Exhibit 99.1
| | | | |
| | News Release | | Zep Inc. 1310 Seaboard Industrial Blvd., NW Atlanta, GA 30318 www.zepinc.com |
Company Contact:
Jill Gilmer
Zep Inc.
404-605-8614
Zep Inc. Reports Strong Third Quarter Revenue and Earnings Growth
Acquisition-Related Revenues and Stabilizing Core End-Markets Drive Significant
Year-Over-Year Revenue Growth
| | • | | Third quarter revenue of $153.0 million represents a 24% increase over the prior year period |
| | • | | Third quarter adjusted diluted EPS increased to $0.30— a $0.05 increase over last year |
| | • | | Integration of Amrep acquisition remains on schedule and now expected to deliver annualized synergies of nearly $6.0 million beginning in fiscal 2011 |
| | • | | Debt, net of cash, was reduced by $6.9 million during the third quarter of fiscal 2010 |
Atlanta, GA, June 28, 2010 – Zep Inc. (NYSE:ZEP), a leading producer, marketer, and service provider of a wide range of cleaning and maintenance solutions, today announced financial results for the three and nine month periods ended May 31, 2010. Zep reported net income during the quarter ended May 31, 2010 of $5.2 million, or $0.23 per diluted share, which included $1.4 million, or $0.07 per diluted share, of costs pertaining to restructuring initiatives and the increased basis of acquired inventories. The Company reported net income in the third quarter of the prior year of $5.4 million, or $0.25 per diluted share. The following table provides a reconciliation of adjusted earnings per diluted share to reported diluted earnings per share:
| | | | | | | | | | | | |
| | | Three Months Ended
May 31, | | Nine Months Ended
May 31, |
| | | 2010 | | 2009 | | 2010 | | 2009 |
Reported (GAAP) Diluted Earnings Per Share | | $ | 0.23 | | $ | 0.25 | | $ | 0.51 | | $ | 0.14 |
Restructuring Charges | | | 0.06 | | | — | | | 0.07 | | | 0.09 |
Acquisition Costs | | | — | | | — | | | 0.04 | | | — |
Incremental expense due to increased basis of acquired inventories | | | 0.01 | | | — | | | 0.02 | | | — |
| | | | | | | | | | | | |
Adjusted Diluted Earnings Per Share(a) | | $ | 0.30 | | $ | 0.25 | | $ | 0.65 | | $ | 0.23 |
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| (a) | This non-GAAP financial information is provided to enhance the reader’s overall understanding of the Company’s current financial performance. A more detailed reconciliation and discussion of Non-GAAP measures used throughout this document is provided within the pages that follow. |
John K. Morgan, Chairman, President and Chief Executive Officer, stated, “We are pleased to report strong third quarter and year-to-date results that represent a significant improvement when compared to prior year periods. This level of performance is a result of operating initiatives implemented last year to reduce costs and improve productivity, and the acquisition of Amrep, which saw strong sales performance across all channels and continued to positively impact our operating results. As previously discussed, we remain committed to our long-term strategic initiatives and continue to take the measures necessary to improve our operations. To this end, we announced the consolidation of six facility locations during the quarter, and we are focused on further streamlining the organization to reduce operating costs. Furthermore, we intend to continue profitably growing our business both organically and through acquisitions.”
Third Quarter Results
Net sales totaled $153.0 million in the third quarter of fiscal 2010 compared with $123.0 million in the third quarter of fiscal 2009, an increase of $30.1 million or 24.4%. Acquisition-related revenues comprised $29.3 million of the current quarter’s net sales. Excluding acquisition-related revenues, the Company experienced sequential quarterly volume improvement compared with the second fiscal quarter of 2010. While demand in the majority of the Company’s end markets remains soft, the rate of year-over-year volume decline has improved as volume in the third quarter of fiscal 2010 was only $2.6 million less compared with the third quarter of last fiscal year. Foreign currency translation on international sales and higher selling prices favorably impacted total net sales by $2.5 million and $0.9 million, respectively.
Adjusted gross profit increased $9.6 million, or 14%, to $75.9 million during the third quarter of fiscal 2010, compared with $66.3 million in the year-ago period. Adjusted gross profit margin fell 430 basis points to 49.6% during the third quarter. The decline was attributable to the impact on sales and product mix resulting from the addition of Amrep, which negatively impacted gross profit margin by approximately 610 basis points. The Amrep acquisition significantly altered the Company’s margin structure due to the increased percentage of revenues sold through the distribution and retail channels.
The impact on gross profit and gross profit margin of the Amrep acquisition was partially offset by lower comparative raw material costs of approximately $2.7 million or 180 basis points. While the Company has benefited from lower raw material costs in the past year, raw material costs have experienced upward pressure during the second and third quarters of fiscal 2010. To mitigate the impact of rising raw material costs, the Company has announced price increases, and it continues to evaluate new raw material suppliers.
The Company incurred incremental selling, distribution, and administrative (“SD&A”) expenses related to newly acquired operations. The impact of higher amortization and depreciation expense due to purchase accounting is estimated to be approximately $2.2 million on an annual basis. The Company recorded a restructuring charge of $2.0 million during the third quarter of fiscal 2010 related primarily to employee severance costs as the Company continues to consolidate facilities and streamline its operations. The Company did not record restructuring charges during the three month period ended May 31, 2009.
SD&A expenses as a percentage of net sales were 460 basis points lower than the prior year period. This favorable trend is due to the inclusion of Amrep and its affect on Zep’s overall cost structure as well as from previously enacted restructuring initiatives undertaken to reduce the breakeven point of the business. The Company has been able to leverage its reduced cost structure to further invest in sales and marketing resources, as well as to reinstitute benefit programs and fund employee incentive programs that are designed to reward performance.
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Adjusted operating profit increased $2.6 million, or 29.5%, in the third quarter of fiscal 2010 to $11.4 million from $8.8 million in the third quarter of fiscal 2009. Adjusted operating profit margins were 7.5% in the third quarter of fiscal 2010 compared with 7.2% in the comparative period a year ago.
Summary of Cash Flows
Net cash provided by the Company’s operating activities totaled $15.2 million during the first nine months of fiscal 2010 compared with $7.4 million in the same prior year period. The $7.8 million improvement in cash flow generation was driven, in part, by substantial improvement in year-over-year operating results. We invested $7.7 million in the first nine months of fiscal 2010, primarily for building improvements, machinery, equipment, and information technology. Management continues to estimate that capital expenditures could range between $10 million and $12 million during fiscal 2010.
Mr. Morgan concluded, “I am pleased with our comparative year-to-date performance and with the many opportunities and synergies provided by the Amrep acquisition. Even though some of the macro-economic indicators have improved or stabilized, demand remains soft across a number of our end-markets. We remain committed to managing overhead costs as we continue to make investments in profitable growth consistent with our strategic plan, which is designed to create value for all stakeholders.”
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The unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”) are supplemented by a table of adjusted operating results, which includes non-GAAP financial information that may or may not be referenced in this press release, including adjusted gross profit, adjusted operating profit, adjusted net income, and adjusted diluted earnings per share. This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s current financial performance and prospects for the future. Specifically, management believes the non-GAAP financial information provides useful information to investors by excluding or adjusting certain items affecting reported operating results that were unusual and not indicative of the Company’s core operating results. This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP. Moreover, this non-GAAP information may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial information included in this earnings release has been reconciled to the nearest GAAP measure in the tables at the end of this press release.
A full discussion of the Company’s long-term objectives and financial goals may be found in its Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The Forms 10-K and 10-Q are available via the Company’s website atwww.zepinc.com.
Conference Call
As previously announced, the Company will host a conference call to discuss the third fiscal quarter’s operating results Tuesday, June 29, 2010 at 8:30 AM ET. The call will be webcast and may be accessed through the Company’s website atwww.zepinc.com or by dialing in at (719) 325-4768, access code: 4371478. A replay of the call will be posted to the website within two hours of completion of the conference call.
About Zep Inc.
Zep Inc. is a leading producer, marketer, and service provider of a wide range of cleaning and maintenance solutions for commercial, industrial, institutional, and consumer end-markets. Zep Inc.’s
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product portfolio includes anti-bacterial and industrial hand care products, cleaners, degreasers, deodorizers, disinfectants, floor finishes, sanitizers, and pest and weed control products, as well as high performance products and professional grade chemical products for the automotive, fleet maintenance, industrial/MRO supply, institutional supply and motorcycle markets through newly acquired Amrep, Inc. The Company markets these products and services under well recognized and established brand names, such as Zep(R), Zep Commercial(R), Zep Professional(TM), Enforcer(R), National Chemical(R), Selig(TM), Misty(R), Next Dimension(TM), Petro(R), i-Chem(R) and a number of private labeled brands, some of which have been in existence for more than 100 years. Zep Inc.’s headquarters are in Atlanta, Georgia. Visit the company’s website atwww.zepinc.com.
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This release contains, and other written or oral statements made by or on behalf of Zep may include, forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, the Company, or the executive officers on the Company’s behalf, may from time to time make forward-looking statements in reports and other documents we file with the SEC or in connection with oral statements made to the press, potential investors or others. Specifically, forward-looking statements may include, but are not limited to statements relating to our future economic performance, business prospects, revenue, income, and financial condition; and statements preceded by, followed by, or that include the words “expects,” “believes,” “intends,” “will,” “anticipates,” and similar terms that relate to future events, performance, or results of the Company. Examples of forward-looking statements in this press release include but are not limited to: statements regarding the economic environment and the impact this environment has had or could have on our current and/or future financial results; statements regarding acquisition-related synergies and benefits that may be realized in the coming months and the next fiscal year; statements regarding investments that may be made in the future to grow the business, either organically or otherwise, in accordance with our strategic plan, or that may be made for other purposes; and statements and related estimates concerning the benefits that the execution of our strategic initiatives are expected to have on future financial results.
The Company’s forward-looking statements are subject to certain risks and uncertainties that could cause actual results, expectations, or outcomes to differ materially from our historical experience as well as management’s present expectations or projections. These risks and uncertainties include, but are not limited to:
| | • | | customer and supplier relationships and prices; |
| | • | | ability to realize anticipated benefits from strategic planning initiatives and timing of benefits; |
| | • | | litigation and other contingent liabilities, such as environmental matters. |
A variety of other risks and uncertainties could cause our actual results to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. A number of those risks are discussed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended August 31, 2009, which is incorporated herein by reference.
Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events.
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Zep Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
| | | | | | |
| | | MAY 31, 2010 | | AUGUST 31, 2009 |
| | | (unaudited) | | |
ASSETS | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 12,634 | | $ | 16,651 |
Accounts receivable, less reserve for doubtful accounts of $3,816 at May 31, 2010 and
$4,955 at August 31, 2009 | | | 93,453 | | | 85,060 |
Inventories | | | 57,749 | | | 39,618 |
Prepayments and other current assets | | | 6,583 | | | 6,772 |
Deferred income taxes | | | 14,072 | | | 7,859 |
| | | | | | |
Total Current Assets | | | 184,491 | | | 155,960 |
| | | | | | |
Property, Plant, and Equipment, at cost: | | | | | | |
Land | | | 5,002 | | | 3,289 |
Buildings and leasehold improvements | | | 61,640 | | | 56,191 |
Machinery and equipment | | | 101,035 | | | 84,940 |
| | | | | | |
Total Property, Plant, and Equipment | | | 167,677 | | | 144,420 |
Less accumulated depreciation and amortization | | | 95,322 | | | 89,945 |
| | | | | | |
Property, Plant, and Equipment, net | | | 72,355 | | | 54,475 |
| | | | | | |
Other Assets: | | | | | | |
Goodwill | | | 53,541 | | | 31,863 |
Identifiable intangible assets | | | 30,697 | | | 77 |
Deferred income taxes | | | 5,131 | | | 5,989 |
Other long-term assets | | | 1,423 | | | 1,254 |
| | | | | | |
Total Other Assets | | | 90,792 | | | 39,183 |
| | | | | | |
Total Assets | | $ | 347,638 | | $ | 249,618 |
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current Liabilities: | | | | | | |
Current maturities of long-term debt | | $ | 15,000 | | $ | 12,000 |
Accounts payable | | | 49,760 | | | 41,062 |
Accrued compensation | | | 18,730 | | | 15,398 |
Other accrued liabilities | | | 23,556 | | | 25,064 |
| | | | | | |
Total Current Liabilities | | | 107,046 | | | 93,524 |
Long-term debt, less current maturities | | | 80,650 | | | 28,650 |
| | | | | | |
Deferred income taxes | | | 14,600 | | | 371 |
| | | | | | |
Self-insurance reserves, less current portion | | | 6,676 | | | 7,262 |
| | | | | | |
Other long-term liabilities | | | 19,584 | | | 10,546 |
| | | | | | |
Commitments and Contingencies | | | | | | |
Stockholders’ Equity: | | | | | | |
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued and outstanding | | | — | | | — |
Common stock, $0.01 par value; 500,000,000 shares authorized; 21,296,482 issued and outstanding at May 31, 2010, and 21,159,127 issued and outstanding at August 31, 2009 | | | 212 | | | 212 |
Paid-in capital | | | 83,807 | | | 80,034 |
Retained earnings | | | 23,842 | | | 15,061 |
Accumulated other comprehensive income items | | | 11,221 | | | 13,958 |
| | | | | | |
Total Stockholders’ Equity | | | 119,082 | | | 109,265 |
| | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 347,638 | | $ | 249,618 |
| | | | | | |
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Zep Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per-share data)
| | | | | | | | | | | | | | | |
| | | THREE MONTHS ENDED
MAY 31, | | | NINE MONTHS ENDED
MAY 31, |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 |
Net Sales | | $ | 153,041 | | | $ | 122,961 | | | $ | 407,142 | | | $ | 366,729 |
Cost of Products Sold | | | 77,489 | | | | 56,659 | | | | 201,722 | | | | 173,895 |
| | | | | | | | | | | | | | | |
Gross Profit | | | 75,552 | | | | 66,302 | | | | 205,420 | | | | 192,834 |
Selling, Distribution, and Administrative Expenses | | | 64,449 | | | | 57,479 | | | | 181,966 | | | | 182,733 |
Restructuring Charge | | | 1,951 | | | | — | | | | 2,350 | | | | 3,009 |
Acquisition Costs | | | — | | | | — | | | | 1,550 | | | | — |
| | | | | | | | | | | | | | | |
Operating Profit | | | 9,152 | | | | 8,823 | | | | 19,554 | | | | 7,092 |
Other Expense: | | | | | | | | | | | | | | | |
Interest expense, net | | | 555 | | | | 370 | | | | 1,284 | | | | 1,372 |
Loss (gain) on foreign currency transactions | | | 38 | | | | (231 | ) | | | 45 | | | | 981 |
Miscellaneous (income) expense, net | | | (69 | ) | | | 10 | | | | (90 | ) | | | 29 |
| | | | | | | | | | | | | | | |
Total Other Expense | | | 524 | | | | 149 | | | | 1,239 | | | | 2,382 |
| | | | | | | | | | | | | | | |
Income before Provision for Income Taxes | | | 8,628 | | | | 8,674 | | | | 18,315 | | | | 4,710 |
Provision for Income Taxes | | | 3,394 | | | | 3,267 | | | | 6,923 | | | | 1,790 |
| | | | | | | | | | | | | | | |
Net Income | | $ | 5,234 | | | $ | 5,407 | | | $ | 11,392 | | | $ | 2,920 |
| | | | | | | | | | | | | | | |
Earnings Per Share: | | | | | | | | | | | | | | | |
Basic Earnings per Share | | $ | 0.24 | | | $ | 0.25 | | | $ | 0.52 | | | $ | 0.14 |
| | | | | | | | | | | | | | | |
Basic Weighted Average Number of Shares Outstanding | | | 21,324 | | | | 21,117 | | | | 21,247 | | | | 21,033 |
| | | | | | | | | | | | | | | |
Diluted Earnings per Share | | $ | 0.23 | | | $ | 0.25 | | | $ | 0.51 | | | $ | 0.14 |
| | | | | | | | | | | | | | | |
Diluted Weighted Average Number of Shares Outstanding | | | 21,857 | | | | 21,264 | | | | 21,716 | | | | 21,236 |
| | | | | | | | | | | | | | | |
Dividends Declared per Share | | $ | 0.04 | | | $ | 0.04 | | | $ | 0.12 | | | $ | 0.12 |
| | | | | | | | | | | | | | | |
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Zep Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
| | | | | | | | |
| | | NINE MONTHS ENDED
MAY 31, | |
| | | 2010 | | | 2009 | |
Cash Provided by (Used for) Operating Activities: | | | | | | | | |
Net income | | $ | 11,392 | | | $ | 2,920 | |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | | | | | | | | |
Depreciation and amortization | | | 7,260 | | | | 5,023 | |
Deferred income taxes | | | 945 | | | | (38 | ) |
Excess tax benefits from share-based payments | | | (251 | ) | | | (971 | ) |
Other non-cash charges | | | 3,134 | | | | 2,238 | |
Change in assets and liabilities: | | | | | | | | |
Accounts receivable | | | (1,624 | ) | | | 13,585 | |
Inventories | | | (2,084 | ) | | | 8,575 | |
Prepayments and other current assets | | | 1,019 | | | | (4,471 | ) |
Accounts payable | | | 69 | | | | (10,786 | ) |
Accrued compensation and other current liabilities | | | (3,342 | ) | | | (10,311 | ) |
Self-insurance and other long-term liabilities | | | (1,247 | ) | | | 963 | |
Other assets | | | (102 | ) | | | 716 | |
| | | | | | | | |
Net Cash Provided by Operating Activities | | | 15,169 | | | | 7,443 | |
| | | | | | | | |
Cash Provided by (Used for) Investing Activities: | | | | | | | | |
Purchases of property, plant, and equipment | | | (7,700 | ) | | | (5,795 | ) |
Acquisition of Amrep, Inc., net of cash acquired | | | (63,511 | ) | | | — | |
Other investing activities | | | — | | | | 121 | |
| | | | | | | | |
Net Cash Used for Investing Activities | | | (71,211 | ) | | | (5,674 | ) |
| | | | | | | | |
Cash Provided by (Used for) Financing Activities: | | | | | | | | |
Proceeds from revolving credit facility | | | 129,000 | | | | 60,100 | |
Repayments of borrowings from revolving credit facility | | | (89,000 | ) | | | (68,300 | ) |
Proceeds from receivables facility | | | 15,000 | | | | — | |
Employee stock purchase plan issuances | | | 255 | | | | 549 | |
Excess tax benefit from share-based payments | | | 251 | | | | 971 | |
Dividend payments | | | (2,611 | ) | | | (2,598 | ) |
| | | | | | | | |
Net Cash Provided by (Used for) Financing Activities | | | 52,895 | | | | (9,278 | ) |
| | | | | | | | |
Effect of Exchange Rate Changes on Cash | | | (870 | ) | | | (406 | ) |
| | | | | | | | |
Net Change in Cash and Cash Equivalents | | | (4,017 | ) | | | (7,915 | ) |
Cash and Cash Equivalents at Beginning of Period | | | 16,651 | | | | 14,528 | |
| | | | | | | | |
Cash and Cash Equivalents at End of Period | | $ | 12,634 | | | $ | 6,613 | |
| | | | | | | | |
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Zep Inc.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited; In thousands, except per-share data)
| | | | | | | | | | | | |
| | | Three Months Ended
May 31, | | Nine Months Ended
May 31, |
| | | 2010 | | 2009 | | 2010 | | 2009 |
Reported (GAAP) Gross Profit | | $ | 75,552 | | $ | 66,302 | | $ | 205,420 | | $ | 192,834 |
Incremental expense due to increased basis of acquired inventories(a) | | | 325 | | | — | | | 850 | | | — |
| | | | | | | | | | | | |
Adjusted Gross Profit | | $ | 75,877 | | $ | 66,302 | | $ | 206,270 | | $ | 192,834 |
| | | | | | | | | | | | |
| | |
| | | Three Months Ended
May 31, | | Nine Months Ended
May 31, |
| | | 2010 | | 2009 | | 2010 | | 2009 |
Reported (GAAP) Operating Profit | | $ | 9,152 | | $ | 8,823 | | $ | 19,554 | | $ | 7,092 |
Incremental expense due to increased basis of acquired inventories(a) | | | 325 | | | — | | | 850 | | | — |
Restructuring charges(b) | | | 1,951 | | | — | | | 2,350 | | | 3,009 |
Acquisition costs(c) | | | — | | | — | | | 1,550 | | | — |
| | | | | | | | | | | | |
Adjusted Operating Profit | | $ | 11,428 | | $ | 8,823 | | $ | 24,304 | | $ | 10,101 |
| | | | | | | | | | | | |
| | |
| | | Three Months Ended
May 31, | | Nine Months Ended
May 31, |
| | | 2010 | | 2009 | | 2010 | | 2009 |
Reported (GAAP) Net Income | | $ | 5,234 | | $ | 5,407 | | $ | 11,392 | | $ | 2,920 |
Incremental expense due to increased basis of acquired inventories(a) | | | 202 | | | — | | | 528 | | | — |
Restructuring charges(b) | | | 1,213 | | | — | | | 1,461 | | | 1,888 |
Acquisition costs(c) | | | — | | | — | | | 964 | | | — |
| | | | | | | | | | | | |
Adjusted Net Income | | $ | 6,649 | | $ | 5,407 | | $ | 14,345 | | $ | 4,808 |
| | | | | | | | | | | | |
| | |
| | | Three Months Ended
May 31, | | Nine Months Ended
May 31, |
| | | 2010 | | 2009 | | 2010 | | 2009 |
Reported (GAAP) Diluted Earnings Per Share | | $ | 0.23 | | $ | 0.25 | | $ | 0.51 | | $ | 0.14 |
Incremental expense due to increased basis of acquired inventories(a) | | | 0.01 | | | — | | | 0.02 | | | — |
Restructuring charges(b) | | | 0.06 | | | — | | | 0.07 | | | 0.09 |
Acquisition costs(c) | | | — | | | — | | | 0.04 | | | — |
| | | | | | | | | | | | |
Adjusted Diluted Earnings Per Share | | $ | 0.30 | | $ | 0.25 | | $ | 0.65 | | $ | 0.23 |
| | | | | | | | | | | | |
| (a) | Under the purchase method of accounting, the total purchase price for Amrep has been allocated to Amrep’s net tangible and intangible assets based on their estimated fair values as of the January 4, 2010 closing date of the acquisition. The estimated fair value of acquired finished goods inventories exceeded the historical net book value for such goods by $0.9 million. As a result of this step-up in asset basis, the Company recognized an increase of cost of goods sold totaling $0.5 million in the last two months of the second fiscal quarter of 2010, and $0.3 million during the three months ended May 31, 2010. |
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Zep Inc.
RECONCILIATION OF NON-GAAP MEASURES(continued)
(Unaudited; In thousands, except per-share data)
| (b) | In the first quarter of fiscal 2010, Zep recorded a pretax restructuring charge of $0.4 million for costs associated with facility consolidations. In the third quarter of fiscal 2010, Zep recorded a pretax restructuring charge of $2.0 million for costs associated with employee severances. During the first quarter of fiscal 2009, Zep’s management initiated actions necessary to reduce non-sales headcount by 5%. Accordingly, Zep recorded a net pretax charge of $1.9 million during the first fiscal quarter of 2009. This charge was entirely composed of severance related costs. In the second quarter of fiscal 2009, the Company recorded a charge of $1.1 million as it exited two facilities, and, in accordance with restructuring-related accounting rules, adjusted sub-lease rental income assumptions associated with a leased facility exited during the third quarter of fiscal 2008. |
| (c) | Included within these amounts are costs associated with advisory, legal and other due diligence-related services incurred in connection with acquisition-related activity. All such costs were expensed as incurred pursuant to purchase accounting. |
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