Zep Inc.

CIK:0001408287|SEC Filings

EARNINGS PER SHARE

6 Months Ended

Feb. 28, 2015

6. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share is computed similarly, but reflects the potential dilution that would occur if dilutive options were exercised and restricted stock awards were vested. The following table shows the computation of basic and diluted earnings per share:

	Three Months Ended					Six Months Ended
	February 28,					February 28,
	2015		2014			2015		2014

Net income (loss)	$	162	$	(682	)	$	3,300	$	2,415

Basic weighted average shares outstanding	22,553		22,320			22,497		22,242
Common stock equivalents (stock options and restricted stock)	464		—			496		629
Diluted weighted average shares outstanding	23,017		22,320			22,993		22,871

Basic earnings (loss) per share	$	0.01	$	(0.03	)	$	0.15	$	0.11
Diluted earnings (loss) per share	$	0.01	$	(0.03	)	$	0.14	$	0.11

For the three month periods ended February 28, 2015 and 2014, we excluded 0.7 million and 1.2 million common stock equivalents, respectively, from our earnings per share calculation because of their anti-dilutive effect on this calculation. For the three month period ended February 28, 2014, no adjustment for common stock equivalents is reflected in the calculation of dilutive loss per share because the effect of including these potentially dilutive items would be anti-dilutive. For the six month periods ended February 28, 2015 and 2014, we excluded 0.7 million and 0.3 million common stock equivalents, respectively, from our earnings per share calculation because of their anti-dilutive effect on this calculation.

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014
Operating Activities
Net income (loss)	$ 3,300us-gaap_NetIncomeLoss	$ 2,415us-gaap_NetIncomeLoss
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization	10,751	11,042
Gain on disposal of fixed assets	(3)us-gaap_GainLossOnDispositionOfAssets	(68)us-gaap_GainLossOnDispositionOfAssets
Excess tax benefits from share-based payments	(116)	(201)
Other non-cash charges	1,580us-gaap_OtherNoncashExpense	1,735us-gaap_OtherNoncashExpense
Deferred income taxes	3,554	843
Insurance proceeds for fire related operating costs	6,322
Changes in assets and liabilities:
Accounts receivable	8,754	8,263
Inventories	(9,791)us-gaap_IncreaseDecreaseInInventories	(10,286)us-gaap_IncreaseDecreaseInInventories
Prepaid expenses and other current assets	(20,189)	617
Accounts payable	(13,066)	5,593
Accrued compensation and other current liabilities	(7,738)	(18,954)
Other long-term liabilities	(244)	111
Other assets	(1,208)	(555)
Net Cash Provided by (used for) operating activities	(18,094)	555
Investing Activities
Purchases of property, plant and equipment	(5,218)	(5,269)
Insurance proceeds for assets damaged in fire	10,536
Proceeds from sale of property, plant and equipment	3	67
Principal payment from innovation partner		300
Net cash provided by (used for) investing activities	5,321	(4,902)
Financing Activities
Proceeds from credit facility borrowings	301,604	176,900
Repayments of borrowings from credit facility	(290,679)	(171,025)
Principal repayment - industrial revenue bonds	(7,150)
Proceeds from (payments for) secured borrowings	(498)	(1,342)
Debt issuance costs	159us-gaap_PaymentsOfDebtIssuanceCosts
Stock issuances	1,369	1,981
Excess tax benefits from share-based payments	116	201
Dividend payments	(2,556)us-gaap_PaymentsOfDividends	(2,262)us-gaap_PaymentsOfDividends
Net cash provided by financing activities	2,365	4,453
Effect of exchange rate changes on cash	(766)	20
Net change in cash and cash equivalents	(11,174)	126
Cash and cash equivalents - beginning of period	14,303	2,402
Cash and cash equivalents - end of period	$ 3,129	$ 2,528

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Feb. 28, 2015	Aug. 31, 2014
ASSETS
Cash and cash equivalents	$ 3,129	$ 14,303
Accounts receivable, less reserve for doubtful accounts of $3,950 at February 28, 2015 and $4,474 at August 31, 2014	95,601us-gaap_AccountsReceivableNetCurrent	108,010us-gaap_AccountsReceivableNetCurrent
Inventories, net	83,864us-gaap_InventoryNet	75,950us-gaap_InventoryNet
Insurance receivable	9,564	13,106
Prepaid expenses and other current current assets	13,062	6,254
Deferred income taxes	8,164	10,452
Total Current assets	213,384us-gaap_AssetsCurrent	228,075us-gaap_AssetsCurrent
Property, plant and equipment, net of accumulated depreciation of $117,042 at February 28, 2015 and $112,794 at August 31, 2014	72,951us-gaap_PropertyPlantAndEquipmentNet	75,361us-gaap_PropertyPlantAndEquipmentNet
Goodwill	120,254us-gaap_Goodwill	121,005us-gaap_Goodwill
Identifiable intangible assets, net	116,506	121,643
Other long-term assets	12,260us-gaap_OtherAssetsNoncurrent	10,127us-gaap_OtherAssetsNoncurrent
Total Assets	535,355us-gaap_Assets	556,211us-gaap_Assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt	20,001us-gaap_LongTermDebtCurrent	20,006us-gaap_LongTermDebtCurrent
Accounts payable	51,437us-gaap_AccountsPayableCurrent	65,874us-gaap_AccountsPayableCurrent
Accrued compensation	16,490	19,720
Other accrued liabilities	33,130us-gaap_AccruedLiabilitiesCurrent	39,329us-gaap_AccruedLiabilitiesCurrent
Total Current liabilities	121,058us-gaap_LiabilitiesCurrent	144,929us-gaap_LiabilitiesCurrent
Long-term debt, less current maturities	190,446us-gaap_LongTermDebtNoncurrent	186,880us-gaap_LongTermDebtNoncurrent
Deferred income taxes	17,930	13,931
Other long-term liabilities	16,880us-gaap_OtherLiabilitiesNoncurrent	17,092us-gaap_OtherLiabilitiesNoncurrent
Total Liabilities	346,314us-gaap_Liabilities	362,832us-gaap_Liabilities
Commitments and Contingencies (Note 5)
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; 22,664,359 issued and outstanding at February 28, 2015, and 22,396,229 issued and outstanding at August 31, 2014	227us-gaap_CommonStockValue	224us-gaap_CommonStockValue
Paid-in capital	111,494	108,432
Retained earnings	73,663	72,918
Accumulated other comprehensive income	3,657	11,805
Total Stockholders' Equity	189,041us-gaap_StockholdersEquity	193,379us-gaap_StockholdersEquity
Total Liabilities and Stockholders' Equity	$ 535,355	$ 556,211