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, 2013
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
Zep Inc. 401(k) Plan
Audited Financial Statements and Supplemental Schedule
At December 31, 2013 and 2012 and for the year ended December 31, 2013
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1 | |
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Financial Statements |
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2 | |
3 | |
4 | |
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Supplemental Schedule |
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12 | |
14 |
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, 2013, and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. 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, 2013 and 2012, and the changes in its net assets available for benefits for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2013 is presented for purposes of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
| /s/ Babush, Neiman, Kornman, & Johnson, LLP |
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Atlanta, GA |
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June 20, 2014 |
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Zep Inc. 401(k) Plan
Statements of Net Assets Available for Benefits
As of December 31, 2013 and 2012
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| December 31, |
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| 2013 |
| 2012 |
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Assets: |
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Investments, at fair value |
| $ | 166,392,870 |
| $ | 148,660,076 |
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Cash, non-interest bearing |
| 2,189 |
| — |
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Notes receivable from participants |
| 3,092,562 |
| 3,251,929 |
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Participant contributions receivable |
| 215,053 |
| 182,059 |
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Employer contributions receivable |
| 89,456 |
| 71,669 |
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Total Assets |
| 169,792,130 |
| 152,165,733 |
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Liabilities: |
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Excess contributions payable |
| 43,625 |
| 73,098 |
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Net assets available for plan benefits, at fair value |
| 169,748,505 |
| 152,092,635 |
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Adjustment from fair value to contract value for interest relative to fully benefit responsive investment contracts |
| (1,234,385 | ) | (1,879,440 | ) | ||
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Net assets available for benefits |
| $ | 168,514,120 |
| $ | 150,213,195 |
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See accompanying notes to the financial statements.
Zep Inc. 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2013
Additions: |
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Investment income: |
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Interest and dividend income |
| $ | 3,793,558 |
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Net appreciation in fair value of investments |
| 22,010,537 |
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Total investment income |
| 25,804,095 |
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Interest income on notes receivable from participants |
| 140,835 |
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Contributions: |
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Participant contributions |
| 7,776,248 |
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Employer contributions |
| 2,304,878 |
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Total contributions |
| 10,081,126 |
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Total additions |
| 36,026,056 |
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Deductions: |
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Benefit payments |
| (17,618,530 | ) | |
Administrative expenses |
| (106,601 | ) | |
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Total deductions |
| (17,725,131 | ) | |
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Net increase in assets available for benefits |
| 18,300,925 |
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Net assets available for benefits: |
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Beginning of year |
| 150,213,195 |
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End of the year |
| $ | 168,514,120 |
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See accompanying notes to the financial statements
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, 2013 and 2012, there were approximately $46,000 and $71,000 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.
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.
Zep Inc. 401(k) Plan
Notes to Financial Statements
Parties-In-Interest
As of December 31, 2013 and 2012, the percentage of the Plan’s net assets invested in the common stock of Zep was 1.4%. In addition, the Plan holds shares of mutual funds managed by the trustee of the Plan.
Funding Policy
The basis for determining participant (pre-tax) and Employer contributions for the year ended December 31, 2013 is as follows:
Plan Name |
| Participant |
| 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.
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.
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 our other 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 |
Zep Inc. 401(k) Plan
Notes to Financial Statements
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 the filing of this Form 11-K, which is the date the financial statements were issued.
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, 2013 or 2012. 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 2012 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.
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%.
Zep Inc. 401(k) Plan
Notes to Financial Statements
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 1.23% and 1.07% at December 31, 2013 and 2012, respectively, while the average yields actually credited to members was approximately 2.04% and 2.74% at December 31, 2013 and 2012, respectively. At December 31, 2013 and 2012, the fair values of the Plan’s interest in the underlying assets of the synthetic GICs were $36,441,173 and $37,573,487, respectively, and the book valuation adjustments were $(1,234,385) and $(1,879,440) 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:
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| December 31, 2013 |
| December 31, |
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Zep Inc. Stable Value Fund |
| $ | 36,441,173 |
| $ | 37,573,487 |
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Vanguard Institutional Index |
| 18,817,404 |
| 14,923,092 |
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Dow Jones Target 2025 Fund |
| 13,506,134 |
| 12,343,235 |
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Columbia Dividend Income Class Z |
| 12,289,004 |
| 9,940,333 |
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T Rowe Price Growth Stock Fund |
| 11,767,797 |
| 8,716,679 |
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American Funds EuroPacific Growth Gr R5 |
| 11,048,126 |
| 8,371,999 |
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PIMCO Total Return PORT Institutional Fund |
| * |
| 8,346,554 |
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T Rowe Price Mid-Cap Growth Fund |
| 9,414,772 |
| * |
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* Was below 5% in the year shown
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, 2013
Contract Issuer |
| Security |
| Fair Value |
| Valuation |
| Contract |
| |||
ING Life & Annuity |
| IGT INVESCO Short-term bond fund |
| $ | 3,837,452 |
| $ | (123,626 | ) | $ | 3,713,826 |
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NATIXIS Capital Markets |
| IGT INVESCO Short-term bond fund |
| 5,899,095 |
| (193,259 | ) | 5,705,836 |
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Monumental |
| IGT MxMgr Core |
| 4,747,233 |
| (250,789 | ) | 4,496,444 |
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Invesco Ltd. Trust ** |
| IVZ Trust Stable Value Fund |
| 10,174,522 |
| (224,736 | ) | 9,949,786 |
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Pacific Life |
| IGT MxMGR Int G/C |
| 8,133,945 |
| (441,975 | ) | 7,691,970 |
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Subtotal |
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| 32,792,247 |
| (1,234,385 | ) | 31,557,862 |
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Cash |
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State Street Bank |
| Cash |
| 3,648,926 |
| — |
| 3,648,926 |
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Total |
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| $ | 36,441,173 |
| $ | (1,234,385 | ) | $ | 35,206,788 |
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Zep Inc. 401(k) Plan
Notes to Financial Statements
Zep Inc. Stable Value Fund as of December 31, 2012
Contract Issuer |
| Security |
| Fair Value |
| Valuation |
| Contract |
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ING Life & Annuity |
| IGT INVESCO Short-term bond fund |
| $ | 3,849,891 |
| $ | (239,792 | ) | $ | 3,610,099 |
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NATIXIS Capital Markets |
| IGT INVESCO Short-term bond fund |
| 5,920,648 |
| (372,827 | ) | 5,547,821 |
| |||
Monumental |
| IGT MxMgr Core |
| 4,704,969 |
| (342,107 | ) | 4,362,862 |
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Invesco Ltd. Trust ** |
| IVZ Trust Stable Value Fund |
| 10,016,681 |
| — |
| 10,016,681 |
| |||
Pacific Life** |
| IGT MxMGR Int G/C |
| 9,346,082 |
| (924,714 | ) | 8,421,368 |
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Subtotal |
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| 33,838,271 |
| (1,879,440 | ) | 31,958,831 |
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Cash |
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State Street Bank |
| Cash |
| 3,735,216 |
| — |
| 3,735,216 |
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Total |
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| $ | 37,573,487 |
| $ | (1,879,440 | ) | $ | 35,694,047 |
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3. Investments (continued)
The Plan’s investments, including investments bought, sold and held during the year, appreciated in value for the year ended December 31, 2013 as follows:
Net appreciation in fair value of common stock (quoted market prices) |
| $ | 1,467,750 |
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Net appreciation in fair value from common/collective trust funds (fair value determined by trustee) |
| 2,776,126 |
| |
Net appreciation in fair value from mutual funds (quoted market prices) |
| 17,660,859 |
| |
Net appreciation in other investments (quoted market prices) |
| 105,802 |
| |
Net appreciation of fair value of investments |
| $ | 22,010,537 |
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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.
Zep Inc. 401(k) Plan
Notes to Financial Statements
The Plan’s Investments, at fair value as of December 31, 2013 and 2012 are presented within the following tables:
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| Fair Value Measurements |
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Assets |
| Fair Value |
| Quoted Market |
| Significant |
| Significant |
| |||
Mutual Funds |
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|
|
|
| |||
T Rowe Price Mid-Cap Growth Fund |
| $ | 9,414,772 |
| $ | 9,414,772 |
|
|
|
|
| |
Vanguard Institutional Index |
| 18,817,404 |
| 18,817,404 |
|
|
|
|
| |||
JP Morgan Mid Cap Value Select |
| 4,988,630 |
| 4,988,630 |
|
|
|
|
| |||
Northern Small Cap Value Fund |
| 5,596,550 |
| 5,596,550 |
|
|
|
|
| |||
Columbia Dividend Income Class Z |
| 12,289,004 |
| 12,289,004 |
|
|
|
|
| |||
T Rowe Price Growth Stock Fund |
| 11,767,797 |
| 11,767,797 |
|
|
|
|
| |||
EuroPacific Growth Gr R5 |
| 11,048,126 |
| 11,048,126 |
|
|
|
|
| |||
PIMCO Total Return Fund Instl |
| 7,030,613 |
| 7,030,613 |
|
|
|
|
| |||
Wells Fargo Adv Emerging Growth |
| 6,860,548 |
| 6,860,548 |
|
|
|
|
| |||
Schwab Value Money Market Fund |
| 522 |
| 522 |
|
|
|
|
| |||
Stable Value Fund Cash |
| 3,648,926 |
| 3,648,926 |
|
|
|
|
| |||
PCRA Self-Directed Brokerage Account |
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|
|
|
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|
|
| |||
Equity mutual funds |
| 2,445,828 |
| 2,445,828 |
|
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|
| |||
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 |
|
|
|
|
|
|
| ||
Zep Inc. 401(k) Plan
Notes to Financial Statements
|
|
|
| Fair Value Measurements |
| |||||||
Assets |
| Fair Value |
| Quoted Market |
| Significant |
| Significant |
| |||
Mutual Funds |
|
|
|
|
|
|
|
|
| |||
T Rowe Price Mid-Cap Growth Fund |
| $ | 7,423,927 |
| $ | 7,423,927 |
|
|
|
|
| |
Vanguard Institutional Index |
| 14,923,092 |
| 14,923,092 |
|
|
|
|
| |||
JP Morgan Mid Cap Value Select |
| 3,968,515 |
| 3,968,515 |
|
|
|
|
| |||
Northern Small Cap Value Fund |
| 4,226,557 |
| 4,226,557 |
|
|
|
|
| |||
Columbia Dividend Income Class Z |
| 9,940,333 |
| 9,940,333 |
|
|
|
|
| |||
T Rowe Price Growth Stock Fund |
| 8,716,679 |
| 8,716,679 |
|
|
|
|
| |||
EuroPacific Growth Gr R5 |
| 8,371,999 |
| 8,371,999 |
|
|
|
|
| |||
PIMCO Total Return Fund Instl |
| 8,346,554 |
| 8,346,554 |
|
|
|
|
| |||
Wells Fargo Advantage Small Cap Grth I |
| 4,469,104 |
| 4,469,104 |
|
|
|
|
| |||
Schwab Value Money Market Fund |
| 171 |
| 171 |
|
|
|
|
| |||
Stable Value Fund Cash |
| 3,735,216 |
| 3,735,216 |
|
|
|
|
| |||
PCRA Self-Directed Brokerage Account |
|
|
|
|
|
|
|
|
| |||
Equity mutual funds |
| 1,520,917 |
| 1,520,917 |
|
|
|
|
| |||
Domestic common stock |
| 5,076,447 |
| 5,076,447 |
|
|
|
|
| |||
Money market fund |
| 1,891,598 |
| 1,891,598 |
|
|
|
|
| |||
Other |
| 1,573,019 |
| 1,573,019 |
|
|
|
|
| |||
Stable Value Fund (a) |
| 33,838,271 |
|
|
| $ | 33,838,271 |
|
|
| ||
Common/Collective Trusts |
|
|
|
|
|
|
|
|
| |||
Dow Jones Target Today Fund (b) |
| 1,398,731 |
|
|
| 1,398,731 |
|
|
| |||
Dow Jones Target 2015 Fund (b) |
| 2,441,713 |
|
|
| 2,441,713 |
|
|
| |||
Dow Jones Target 2025 Fund (b) |
| 12,343,235 |
|
|
| 12,343,235 |
|
|
| |||
Dow Jones Target 2035 Fund (b) |
| 3,603,376 |
|
|
| 3,603,376 |
|
|
| |||
Dow Jones Target 2045 Fund (b) |
| 2,656,366 |
|
|
| 2,656,366 |
|
|
| |||
Dow Jones Target 2055 Fund (b) |
| 66,137 |
|
|
| 66,137 |
|
|
| |||
US Bond Index SL Series I (b) |
| 6,025,265 |
|
|
| 6,025,265 |
|
|
| |||
Zep Inc. Common Stock |
| 2,102,854 |
| 2,102,854 |
|
|
|
|
| |||
|
| $ | 148,660,076 |
|
|
|
|
|
|
| ||
(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.
(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.
Zep Inc. 401(k) Plan
Notes to Financial Statements
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.
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, 2013, 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 2010.
6. Reconciling Items and Form 5500
The following is a reconciliation from the financial statements to the Form 5500 as of December 31, 2013, and 2012, and for the year ended December 31, 2013.
|
| 2013 |
| 2012 |
| ||
Net Assets Available For Benefits per Financial Statements |
| $ | 168,514,120 |
| $ | 150,213,195 |
|
Adjustment from contract value to fair value for fully benefit responsive investment contract |
| 1,234,385 |
| 1,879,440 |
| ||
Excess contribution payable |
| 43,625 |
| 73,098 |
| ||
Net Assets Available For Benefits per Form 5500 |
| $ | 169,792,130 |
| $ | 152,165,733 |
|
|
|
|
|
|
| ||
Net increase in net assets for benefits per financial statements |
| $ | 18,300,925 |
|
|
| |
Net adjustment from contract value to fair value for fully benefit-responsive investment contract |
| (645,055 | ) |
|
| ||
Add: Excess contributions payable at December 31, 2013 |
| 43,625 |
|
|
| ||
Subtract: Excess contributions payable at December 31, 2012 |
| (73,098 | ) |
|
| ||
Total Net income per Form 5500 |
| $ | 17,626,397 |
|
|
| |
7. Excess Contributions Payable
As of December 31, 2013 and 2012, certain 2013 and 2012 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 and $73,098 was recorded in the Statements of Net Assets Available for Benefits as of December 31, 2013 and 2012, respectively.
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.
Zep Inc. 401(k) Plan
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
December 31, 2013
EIN#: 26-0783366 Plan: 007
(a) |
| (b) |
| (c) |
| (e) |
| |
|
| T Rowe Price |
| T Rowe Price Mid-Cap Growth fund |
| $ | 9,414,772 |
|
|
| Vanguard |
| Vanguard Institutional Index |
| 18,817,404 |
| |
|
| JP Morgan |
| Mid Cap Value Select |
| 4,988,630 |
| |
|
| Northern Trust |
| Northern Small Cap Value Fund |
| 5,596,550 |
| |
|
| Columbia Management Advisors, LLC |
| Columbia Dividend Income Class Z |
| 12,289,004 |
| |
|
| T Rowe Price |
| T Rowe Price Growth Stock Fund |
| 11,767,797 |
| |
|
| American Funds |
| EuroPacific Growth Gr R5 |
| 11,048,126 |
| |
|
| PIMCO |
| PIMCO Total Return Fund Instl |
| 7,030,613 |
| |
|
| Wells Fargo |
| Wells Fargo Advantage Emerging Growth |
| 6,860,548 |
| |
* |
| Charles Schwab |
| Schwab Value Money Market Fund |
| 522 |
| |
* |
| Charles Schwab |
| PCRA Self-Directed Brokerage Account |
| 10,115,658 |
| |
|
| State Street Bank |
| Dow Jones Target Today Fund |
| 1,207,043 |
| |
|
| State Street Bank |
| Dow Jones Target 2015 Fund |
| 2,035,641 |
| |
|
| State Street Bank |
| Dow Jones Target 2025 Fund |
| 13,506,134 |
| |
|
| State Street Bank |
| Dow Jones Target 2035 Fund |
| 4,717,261 |
| |
|
| State Street Bank |
| Dow Jones Target 2045 Fund |
| 3,416,905 |
| |
|
| State Street Bank |
| Dow Jones Target 2055 Fund |
| 129,456 |
| |
|
| State Street Bank |
| US Bond Index SL Series I |
| 4,555,636 |
| |
|
| ING Life & Annuity |
| IGT Invesco Short-term Bond Fund |
| 3,837,452 |
| |
|
| NATIXIS Capital Markets |
| IGT Invesco Short-term Bond Fund |
| 5,899,095 |
| |
|
| Monumental |
| IGT Invesco Short-term Bond Fund |
| 2,848,885 |
| |
|
| Monumental |
| Invesco Core Fixed Income Fund |
| 475,072 |
| |
|
| Monumental |
| PIMCO Core Fixed Income Fund |
| 473,416 |
| |
|
| Monumental |
| BlackRock Core Fixed Income Fund |
| 474,277 |
| |
|
| Monumental |
| Goldman Sachs Core |
| 475,583 |
| |
|
| Invesco Ltd. Trust |
| INVESCO Trust Stable Value Fund |
| 10,174,522 |
| |
|
| Pacific Life Insurance |
| IGT MxMGR Int G/C Fund |
| 8,133,945 |
| |
|
| State Street Bank |
| Cash |
| 3,648,926 |
| |
* |
| Zep Inc. |
| Zep Stock Fund |
| 2,453,997 |
| |
* |
| Participant Loans |
| Interest Ranging from 4.25% to 9.25%; various maturity dates |
| 3,092,562 |
| |
|
|
|
|
|
|
|
| |
|
| Total investments, at fair value and participant loans |
|
|
| $ | 169,485,432 |
|
| * | Represents Party-In-Interest |
|
|
|
|
|
Note: All investments are participant directed therefore cost information in column (d) has been omitted.
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 20, 2014 | By: | Zep Inc. 401(k) Plan |
|
|
|
|
|
|
| By: | /s/ Mark R. Bachmann |
| Name: | Mark R. Bachmann |
|
| Executive Vice President and Chief Financial Officer |
| Title: | Zep Inc. |
Exhibit |
| Description |
23.1 |
| Consent of Independent Registered Public Accounting Firm. |
