Franklin Electric (FELE) 8-K Reports Record Income and Sales

Exhibit Index

EXHIBIT NO. (99) Press release, dated October 23, 2006 issued by Franklin Electric Co., Inc.

EXHIBIT 99

ADDITIONAL EXHIBITS

Press Release

For Immediate Release	For Further Information
	Refer to: Thomas J. Strupp
	260-824-2900

FRANKLIN ELECTRIC COMPANY

REPORTS RECORD INCOME AND SALES

COUPLED WITH A DIVIDEND DECLARATION

FOR THE THIRD QUARTER OF 2006

Bluffton, Indiana - October 23, 2006 -- Franklin Electric Co., Inc. (NASDAQ:FELE) reported record third quarter 2006 net income of $16.8 million, an increase of 27 percent from $13.2 million for the same period a year ago. The Company reported record third quarter diluted earnings per share of $0.72, an increase of 26 percent compared to 2005 third quarter earnings per share of $0.57.

Third quarter sales were a record $166 million, an increase of $47 million or 39 percent from the same quarter of 2005. Sales attributable to acquisitions, primarily the Little Giant Pump Company, contributed approximately $26.5 million during the third quarter. Third quarter sales, excluding the incremental sales from acquisitions were still a record at $139 million, an increase of $20 million or 17 percent on a comparable basis to last year. The record sales were primarily driven by continued increased demand for Franklin products sold to distributor customers.

Global Water Systems sales (exclusive of the Little Giant acquisition) grew by 15 percent during the quarter. This sales growth occurred in spite of a North American industry-wide slowdown that became evident during the last half of the third quarter attributable to softness in new residential housing construction.

The Fueling Systems global business continued its rapid organic growth. Sales were up 30 percent in the quarter driven by strong demand across all product lines and geographic regions.

For third quarter 2006, operating earnings were $26.5 million, up $6.3 million or 31 percent compared to $20.2 million a year ago. Gross profit margin for the quarter was 33.5 percent compared to 33.9 percent for the prior year. The modest reduction in gross profit margin was caused by timing delays between raw material cost increases and market price increases. The Company implemented price increases during the last half of the quarter which offset the increased cost of copper, steel, and other raw materials. Selling and administrative expenses increased primarily due to the inclusion of Little Giant and other selling expenses related to the Company’s distributor direct sales strategy for North America.

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Scott Trumbull, Chairman and Chief Executive Officer, stated: “During the third quarter we continued to make progress on our strategy to increase our sales and earnings growth rate by vertically integrating and selling our products direct to distributors. In September, we took an important step to reinforce this strategy by beginning the roll-out of our TRI-SEAL submersible pump product line, (patent pending). We believe TRI-SEAL offers the best overall performance in the market and will help enable us to continue our rapid submersible pump growth into 2007. We are also encouraged by the growing business base that we are establishing with distributors. Franklin Water Systems has now solidified direct submersible motor supply relationships with virtually every major pump specialty distributor in North America. While shipments of submersible electric motors are up 21 percent in North America for the first nine months of 2006, we believe that a majority of this growth is attributable to inventory stockpiling by OEM customers in response to our previously announced distribution plans for 2007. Although we are concerned that this stockpiling will eventually have a one-time impact on our sales volume, we believe that our strategy change is being implemented effectively. This is being confirmed by the growth and strength of our water systems distribution channel customer relationships.”

“We are very pleased that our Fueling System business continues to grow and become a more significant part of the company. In September, we announced the acquisition of Healy Systems, a leading manufacturer of gasoline vapor control equipment. We anticipate rapid growth for the Healy product line, due in part to environmental initiatives in California and other states which mandate vapor emission controls.”

It was also announced today that the Board of Directors declared a quarterly cash dividend of eleven cents per share payable November 16, 2006 to shareowners of record on November 2, 2006.

Franklin Electric is a global leader in the production and marketing of water and fuel pumping systems and is a technical leader in submersible motors, drives, controls, and monitoring devices.

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“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward looking statements contained herein involve risks and uncertainties, including but not limited to, general economic and currency conditions, various conditions specific to the Company’s business and industry, market demand, competitive factors, changes in distribution channels, supply constraints, technology factors, litigation, government and regulatory actions, the Company’s accounting policies, future trends, and other risks which are detailed in the Company’s Securities and Exchange Commission filings. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements.

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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
	Third Quarter Ended						Nine Months Ended
	Sept.30,			Oct. 1			Sept. 30,			Oct. 1,
	2006			2005			2006			2005
Net sales	$	165,652		$	119,043		$	439,301		$	325,014
Cost of sales		110,219			78,720			293,509			217,792
Gross profit		55,433			40,323			145,792			107,222
Selling and administrative expenses		28,972			19,072			78,213			55,320
Restructuring expense		-			1,039			-			1,749
Operating income		26,461			20,212			67,579			50,153
Interest expense		(1,093	)		(198	)		(2,362	)		(553	)
Other income		329			204			1,389			545
Foreign exchange gain		173			239			47			207
Income before income taxes		25,870			20,457			66,653			50,352
Income taxes		9,087			7,211			23,729			17,750
Net income	$	16,783		$	13,246		$	42,924		$	32,602
Net income per share:
Basic	$	0.73		$	0.59		$	1.88		$	1.47
Diluted	$	0.72		$	0.57		$	1.84		$	1.41
Weighted average shares and equivalent
shares outstanding:
Basic		22,953			22,274			22,790			22,152
Diluted		23,390			23,187			23,287			23,147

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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)	Sept. 30,		Dec. 31,
	2006		2005
ASSETS:
Cash and equivalents	$	29,996	$	52,136
Investments		-		35,988
Receivables		53,178		30,165
Inventories		110,338		70,381
Other current assets		18,077		14,350
Total current assets		211,589		203,020
Property, plant and equipment, net		112,705		95,732
Goodwill and other assets		190,084		81,010
Total assets	$	514,378	$	379,762
LIABILITIES AND SHAREOWNERS' EQUITY:
Current maturities of long-term
debt and short-term borrowings	$	11,298	$	1,303
Accounts payable		29,238		26,409
Accrued liabilities		50,090		36,310
Total current liabilities		90,626		64,022
Long-term debt		62,122		12,324
Deferred income taxes		4,784		4,296
Employee benefit plan obligations		26,823		25,830
Other long-term liabilities		5,536		5,728
Shareowners' equity		324,487		267,562
Total liabilities and shareowners' equity	$	514,378	$	379,762

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FRANKLIN ELECTRIC CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)	Sept. 30,			Oct. 1,
	2006			2005
Cash flows from operating activities:
Net income	$	42,924		$	32,602
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization		13,657			11,581
Stock based compensation		2,108			-
Deferred income taxes		1,809			616
Loss/(gain) on disposals of plant and equipment		(87	)		69
Changes in assets and liabilities:
Receivables		(4,331	)		(4,057	)
Inventories		(6,378	)		(10,387	)
Accounts payable and other accrued expenses		(2,125	)		(41	)
Accrued income taxes		7,429			5,780
Excess tax from share-based payment arrangements		(5,683	)		-
Employee benefit plans		712			1,215
Other, net		(3,338	)		671
Net cash flows from operating activities		46,697			38,049
Cash flows from investing activities:
Additions to plant and equipment		(15,421	)		(10,374	)
Proceeds from sale of plant and equipment		323			1,054
Additions to other assets		(293	)		(5,083	)
Purchases of securities		(63,500	)		(150,489	)
Proceeds from sale of securities		99,488			128,473
Cash paid for acquisitions, net of cash acquired		(158,028	)		(8,509	)
Net cash flows from investing activities		(137,431	)		(44,928	)
Cash flows from financing activities:
Additions to long-term debt		130,000			-
Repayment of long-term debt		(70,219	)		(213	)
Proceeds from issuance of common stock		9,731			11,739
Excess tax from share-based payment arrangements		5,683			-
Purchases of common stock		(198	)		(12,318	)
Reduction of loan to ESOP Trust		232			233
Dividends paid		(7,304	)		(6,203	)
Net cash flows from financing activities		67,925			(6,762	)
Effect of exchange rate changes on cash		669			(1,567	)
Net change in cash and equivalents		(22,140	)		(15,208	)
Cash and equivalents at beginning of period		52,136			50,604
Cash and equivalents at end of period	$	29,996		$	35,396

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