fixed assets	9,968
Accounts payable	(1,186)
Income taxes	(5,054)
Other	(465)
Net assets acquired	27,637
Excess purchase price attributed to goodwill acquired	$	9,423

The Company estimates $1.7 million of the goodwill is deductible for tax purposes. Goodwill recognized from this acquisition consists largely of the synergies and economies of scale from integrating this company with existing businesses.

The following table summarizes the fair value of intangible assets as of the acquisition date:

	FRE Composites Group
($ in thousands)	Fair Value		Weighted Average Useful Life (Years)
Customer relationships	$	14,500	11
Other	3,400		6
Total intangible assets	$	17,900

9

Net sales and net income of both the above acquisitions are included in the condensed consolidated statement of operations for the post-acquisition periods. Due to the immaterial nature of these acquisitions, both individually and in the aggregate, the Company did not include the full year pro forma results of operations for the acquisition year or previous years.    

4. POSTRETIREMENT BENEFITS

The Company provides pension benefits through a number of noncontributory and contributory defined benefit retirement plans covering eligible U.S. employees. As of September 30, 2017, all defined pension benefit plans were frozen, whereby participants no longer accrue credited service. The net periodic benefit credit was as follows: 

		Three months ended				Six months ended
(in thousands)	Note	March 26, 2021		March 27, 2020		March 26, 2021		March 27, 2020
Interest cost		$	682	$	935	$	1,364	$	1,870
Expected return on plan assets		(1,606)		(1,583)		(3,212)		(3,166)
Amortization of actuarial loss		333		222		666		444
Net periodic benefit credit	5	$	(591)	$	(426)	$	(1,182)	$	(852)

10

5. OTHER INCOME, NET

Other income, net consisted of the following:

	Three months ended				Six months ended
(in thousands)	March 26, 2021		March 27, 2020		March 26, 2021		March 27, 2020
Business interruption insurance recovery	$	(6,000)	$	—	$	(6,000)	$	—
Undesignated foreign currency derivative instruments	793		(3,666)		3,410		(543)
Foreign exchange gain on intercompany loans	(711)		2,407		(3,168)		(524)
Pension-related benefits	(591)		(426)		(1,182)		(852)
Gain on purchase of business	(731)		—		(731)		—
Other income, net	$	(7,240)	$	(1,685)	$	(7,671)	$	(1,919)

6. INCOME TAXES    

For the three months ended March 26, 2021 and March 27, 2020, the Company's effective tax rate attributable to income before income taxes was 23.5% and 25.1%, respectively. For the three months ended March 26, 2021 and March 27, 2020, the Company's income tax expense was $38,304 and $13,100 respectively. The decrease in the current period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation.

For the six months ended March 26, 2021 and March 27, 2020, the Company's effective tax rate attributable to income before income taxes was 23.7% and 21.6%, respectively. For the six months ended March 26, 2021 and March 27, 2020, the Company's tax expense was $65,268 and $20,440, respectively. The increase in the six month period effective tax rate was primarily due to a smaller increase in the net discrete tax benefit compared to the increase in earnings period over period.

A valuation allowance has been recorded against certain net operating losses in certain foreign jurisdictions. A valuation allowance is recorded when it is determined to be more likely than not that these 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 we have determined are more likely than not to be realized upon examination. We record interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the six months ended March 26, 2021, the balance of unrecognized tax benefits decreased by an immaterial amount due to the change in reserves for state audit items.

For the six months ended March 26, 2021, the Company made no additional provision for U.S. or non-U.S. income taxes for unrecognized deferred tax liabilities for temporary differences related to basis differences in investments in subsidiaries, as the investments are essentially permanent in duration.

7. EARNINGS PER SHARE

The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating securities as if all of the net earnings for the period had been distributed. The Company's participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common stockholders.

Basic earnings per common share excludes dilution and is calculated by dividing the net earnings allocated to common stock by the weighted-average number of common stock outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common stock by the weighted-average number of shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

11

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended				Six months ended
(in thousands, except per share data)	March 26, 2021		March 27, 2020		March 26, 2021		March 27, 2020
Numerator:
Net income	$	124,933	$	39,193	$	209,999	$	73,983
Less: Undistributed earnings allocated to participating securities	2,435		853		4,091		1,719
Net income available to common shareholders	$	122,498	$	38,340	$	205,908	$	72,264
Denominator:
Basic weighted average common shares outstanding	46,803		47,404		46,858		47,268
Effect of dilutive securities: Non-participating employee stock options (1)	744		691		728		961
Diluted weighted average common shares outstanding	47,547		48,095		47,586		48,229
Basic earnings per share	$	2.62	$	0.81	$	4.39	$	1.53
Diluted earnings per share	$	2.58	$	0.80	$	4.33	$	1.50
(1) Stock options to purchase approximately 0.0 million and 0.3 million shares of common stock were outstanding during the three months ended March 26, 2021 and March 27, 2020, respectively, 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 approximately 0.0 million and 0.1 million shares of common stock were outstanding during the six months ended March 26, 2021 and March 27, 2020, respectively, but were not included in the calculation of diluted earnings per share as the impact of these options would have been anti-dilutive.

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8. ACCUMULATED OTHER COMPREHENSIVE LOSS     

The following table presents the changes in accumulated other comprehensive loss by component for the three months ended March 26, 2021 and March 27, 2020.

(in thousands)	Defined benefit pension items		Currency translation adjustments		Total
Balance as of December 25, 2020	$	(30,499)	$	(4,742)	$	(35,241)
Other comprehensive loss before reclassifications	—		(818)		(818)
Amounts reclassified from accumulated other comprehensive loss, net of tax	262		—		262
Net current period other comprehensive income (loss)	262		(818)		(556)
Balance as of March 26, 2021	$	(30,237)	$	(5,560)	$	(35,797)

(in thousands)	Defined benefit pension items		Currency translation adjustments		Total
Balance as of December 27, 2019	$	(23,611)	$	(12,771)	$	(36,382)
Other comprehensive loss before reclassifications	—		(6,229)		(6,229)
Amounts reclassified from accumulated other comprehensive loss, net of tax	226		—		226
Net current period other comprehensive income (loss)	226		(6,229)		(6,003)
Balance as of March 27, 2020	$	(23,385)	$	(19,000)	$	(42,385)

The following table presents the changes in accumulated other comprehensive loss by component for the six months ended March 26, 2021 and March 27, 2020.

(in thousands)	Defined benefit pension items		Currency translation adjustments		Total
Balance as of September 30, 2020	$	(30,761)	$	(11,793)	$	(42,554)
Other comprehensive income before reclassifications	—		6,233		6,233
Amounts reclassified from accumulated other comprehensive loss, net of tax	524		—		524
Net current period other comprehensive income	524		6,233		6,757
Balance as of March 26, 2021	$	(30,237)	$	(5,560)	$	(35,797)

(in thousands)	Defined benefit pension items		Currency translation adjustments		Total
Balance as of September 30, 2019	$	(23,818)	$	(17,880)	$	(41,698)
Other comprehensive loss before reclassifications	—		(1,120)		(1,120)
Amounts reclassified from accumulated other comprehensive loss, net of tax	433		—		433
Net current period other comprehensive income (loss)	433		(1,120)		(687)
Balance as of March 27, 2020	$	(23,385)	$	(19,000)	$	(42,385)

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9. INVENTORIES, NET

A majority of the Company's inventories are recorded at the lower of cost (primarily last in, first out, or "LIFO") or market or net realizable value, as applicable. Approximately 77% and 73% of the Company's inventories were valued at the lower of LIFO cost or market at March 26, 2021 and September 30, 2020, respectively. Interim LIFO determinations, including those at March 26, 2021, are based on management's estimates of future inventory levels and costs for the remainder of the current fiscal year.

(in thousands)	March 26, 2021		September 30, 2020
Purchased materials and manufactured parts, net	$	58,536	$	49,192
Work in process, net	27,713		24,113
Finished goods, net	151,643		125,790
Inventories, net	$	237,892	$	199,095

Total inventories would be $32,550 higher and $4,418 lower than reported as of March 26, 2021 and September 30, 2020, respectively, if the first-in, first-out method was used for all inventories. As of March 26, 2021, and September 30, 2020, the excess and obsolete inventory reserve was $13,762 and $14,533, respectively.

10. PROPERTY, PLANT AND EQUIPMENT

As of March 26, 2021, and September 30, 2020, property, plant and equipment and accumulated depreciation were as follows:

(in thousands)	March 26, 2021		September 30, 2020
Land	$	23,170	$	20,460
Buildings and related improvements	131,188		129,538
Machinery and equipment	363,108		332,260
Leasehold improvements	10,465		9,862
Software	27,844		27,028
Construction in progress	18,846		22,736
Property, plant and equipment, at cost	574,621		541,884
Accumulated depreciation	(318,405)		(297,993)
Property, plant and equipment, net	$	256,216	$	243,891

Depreciation expense for the three months ended March 26, 2021 and March 27, 2020 totaled $11,170 and $10,407 respectively. Depreciation expense for the six months ended March 26, 2021 and March 27, 2020 totaled $21,953 and $21,024, respectively.

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11. GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill are as follows:    

(in thousands)	Electrical		Safety & Infrastructure		Total
Balance as of October 1, 2020	$	144,662	$	43,577	$	188,239
Goodwill acquired during year	9,423		—		9,423
Exchange rate effects	1,851		—		1,851
Balance as of March 26, 2021	$	155,936	$	43,577	$	199,513

Goodwill balances as of October 1, 2020 and March 26, 2021 include $3,924 and $43,000 of accumulated impairment losses within the Electrical and Safety & Infrastructure segments, respectively.

The Company assesses the recoverability of goodwill and indefinite-lived trade names on an annual basis in accordance with 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 or the respective indefinite-lived trade name is less than the carrying value.

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

		March 26, 2021						September 30, 2020
($ 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	11	$	370,848	$	(219,196)	$	151,652	$	355,735	$	(202,677)	$	153,058
Other	8	24,893		(10,435)		14,458		19,086		(9,675)		9,411
Total		395,741		(229,631)		166,110		374,821		(212,352)		162,469
Indefinite-lived intangible assets:
Trade names		92,880		—		92,880		92,880		—		92,880
Total		$	488,621	$	(229,631)	$	258,990	$	467,701	$	(212,352)	$	255,349

Other intangible assets consist of definite-lived trade names, technology, non-compete agreements and backlogs. Amortization expense for the three months ended March 26, 2021 and March 27, 2020 was $8,096 and $8,071, respectively. Amortization expense for the six months ended March 26, 2021 and March 27, 2020 was $16,356 and $16,184, respectively. Expected amortization expense for intangible assets for the remainder of fiscal 2021 and over the next five years and thereafter is as follows:

(in thousands)
Remaining 2021	$	22,744
2022	34,950
2023	34,842
2024	28,974
2025	15,450
2026	14,104
Thereafter	15,046

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

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12. DEBT

Debt as of March 26, 2021 and September 30, 2020 was as follows:

(in thousands)	March 26, 2021		September 30, 2020
First Lien Term Loan Facility due December 22, 2023	$	771,629	$	811,540
Deferred financing costs	(6,580)		(7,804)
Total debt	$	765,049	$	803,736
Less: Current portion	—		—
Long-term debt	$	765,049	$	803,736

During the three months ended December 25, 2020, the Company made a voluntary prepayment of $40,000 of principal on the First Lien Loan. The voluntary prepayments in the past two years resulted in the elimination of all principal payment requirements until the contractual maturity of the debt in fiscal 2024.

The asset-based credit facility (the "ABL Credit Facility") has aggregate commitments of $325,000 and is guaranteed by AIH, the U.S. operating companies owned by AII and certain other restricted subsidiaries of AII that AII causes to be a subsidiary guarantor from time to time. AII's availability under the ABL Credit Facility was $315,499 and $265,899 as of March 26, 2021 and September 30, 2020, respectively.

13. 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 balances 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 six months to two years. Short-term forward currency contracts are recorded in either other current assets or other current liabilities and long-term forward currency contracts are recorded in either other long-term assets or other long-term liabilities in the condensed consolidated balance sheet. The fair value gains and losses are included in other income, net within the condensed consolidated statements of operations. See Note 5, ''Other Income, net'' for further detail.

The total notional amounts of undesignated forward currency contracts were £36.1 million and £43.3 million as of March 26, 2021 and September 30, 2020, 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:

	March 26, 2021						September 30, 2020
(in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	218,684	$	—	$	—	$	209,421	$	—	$	—
Forward currency contracts	—		—		—		—		2,209		—
Liabilities
Forward currency contracts	—		$	1,174	—		—		102		—

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:

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	March 26, 2021				September 30, 2020
(in thousands)	Carrying Value		Fair Value		Carrying Value	Fair Value
First Lien Term Loan Facility due December 22, 2023	$	772,120	$	772,808	$</