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ZEP

20.04
0.00 (0.00%)
14 Jun 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
NYSE:ZEP NYSE Common Stock
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Annual Report of Employee Stock Plans (11-k)

24/06/2015 5:31pm

Edgar (US Regulatory)


Table of Contents

 

 

 

FORM 11-K

 


 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934

 

(Mark One)

 

x               ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the fiscal year ended: December 31, 2014

 

OR

 

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

 

For the transition period from              to

 

Commission file number 001- 33633

 


 

A.                     Full title of the plans and the address of the plans, if different from that of the Issuer named below:

 

Zep Inc. 401(k) Plan

 

B.                     Name of issuer of the securities held pursuant to the plans and the address of the Principal executive office:

 

Zep Inc.

1310 Seaboard Industrial Boulevard, N.W.

Atlanta, Georgia 30318

 

 

 



Table of Contents

 

Zep Inc. 401(k) Plan

 

Audited Financial Statements and Supplemental Schedules

At December 31, 2014 and 2013 and for the year ended December 31, 2014

 

Contents

 

 

 

Report of Independent Registered Public Accounting Firm

1

 

 

Financial Statements

 

 

 

Statements of Net Assets Available for Benefits

2

Statement of Changes in Net Assets Available for Benefits

3

Notes to Financial Statements

4

 

 

Supplemental Schedules

 

 

 

Schedule of Delinquent Contributions

13

Schedule of Assets (Held at End of Year)

14

Exhibit Index

16

 



Table of Contents

 

Report of Independent Registered Public Accounting Firm

 

Investment Committee

Zep Inc. 401(k) Plan

 

We have audited the accompanying statements of net assets available for benefits of the Zep Inc. 401(k) Plan (the “Plan”) as of December 31, 2014, and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2014 and 2013, and the changes in its net assets available for benefits for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

 

The supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions have been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions are the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions reconcile to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions. In forming our opinion on the supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions, we evaluated whether the supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions, including their form and content, are presented in conformity with Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental schedule of assets (held at end of year) and the schedule of delinquent contributions are fairly stated, in all material respects, in relation to the financial statements as a whole.

 

 

/s/ Babush, Neimanm Kornman & Johnson LLP

 

Atlanta, GA

June 24, 2015

 



Table of Contents

 

Zep Inc. 401(k) Plan

Statements of Net Assets Available for Benefits

As of December 31, 2014 and 2013

 

 

 

December 31,

 

 

 

2014

 

2013

 

Assets:

 

 

 

 

 

Investments, at fair value

 

$

165,703,345

 

$

166,392,870

 

Cash, non-interest bearing

 

48,022

 

2,189

 

Notes receivable from participants

 

3,045,369

 

3,092,562

 

Participant contributions receivable

 

119,142

 

215,053

 

Employer contributions receivable

 

137,909

 

89,456

 

Total Assets

 

169,053,787

 

169,792,130

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Excess contributions payable

 

 

43,625

 

 

 

 

 

 

 

Net assets available for plan benefits, at fair value

 

169,053,787

 

169,748,505

 

 

 

 

 

 

 

Adjustment from fair value to contract value for interest relative to fully benefit responsive investment contracts

 

(1,010,411

)

(1,234,385

)

 

 

 

 

 

 

Net assets available for benefits

 

$

168,043,376

 

$

168,514,120

 

 

See accompanying notes to the financial statements.

 

2



Table of Contents

 

Zep Inc. 401(k) Plan

Statement of Changes in Net Assets Available for Benefits

For the Year Ended December 31, 2014

 

Additions:

 

 

 

Investment income:

 

 

 

Interest and dividend income

 

$

5,760,006

 

Net appreciation in fair value of investments

 

3,303,684

 

Total investment income

 

9,063,690

 

 

 

 

 

Interest income on notes receivable from participants

 

111,263

 

 

 

 

 

Contributions:

 

 

 

Participant contributions

 

7,123,467

 

Employer contributions

 

2,279,972

 

Total contributions

 

9,403,439

 

 

 

 

 

Total additions

 

18,578,392

 

 

 

 

 

Deductions:

 

 

 

Benefit payments

 

(18,946,000

)

Administrative expenses

 

(103,136

)

 

 

 

 

Total deductions

 

(19,049,136

)

 

 

 

 

 

 

 

 

Net decrease in assets available for benefits

 

(470,744

)

 

 

 

 

Net assets available for benefits:

 

 

 

Beginning of year

 

168,514,120

 

 

 

 

 

End of the year

 

$

168,043,376

 

 

See accompanying notes to the financial statements.

 

3



Table of Contents

 

Zep Inc. 401(k) Plan

 

Notes to Financial Statements

 

1.                    Description of the Plan

 

The following description of the Zep Inc. 401(k) Plan (the “Plan”), sponsored by Zep Inc. (the “Company, the “Employer, or “Zep”) provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan’s provisions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

 

Eligibility and Forfeitures

 

The Plan covers substantially all domestic salaried, commissioned, union and non-union hourly employees of the Company.

 

Employees of the Company have immediate eligibility upon attaining the age of 21 and satisfying a 30-day minimum employment period. The Plan provides that forfeitures of Employer contributions may be used to pay Plan administrative expenses or reduce future Employer contributions. As of December 31, 2014 and 2013, there were approximately $23,000 and $46,000 in forfeited accounts.

 

In the event of the cessation of operation of a plant, or the discontinuance of certain portions of the Company’s business, Plan participants shall automatically become fully vested in Employer contributions upon termination.

 

Effective June 1, 2006, automatic enrollment was implemented for all new hires at a 3% deferral rate. Employer matching amounts are allocated in accordance with the participant’s current investment elections for elective deferrals at the time the match is funded.

 

Refer to the Plan agreement for additional information about the Plan’s eligibility, funding, allocation, vesting, and benefit provisions.

 

Participant Accounts

 

Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, the Company’s contribution, allocation of Plan earnings, and charged with withdrawals, an allocation of Plan losses, and administrative expenses. Allocations are based on participant earnings or account balances, as defined by the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Loans

 

Participants may borrow the lesser of 50% of their vested balance or $50,000 (reduced by the excess of the participant’s highest outstanding loan balance from the twelve months prior to the loan request). Participants agree to loan repayment terms upon endorsement of the borrowed funds. Only one outstanding general-purpose loan for each participant is permitted during a calendar year.

 

Loan repayments must be substantially equal in amount over the term of the loan and must be made by payroll deduction on an after-tax basis. General-purpose loans must be repaid within five years.

 

Loan repayments may be suspended, at the discretion of the Company, for a period of not more than twelve months if a participant is on unpaid leave of absence, disability, or military service. Upon return, the loan will be amortized over the initial loan repayment period.

 

Administration

 

Administration of the Plan is the Company’s responsibility.  The Company has delegated the selection and evaluation of certain investments that are available to Plan participants to an Investment Committee, the members of which are designated by the Compensation Committee of the Company’s Board of Directors.

 

Plan Termination

 

Although the Company intends for the Plan to be permanent, the Plan provides the Company the right to discontinue contributions or to terminate the Plan at any time.

 

4



Table of Contents

 

In the event of a Plan termination, each respective participant shall be 100% vested in the balance of his/her account and his/her proportionate share of any future adjustments.

 

Parties-In-Interest

 

As of December 31, 2014 and 2013, the percentage of the Plan’s net assets invested in the common stock of Zep was 1.2% and 1.4%, respectively.  In addition, the Plan holds shares of mutual funds managed by the trustee of the Plan. As indicated below, the Plan paid certain expenses related to plan operations and investment activity to various parties.  These transactions are party in interest transactions under ERISA.

 

Funding Policy

 

The basis for determining participant (pre-tax and Roth) and Employer contributions for the year ended December 31, 2014 is as follows:

 

Plan Name

 

Participant
Contributions

 

Employer Contributions

Zep Inc. 401(k) Plan

 

1% to 50% of compensation

 

50% of participant contributions up to 6% of compensation. Deferrals in excess of 6% of the participant’s annual compensation shall not be eligible for matching contributions.

 

Effective January 1, 2009, the Plan was amended allowing Zep, at its sole discretion, to make matching contributions to the Plan on behalf of each eligible participant for a Plan year. The matching contribution, if any, shall be determined from time to time by Zep at its sole discretion, and the matching contribution may be expressed as a percentage of the amount of each participant’s elective deferrals. Further, Zep may, at its sole discretion, limit the amount of a participant’s elective deferrals eligible for a matching contribution. As a result of this amendment, Zep may elect to make matching contributions annually or more frequently.

 

Effective April 1, 2014, the Plan was amended allowing participants to designate all or a portion of his or her elective deferrals as Roth Elective Deferrals in accordance with the Plan.

 

Administrative Expenses

 

Certain reasonable Plan administration expenses approved in accordance with Plan requirements may be paid from Plan assets, all other expenses are borne by the Company.

 

Benefits/Distributions

 

Generally, upon termination of service due to death, disability, retirement, or separation from service, a participant or designated beneficiary may elect to receive a lump-sum amount equal to the value of the participant’s vested interest in his/her account.  The participant may also elect to roll over his/her account into an Individual Retirement Account (“IRA”) or another company’s retirement plan, or leave it in the Plan as long as the value of the account exceeds $1,000.  If the participant’s balance is less than $1,000, the Company has the authority to distribute the balance to the participant in a single lump-sum payment.  A participant may make withdrawals from his/her elective contribution account balance after reaching age 59½ and must begin receiving distributions at age 70½ if the participant has terminated employment by that time.  Participants are eligible to withdraw part of their plan account balance if they experience a qualified hardship.  When a hardship distribution is approved then the participant is suspended from making pre-tax contributions to the Plan for six months following the distribution.

 

Vesting

 

Participants are immediately vested in their pretax contribution.

 

5



Table of Contents

 

Participants become vested in employer matching contributions based on the following schedule of participant’s credited years of service as of the date the vested interest is determined. In determining the vested interest in this account, all of the participant’s years of service will be counted. Any part of this account which is not vested will be forfeited when the participant receives a distribution of their vested interest (or after the participant incurs 5 consecutive breaks in service, if earlier) and will thereafter be used to reduce employer contributions.

 

1 Year of Service

 

20% Vested

 

2 Years of Service

 

40% Vested

 

3 Years of Service

 

60% Vested

 

4 Years of Service

 

80% Vested

 

5 Years of Service

 

100% Vested

 

 

2.                    Significant Accounting Policies

 

Basis of Accounting

 

The accompanying financial statements are prepared on the accrual basis of accounting in conformity with the accounting principles generally accepted in the United States of America (U.S. GAAP).

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and the differences could be significant.

 

Subsequent Events

 

We have evaluated the financial statements for subsequent events through the date of filing of this Form 11-K, which is the date the financial statements were issued.  See Note 10.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

Notes Receivable from Participants

 

Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2014 or 2013. If a participant ceases to make loan repayments and the Plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a benefit payment is recorded.

 

Excess Contributions Payable

 

Amounts payable to participants for contributions in excess of amounts allowed by the Internal Revenue Service (“IRS”) are recorded as a liability as of December 31, 2013 and were returned to participants in accordance with IRS regulations.

 

Investments

 

Participants direct the investment of their contributions into various investment options offered by the Plan. Company contributions are automatically invested in accordance with the participants’ allocation.

 

Investment Valuation and Income Recognition

 

The investments in the Plan are participant-directed and are subject to certain administrative guidelines and limitations as to the type and amount of securities held. Certain fund assets are allocated to selected independent investment managers to invest under these guidelines. Investments of the Plan, including synthetic guaranteed investment contracts (“synthetic GICs”), are stated at fair value, as determined by the trustee from quoted market prices or quoted redemption values in an active market or as determined by the investment fund managers using generally accepted valuation procedures for synthetic GICs. Securities traded on a national exchange are valued at the last reported sales price on the last business day of the Plan year; investments traded in the over-the-counter market and listed securities for which no sale was reported on the last day of the Plan year are valued at the last reported bid price.

 

6



Table of Contents

 

The Plan holds synthetic GIC’s as part of the Stable Value Fund investment held by the Plan. The synthetic GICs each hold a diversified portfolio of primarily units of common collective trust funds held in the name of the Plan. The synthetic GICs or wrap contracts have features that provide for variable interest crediting rates which are credited to the contract value of the contracts’ underlying holdings. As required by Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 962, Plan Accounting — Defined Contribution Pension Plans, the Plan’s investments in the synthetic GICs have been presented at fair value on the Statements of Net Assets Available for Benefits. An adjustment has also been included in the Statements of Net Assets Available for Benefits so that ending net assets available for benefits are presented at contract value.

 

Contract value represents contributions made under the contract, plus earnings, less member withdrawals and administrative expenses. Members may ordinarily direct the withdrawal and transfer of all or a portion of their investment at contract value. The crediting interest rate is based on a mutually agreed upon formula that resets on a monthly basis depending on the performance of the underlying assets being managed. The minimum crediting rate is 0%.

 

Certain events limit the ability of the Plan to transact at contract value with the issuer. These events include, but are not limited to, the following: (1) amendments to the Plan documents that materially and adversely affect the risk borne by the contract issuer, unless otherwise approved by the issuer, (2) bankruptcy of the Plan sponsor or other Plan sponsor events which cause a significant withdrawal from the Plan or (3) the failure of the Plan to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Company does not believe that the occurrence of any event limiting the Plan’s ability to transact at contract value with members is probable.

 

The synthetic GIC issuers can only terminate the contract under very limited circumstances, such as the Company or the investment fund managers’ breach of material obligations made under the agreement, or upon completion of specified periods of time following notice periods. Zep does not believe it is probable that the synthetic GICs will be terminated.

 

The average yield of the synthetic GICs based on actual earnings was approximately 1.39% and 1.23% at December 31, 2014 and 2013, respectively, while the average yields actually credited to members was approximately 2.16 % and 2.04% at December 31, 2014 and 2013, respectively. At December 31, 2014 and 2013, the fair values of the Plan’s interest in the underlying assets of the synthetic GICs were $33,163,190 and $36,441,173, respectively, and the book valuation adjustments were $(1,010,411) and $(1,234,385) for these respective periods.

 

3.                    Investments

 

The fair values of individual investments that represent 5% or more of the Plan’s net assets available for benefits are as follows:

 

 

 

December 31, 
2014

 

December 31, 
2013

 

Zep Inc. Stable Value Fund

 

$

33,163,190

 

$

36,441,173

 

Vanguard Institutional Index

 

20,660,818

 

18,817,404

 

Dow Jones Target 2025 Fund

 

13,302,154

 

13,506,134

 

Columbia Dividend Income Class Z

 

12,954,919

 

12,289,004

 

T Rowe Price Growth Stock Fund

 

11,740,934

 

11,767,797

 

American Funds EuroPacific Growth Gr R5

 

10,770,492

 

11,048,126

 

T Rowe Price Mid Cap Growth Fund

 

9,272,612

 

9,414,772

 

 

7



Table of Contents

 

The following investments are the components of the synthetic GICs, and any of these investments exceeding 5% or more of the Plan’s net assets available for benefits have been denoted with double-asterisk (**):

 

Zep Inc. Stable Value Fund as of December 31, 2014

 

Contract Issuer

 

Security

 

Fair Value

 

Valuation
Adjustment

 

Contract
Value

 

Voya Financial

 

IGT INVESCO Short-term bond fund

 

$

3,896,393

 

$

(99,573

)

$

3,796,820

 

NATIXIS Capital Markets

 

IGT INVESCO Short-term bond fund

 

4,983,004

 

(156,222

)

4,826,782

 

Transamerica Stable Value Solutions Inc.

 

IGT MxMgr Core

 

4,877,112

 

(248,595

)

4,628,517

 

Invesco Ltd. Trust **

 

IVZ Trust Stable Value Fund

 

10,290,182

 

(69,609

)

10,220,574

 

Pacific Life

 

IGT MxMGR Int G/C

 

8,000,190

 

(436,413

)

7,563,777

 

Subtotal

 

 

 

32,046,881

 

(1,010,411

)

31,036,470

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

 

State Street Bank

 

Cash

 

1,116,309

 

 

1,116,309

 

Total

 

 

 

$

33,163,190

 

$

(1,010,411

)

$

32,152,779

 

 

Zep Inc. Stable Value Fund as of December 31, 2013

 

Contract Issuer

 

Security

 

Fair Value

 

Valuation
Adjustment

 

Contract
Value

 

ING Life & Annuity

 

IGT INVESCO Short-term bond fund

 

$

3,837,452

 

$

(123,626

)

$

3,713,826

 

NATIXIS Capital Markets

 

IGT INVESCO Short-term bond fund

 

5,899,095

 

(193,259

)

5,705,836

 

Monumental

 

IGT MxMgr Core

 

4,747,233

 

(250,789

)

4,496,444

 

Invesco Ltd. Trust **

 

IVZ Trust Stable Value Fund

 

10,174,522

 

(224,736

)

9,949,786

 

Pacific Life

 

IGT MxMGR Int G/C

 

8,133,945

 

(441,975

)

7,691,970

 

Subtotal

 

 

 

32,792,247

 

(1,234,385

)

31,557,862

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

 

State Street Bank

 

Cash

 

3,648,926

 

 

3,648,926

 

Total

 

 

 

$

36,441,173

 

$

(1,234,385

)

$

35,206,788

 

 

The Plan’s investments, including investments bought, sold and held during the year, appreciated in value for the year ended December 31, 2014 as follows:

 

Net depreciation in fair value of common stock (quoted market prices)

 

$

(284,062

)

Net appreciation in fair value from common/collective trust funds (fair value determined by trustee)

 

1,371,536

 

Net appreciation in fair value from mutual funds (quoted market prices)

 

2,160,661

 

Net appreciation in other investments (quoted market prices)

 

55,550

 

Net appreciation of fair value of investments

 

$

3,303,684

 

 

8



Table of Contents

 

4.                    Fair Value Measurements

 

Zep determines a fair value measurement based on the assumptions a market participant would use in pricing an asset or liability. Accounting guidance established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

 

·                  Level 1 — Quoted prices in active markets for identical assets or liabilities.

·                  Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

·                  Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

 

The Plan’s Investments, at fair value as of December 31, 2014 and 2013 are presented within the following tables:

 

 

 

 

 

Fair Value Measurements
as of December 31, 2014

 

Assets

 

Fair Value
as of
December 31, 2014

 

Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Mutual Funds

 

 

 

 

 

 

 

 

 

T Rowe Price Mid Cap Growth Fund

 

$

9,272,612

 

$

9,272,612

 

 

 

 

 

Vanguard Institutional Index

 

20,660,818

 

20,660,818

 

 

 

 

 

JP Morgan Mid Cap Value Select

 

5,353,431

 

5,353,431

 

 

 

 

 

Northern Small Cap Value Fund

 

5,273,281

 

5,273,281

 

 

 

 

 

Columbia Dividend Income Class Z

 

12,954,919

 

12,954,919

 

 

 

 

 

T Rowe Price Growth Stock Fund

 

11,740,934

 

11,740,934

 

 

 

 

 

EuroPacific Growth Gr R5

 

10,770,492

 

10,770,492

 

 

 

 

 

PIMCO Total Return Fund Instl

 

7,239,432

 

7,239,432

 

 

 

 

 

Wells Fargo Adv Emerging Growth

 

5,617,599

 

5,617,599

 

 

 

 

 

Schwab Value Money Market Fund

 

231

 

231

 

 

 

 

 

PCRA Self-Directed Brokerage Account

 

 

 

 

 

 

 

 

 

Equity mutual funds

 

1,681,052

 

1,681,052

 

 

 

 

 

Domestic common stock

 

3,805,122

 

3,805,122

 

 

 

 

 

Money market fund

 

1,859,425

 

1,859,425

 

 

 

 

 

Other

 

3,405,757

 

3,405,757

 

 

 

 

 

Stable Value Fund (a)

 

33,163,190

 

 

 

$

33,163,190

 

 

 

Common/Collective Trusts

 

 

 

 

 

 

 

 

 

Dow Jones Target Today Fund (b)

 

1,018,491

 

 

 

1,018,491

 

 

 

Dow Jones Target 2015 Fund (b)

 

2,160,917

 

 

 

2,160,917

 

 

 

Dow Jones Target 2025 Fund (b)

 

13,302,154

 

 

 

13,302,154

 

 

 

Dow Jones Target 2035 Fund (b)

 

5,612,767

 

 

 

5,612,767

 

 

 

Dow Jones Target 2045 Fund (b)

 

3,646,379

 

 

 

3,646,379

 

 

 

Dow Jones Target 2055 Fund (b)

 

231,582

 

 

 

231,582

 

 

 

US Bond Index SL Series I (b)

 

4,846,802

 

 

 

4,846,802

 

 

 

Zep Inc. Common Stock

 

2,085,958

 

2,085,958

 

 

 

 

 

 

 

$

165,703,345

 

 

 

 

 

 

 

 

9



Table of Contents

 

 

 

 

 

Fair Value Measurements
as of December 31, 2013

 

Assets

 

Fair Value
as of
December 31, 2013

 

Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Mutual Funds

 

$

9,414,772

 

$

9,414,772

 

 

 

 

 

T Rowe Price Mid Cap Growth Fund

 

18,817,404

 

18,817,404

 

 

 

 

 

Vanguard Institutional Index

 

4,988,630

 

4,988,630

 

 

 

 

 

JP Morgan Mid Cap Value Select

 

5,596,550

 

5,596,550

 

 

 

 

 

Northern Small Cap Value Fund

 

12,289,004

 

12,289,004

 

 

 

 

 

Columbia Dividend Income Class Z

 

11,767,797

 

11,767,797

 

 

 

 

 

T Rowe Price Growth Stock Fund

 

11,048,126

 

11,048,126

 

 

 

 

 

EuroPacific Growth Gr R5

 

7,030,613

 

7,030,613

 

 

 

 

 

PIMCO Total Return Fund Instl

 

6,860,548

 

6,860,548

 

 

 

 

 

Wells Fargo Adv Emerging Growth

 

522

 

522

 

 

 

 

 

Schwab Value Money Market Fund

 

3,648,926

 

3,648,926

 

 

 

 

 

Stable Value Fund Cash

 

 

 

 

 

 

 

 

 

PCRA Self-Directed Brokerage Account

 

 

 

 

 

 

 

 

 

Equity Mutual Funds

 

2,445,828

 

2,445,828

 

 

 

 

 

Domestic common stock

 

3,235,331

 

3,235,331

 

 

 

 

 

Money market fund

 

1,721,953

 

1,721,953

 

 

 

 

 

Other

 

2,712,546

 

2,712,546

 

 

 

 

 

Stable Value Fund (a)

 

32,792,247

 

 

 

$

32,792,247

 

 

 

Common/Collective Trusts

 

 

 

 

 

 

 

 

 

Dow Jones Target Today Fund (b)

 

1,207,043

 

 

 

1,207,043

 

 

 

Dow Jones Target 2015 Fund (b)

 

2,035,641

 

 

 

2,035,641

 

 

 

Dow Jones Target 2025 Fund (b)

 

13,506,134

 

 

 

13,506,134

 

 

 

Dow Jones Target 2035 Fund (b)

 

4,717,261

 

 

 

4,717,261

 

 

 

Dow Jones Target 2045 Fund (b)

 

3,416,905

 

 

 

3,416,905

 

 

 

Dow Jones Target 2055 Fund (b)

 

129,456

 

 

 

129,456

 

 

 

US Bond Index SL Series I (b)

 

4,555,636

 

 

 

4,555,636

 

 

 

Zep Inc. Common Stock

 

2,453,997

 

2,453,997

 

 

 

 

 

 

 

$

166,392,870

 

 

 

 

 

 

 

 


(a)   The Stable Value Fund’s key strategy is to provide preservation of principal, maintain a stable interest rate and provide daily liquidity at contract value for participant withdrawals and transfers in accordance with the provisions of the Plan. The fair value of the Stable Value Fund is valued using the net asset value (“NAV”) provided by the administrator of the underlying common collective trust funds. NAV is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of shares outstanding. There are no redemption restrictions.

 

(b)   The State Street Bank Dow Jones Target Funds consist of a diverse combination of equity and bond securities and are valued using the NAV provided by the administrator of those funds. NAV is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of shares outstanding. There are no redemption restrictions.

 

5.                    Income Tax Status

 

The underlying non-standardized prototype plan has received an opinion letter from the Internal Revenue Service (‘IRS’) dated May 23, 2008, stating that the form of the plan is qualified under Section 401(a) of the Internal Revenue Code (“the Code”) and therefore the related trust is tax-exempt. In accordance with Revenue Procedures 2010-6 and 2005-16, the plan administrator has determined that it is eligible to and has chosen to rely on the current IRS prototype plan opinion letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualified status. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and therefore believes the Plan is qualified and the related trust is tax-exempt.

 

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Table of Contents

 

Uncertain tax position

 

Accounting principles generally accepted in the United States require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for years prior to 2011.

 

6.                    Reconciling Items and Form 5500

 

The following is a reconciliation from the financial statements to the Form 5500 as of December 31, 2014, and 2013, and for the year ended December 31, 2014.

 

 

 

2014

 

2013

 

Net Assets Available For Benefits per Financial Statements

 

$

168,043,376

 

$

168,514,120

 

Adjustment from contract value to fair value for fully benefit responsive investment contract

 

1,010,411

 

1,234,385

 

Excess contribution payable

 

 

43,625

 

Net Assets Available For Benefits per Form 5500

 

$

169,053,787

 

$

169,792,130

 

 

 

 

 

 

 

Net decrease in net assets available for benefits per financial statements

 

$

(470,744

)

 

 

Net adjustment from contract value to fair value for fully benefit-responsive investment contract

 

(223,974

)

 

 

Subtract: Excess contributions payable at December 31, 2013

 

(43,625

)

 

 

Total Net loss per Form 5500

 

$

(738,343

)

 

 

 

7.                    Excess Contributions Payable

 

As of December 31, 2013, certain 2013 participant contributions were deemed to be excess contributions under the Code. Such contributions were refunded to Plan participants in March of the subsequent year. A liability for excess contributions of $43,625 was recorded in the Statements of Net Assets Available for Benefits as of December 31, 2013. There were no excess contributions for the year ended December 31, 2014.

 

8.                    Risks and Uncertainties

 

The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term, and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

 

9.                    Nonexempt Party-In-Interest Transactions

 

The Company remitted certain contributions in 2014 totaling of $704 later than required by DOL Regulation 2510.3-102.  The Company filed Form 5330 with the IRS and paid the required excise tax on the transactions.  In addition, participant accounts were credited with the amount of investment income that would have been earned had the participant contributions been remitted on a timely basis.

 

11



Table of Contents

 

10.             Subsequent Event

 

The Company entered into an Agreement and Plan of Merger, dated April 7, 2015 (the “Merger Agreement”), by and among the Company, NM Z Parent Inc. and NM Z Merger Sub Inc. (“Merger Sub”), that calls for, among other things: (1) each issued and outstanding share of common stock, $0.01 par value, of the Company (“Company Stock”) (other than shares of Company Stock to be cancelled in accordance with the Merger Agreement) to be converted into the right to receive $20.05 in cash, without interest; and (2) Merger Sub to merge with and into the Company, whereupon the separate existence of Merger Sub will cease and the Company will be the surviving corporation in the merger (the “Merger”). At the completion of the Merger, the Company will no longer have publicly-traded common stock and will no longer be able to offer Company Stock as an investment option in the Zep Inc. 401(k) Plan (the “Plan”). We anticipate that the Merger will become effective after the stock market closes on June 25, 2015 . Shares in Zep Stock will be converted to cash in early July 2015 and proceeds will be automatically invested in the BlackRock LifePath Target Fund that corresponds with the participant’s year of birth.

 

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Table of Contents

 

Zep Inc. 401(k) Plan

Schedule H, Line 4i

Schedule of Delinquent Contributions

For the Year Ended December 31, 2014

EIN#: 26-0783366 Plan: 007

 

Participant Contributions 
Transferred Late to Plan

 

Total that Constitute Nonexempt Prohibited Transactions

 

 

 

Check here if Late Participant 
Loan Repayments are included:

 

Contributions Not
Corrected

 

Contributions Corrected
Outside VFCP

 

Contributions 
Pending 
Correction in 
VFCP

 

Total Fully 
Corrected Under 
VFCP and PTE 
2002-51

 

 

 

 

 

 

 

 

 

 

 

$

 704

 

$

 

$

704

 

$

 

$

 

 

13



Table of Contents

 

Zep Inc. 401(k) Plan

Schedule H, Line 4i

Schedule of Assets (Held at End of Year)

December 31, 2014

EIN#: 26-0783366 Plan: 007

 

(a)

 

(b)
Identity of Issue, Borrower
Lessor, or Similar Party

 

(c)
Description of Investment

 

(e)
Current Value

 

 

 

T Rowe Price

 

T Rowe Price Mid Cap Growth fund

 

$

9,272,612

 

 

 

Vanguard

 

Vanguard Institutional Index

 

20,660,818

 

 

 

JP Morgan

 

JP Morgan Mid Cap Value Select

 

5,353,431

 

 

 

Northern Trust

 

Northern Small Cap Value Fund

 

5,273,281

 

 

 

Columbia Management Advisors, LLC

 

Columbia Dividend Income Class Z

 

12,954,919

 

 

 

T Rowe Price

 

T Rowe Price Growth Stock Fund

 

11,740,934

 

 

 

American Funds

 

EuroPacific Growth Gr R5

 

10,770,492

 

 

 

PIMCO

 

PIMCO Total Return Fund Instl

 

7,239,432

 

 

 

Wells Fargo

 

Wells Fargo Advantage Emerging Growth

 

5,617,599

 

*

 

Charles Schwab

 

Schwab Value Money Market Fund

 

231

 

*

 

Charles Schwab

 

PCRA Self-Directed Brokerage Account

 

10,751,356

 

 

 

State Street Bank

 

Dow Jones Target Today Fund

 

1,018,491

 

 

 

State Street Bank

 

Dow Jones Target 2015 Fund

 

2,160,917

 

 

 

State Street Bank

 

Dow Jones Target 2025 Fund

 

13,302,154

 

 

 

State Street Bank

 

Dow Jones Target 2035 Fund

 

5,612,767

 

 

 

State Street Bank

 

Dow Jones Target 2045 Fund

 

3,646,379

 

 

 

State Street Bank

 

Dow Jones Target 2055 Fund

 

231,582

 

 

 

State Street Bank

 

US Bond Index SL Series I

 

4,846,802

 

 

 

Voya Financial

 

IGT Invesco Short-term Bond Fund

 

3,896,393

 

 

 

NATIXIS Capital Markets

 

IGT Invesco Short-term Bond Fund

 

4,983,004

 

 

 

Transamerica Stable Value Solutions Inc.

 

IGT Invesco Short-term Bond Fund

 

2,884,340

 

 

 

Transamerica Stable Value Solutions Inc.

 

Invesco Core Fixed Income Fund

 

502,361

 

 

 

Transamerica Stable Value Solutions Inc.

 

PIMCO Core Fixed Income Fund

 

492,160

 

 

 

Transamerica Stable Value Solutions Inc.

 

BlackRock Core Fixed Income Fund

 

499,447

 

 

 

Transamerica Stable Value Solutions Inc.

 

Goldman Sachs Core

 

498,804

 

 

 

Invesco Ltd. Trust

 

INVESCO Trust Stable Value Fund

 

10,290,182

 

 

 

Pacific Life Insurance

 

IGT MxMGR Int G/C Fund

 

8,000,190

 

 

 

State Street Bank

 

SSgA Money Market Fund

 

1,116,309

 

*

 

Zep Inc.

 

Zep Stock Fund

 

2,085,958

 

*

 

Participant Loans

 

Interest Ranging from 4.25%; various maturity dates

 

3,045,369

 

 

 

 

 

 

 

 

 

 

 

Total investments, at fair value and participant loans

 

 

 

$

168,748,714

 

 


*Represents Party-In-Interest

 

Note: Column (d) for cost has been omitted because all investments are participant directed.

 

14



Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: June 24, 2015

By:

Zep Inc. 401(k) Plan

 

 

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief Financial Officer Zep Inc.

 

15



Table of Contents

 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

23.1

 

Consent of Independent Registered Public Accounting Firm.

 

16




Exhibit 23.1

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-147157) pertaining to the Zep Inc. 401(k) Plan of Zep Inc. of our report dated June 24, 2015, with respect to the financial statements and schedule of the Zep Inc. 401(k) Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2014.

 

/s/ Babush Neiman Kornman & Johnson, LLP

 

Atlanta, Georgia

June 24, 2015

 

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