SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 10, 2003
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FRANKLIN ELECTRIC CO., INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INDIANA 0-362 35-0827455
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(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER IDENTIFICATION NO.)
400 EAST SPRING STREET
BLUFFTON, INDIANA 46714
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(260) 824-2900
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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The following exhibit is furnished pursuant to Item 12: (99) Press Release,
dated April 10, 2003 issued by Franklin Electric Co., Inc.
Item 9. Regulation FD Disclosure
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The following information is furnished pursuant to Item 9, "Regulation FD
Disclosure" and Item 12, "Disclosure of Results of Operations and Financial
Condition."
On April 10, 2003, Franklin Electric Co., Inc. issued a press release setting
forth its first-quarter 2003 earnings. A copy of the press release is
attached hereto as Exhibit (99) and hereby incorporated by reference.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANKLIN ELECTRIC CO., INC.
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(Registrant)
Date April 10, 2003 By /s/ Gregg C. Sengstack
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Gregg C. Sengstack, Senior Vice
President, Chief Financial
Officer and Secretary (Principal
Financial and Accounting Officer)
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Exhibit Index
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(99) Press release, dated April 10, 2003 issued by Franklin Electric Co., Inc.
EXHIBIT 99
ADDITIONAL EXHIBITS
Press Release
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For Immediate Release For Further Information
Refer to Gregg C. Sengstack
260/824-2900
FRANKLIN ELECTRIC COMPANY
REPORTS INCREASED INCOME AND SALES
FOR THE FIRST QUARTER OF 2003
Bluffton, Indiana-April 10, 2003--Franklin Electric Co., Inc. (NASDAQ:FELE)
reported record first quarter 2003 net income of $4.0 million, an increase of
9 percent from $3.7 million for the same period a year ago. First quarter 2003
diluted earnings per share were a record $0.36, a 12 percent increase from
$0.32 for the first quarter of 2002.
Sales for the first quarter of 2003 were a record $69.8 million, an increase
of 3 percent from $68.1 million for the same period a year ago. Excluding the
sales of Intelligent Controls, Inc. ("INCON"), acquired by the Company in July
2002, sales were flat to last year. Foreign currencies, particularly the euro,
strengthened relative to the U.S. dollar since the first quarter of 2002. The
impact of this change in exchange rates was a $3.7 million increase in the
Company's reported first quarter 2003 sales from its operations outside of
North America compared to the same period in 2002. In local currency terms,
sales outside North America were down 4 percent as compared to the same time
last year.
Gross profits in the quarter were $19.8 million, compared to $17.9 million a
year ago. Selling and administrative expense were $13.9 million, compared to
$11.7 million last year. The increases in selling and administrative expenses
were primarily due to the INCON acquisition, since this unit carries
disproportionately higher selling and administrative costs; increases in
Europe due to the rising value of the euro; and selling costs associated with
new product launches.
R. Scott Trumbull, Chairman and Chief Executive Officer, stated, "I am pleased
to report record profits for the first quarter, generated primarily by the
continued success of our Value Improvement cost reduction process within our
plants. Our earnings growth was limited this quarter by increased selling
costs associated with the launch of Sub-Drive series of electronic water well
controls, V-series motor line and the expenses associated with integration of
recently acquired fueling systems businesses. During the quarter, we also
started commercial production of motors in our new factory in Linares, Mexico
and motor components in our new factory in Brno, Czech Republic. We also broke
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ground on our new components facility in Suzhou, China which will be completed
later this year.
North America water systems products sales were down in the first quarter as
compared to last year. The decrease during the quarter is attributed to the
unusually hard winter in the U.S. and, to a lesser extent, strong fourth
quarter 2002 sales ahead of industry wide price increases. Finished goods
inventories, while generally higher than our strategic targets, are
appropriate for this time of year.
Sales of Sub-Drive 75 electronic drive systems for water wells continue to
grow. This variable speed drive provides a constant pressure water system
solution for residential applications. During the quarter the Company launched
Sub-Drive 150 for higher output water well applications.
North American fueling systems product sales, excluding INCON, were down
slightly in the quarter. The Company has taken additional steps to consolidate
INCON into Franklin Electric. These steps will reduce this unit's selling and
administrative expenses in future quarters.
Sales of our North American based industrial motor products were basically
flat as compared to last year, but profitability continued to improve with
increased productivity, and reduced costs through our Value Improvement
Process. Additionally, the Company introduced a 'V-Series' line of electric
motors which are produced offshore.
Outside of North America, water systems sales were down in Europe, the Middle
East and North Africa due to the war in Iraq and customers buying ahead of a
year-end price increase. South Africa, Australia and the Far East all showed
higher sales quarter over quarter."
Franklin Electric, a technical leader in electric motors, drives and controls,
is the world's largest manufacturer of submersible water and fueling systems
motors, a manufacturer of underground fueling systems hardware and flexible
piping systems and a leader in engineered industrial motor products.
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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, supply constraints, technology factors,
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)
First Quarter Ended
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March 29, March 30,
2003 2002
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Net sales $69,778 $68,069
Cost of sales 49,963 50,218
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Gross profit 19,815 17,851
Selling and administrative expenses 13,867 11,661
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Operating income 5,948 6,190
Interest expense (337) (338)
Other income, net 136 226
Foreign exchange income (loss) 451 (208)
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Income before income taxes 6,198 5,870
Income taxes 2,170 2,188
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Net income $ 4,028 $ 3,682
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Net income per share:
Basic $ 0.37 $ 0.34
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Diluted $ 0.36 $ 0.32
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Weighted average shares and equivalent
shares outstanding:
Basic 10,764 10,697
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Diluted 11,230 11,381
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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) March 29, Dec. 28,
2003 2002
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ASSETS:
Cash and equivalents $ 5,152 $ 20,133
Receivables 30,864 31,711
Inventories 62,240 48,268
Other current assets 12,506 12,897
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Total current assets 110,762 113,009
Property, plant and equipment, net 75,165 76,033
Deferred and other assets 30,489 30,795
Goodwill 39,343 38,746
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Total assets $ 255,759 $ 258,583
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LIABILITIES AND SHAREOWNERS' EQUITY:
Current maturities of long-term
debt and short-term borrowings $ 4,474 $ 1,467
Accounts payable and accrued liabilities 45,696 48,780
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Total current liabilities 50,170 50,247
Long-term debt 31,533 25,946
Employee benefit plan obligations 19,687 23,988
Other long-term liabilities 5,310 5,264
Shareowners' equity 149,059 153,138
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Total liabilities and shareowners' equity $ 255,759 $ 258,583
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FRANKLIN ELECTRIC CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Mar. 29, Mar. 30,
2003 2002
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Cash flows from operating activities:
Net income $ 4,028 $ 3,682
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 3,329 3,184
Loss on disposals of plant and equipment 363 -
Changes in assets and liabilities:
Receivables 1,023 (4,409)
Inventories (13,620) (6,269)
Accounts payable and other
accrued expenses (3,962) (5,111)
Employee benefit plan obligations (3,666) 109
Other, net 16 (264)
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Net cash flows from operating activities (12,489) (9,078)
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Cash flows from investing activities:
Additions to plant and equipment (1,988) (1,078)
Proceeds from sale of plant and equipment 214 -
Additions to deferred assets (250) (2,640)
Cash paid for acquisitions, net of cash
acquired - (17,475)
Proceeds from maturities of marketable
securities - 2,999
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Net cash flows from investing activities (2,024) (18,194)
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Cash flows from financing activities:
Borrowing on long-term debt 5,466 8,350
Repayment of long-term debt (109) -
Borrowing on line of credit
and short-term borrowings 3,000 3,000
Repayment of line of credit
and short-term borrowings (6) (5)
Proceeds from issuance of common stock 377 1,242
Purchases of common stock (8,394) -
Reduction of loan to ESOP Trust 233 232
Dividends paid (1,396) (1,284)
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Net cash flows from financing activities (829) 11,535
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Effect of exchange rate changes on cash 361 57
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Net change in cash and equivalents (14,981) (15,680)
Cash and equivalents at beginning of period 20,133 20,750
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Cash and equivalents at end of period $ 5,152 $ 5,070
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