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) JULY 11, 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 July 11, 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 July 11, 2003, Franklin Electric Co., Inc. issued a press release setting
forth its second-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 July 16, 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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EXHIBIT NO. (99) Press release, dated July 11, 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 SECOND QUARTER AND FIRST HALF OF 2003
Bluffton, Indiana-July 11, 2003--Franklin Electric Co., Inc. (NASDAQ:FELE)
reported record second quarter 2003 diluted earnings per share of $0.83, a 5
percent increase from $0.79 for the second quarter of 2002. Second quarter
2003 net income was a record $9.4 million, an increase of 4 percent from $9.0
million for the same period a year ago. For the first half of 2003, diluted
earnings per share were a record $1.19, an increase of 7 percent compared to
2002 earnings per share of $1.11, and net income was a record $13.4 million,
an increase of 6 percent compared to last year's $12.7 million.
Sales for the second quarter of 2003 were a record $93.8 million, up slightly
compared to sales of $93.7 million for the same period a year ago. Foreign
currencies, particularly the euro, strengthened relative to the U.S. dollar
since the second quarter of 2002. The impact of this change in exchange rates
was a $4.2 million increase in the Company's reported second quarter 2003
sales. In addition, the year on year impact of the inclusion of the sales of
Intelligent Controls, Inc. ("INCON"), acquired by the Company in July 2002,
was an increase in sales of $2.0 million in the second quarter of 2003
compared to last year. For the first half of 2003, sales were a record $163.6
million, an increase of 1 percent compared to 2002 sales of $161.8 million.
Operating earnings in the second quarter of 2003 were $14.2 million, an
increase of 8 percent compared to $13.2 million a year ago. The second
quarter 2003 operating margin on sales was 15 percent as compared to 14
percent for the same period last year. For the first half of 2003, operating
earnings were $20.1 million compared to last year's $19.4 million.
R. Scott Trumbull, Chairman and Chief Executive Officer, stated, "We were
pleased that our operating earnings increased by 8 percent in spite of weak
sales. While our market position is solid, the overall demand for our water
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system products has fallen off compared to the strong drought induced sales
of last year. Our cost and productivity programs are working and we continue
to invest in the construction of three new manufacturing facilities and
several important new product launches.
North America water systems products sales were down in the second quarter as
compared to last year. The decrease during the quarter reflected continued
weak demand in the market attributed to extremely wet weather conditions
throughout the Eastern half of the country.
Sales of the SubDrive(tm) family of electronic drive systems for water wells
continued to grow. The Company launched two new SubDrive(tm) products which
broaden the line to cover most U.S. residential applications.
Fueling system product sales were up 24 percent during the quarter due in
part to including INCON. Both sales and margins improved significantly
through the quarter in this product line.
Second quarter industrial motor products sales were down due in part to the
Company's focus on pruning low margin business within this product line.
During the quarter, the Company started production of its new V-Series(tm)
product line in China. The V-Series(tm) line will be introduced to the US
market in the third quarter.
Water System sales in Europa (Europe, the Middle East and North Africa) were
down due primarily to disrupted markets in the Middle East. Towards the end
of the quarter orders from the Middle East were strengthening. South Africa
and Australia both showed higher quarter over quarter sales. Sales in the
Asia/Pacific region were lower."
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)
Second Quarter Ended First Half Ended
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June 28, June 29, June 28, June 29,
2003 2002 2003 2002
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Net sales $93,840 $93,682 $163,618 $161,751
Cost of sales 64,900 67,082 114,863 117,300
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Gross profit 28,940 26,600 48,755 44,451
Selling and administrative
Expenses 14,767 13,428 28,634 25,089
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Operating income 14,173 13,172 20,121 19,362
Interest expense (325) (321) (662) (659)
Other income / (expense) 98 (19) 234 207
Foreign exchange gain 231 1,312 682 1,104
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Income before income taxes 14,177 14,144 20,375 20,014
Income taxes 4,809 5,138 6,979 7,326
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Net income $ 9,368 $ 9,006 $ 13,396 $ 12,688
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Net income per share:
Basic $0.87 $0.83 $1.24 $1.18
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Diluted $0.83 $0.79 $1.19 $1.11
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Weighted average shares and
Equivalent shares outstanding:
Basic 10,772 10,824 10,768 10,760
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Diluted 11,240 11,450 11,240 11,419
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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) June 28, Dec. 28,
2003 2002
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ASSETS:
Cash and equivalents $ 10,712 $ 20,133
Receivables 39,311 31,711
Inventories 62,611 48,268
Other current assets 12,155 12,897
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Total current assets 124,789 113,009
Property, plant and equipment, net 75,843 76,033
Goodwill and other assets 70,521 69,541
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Total assets $271,153 $258,583
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LIABILITIES AND SHAREOWNERS' EQUITY:
Current maturities of long-term
debt and short-term borrowings $ 1,483 $ 1,467
Accounts payable and accrued liabilities 48,630 48,780
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Total current liabilities 50,113 50,247
Long-term debt 33,713 25,946
Employee benefit plan obligations 20,396 23,988
Other long-term liabilities 5,438 5,264
Shareowners' equity 161,493 153,138
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Total liabilities and shareowners' equity $271,153 $258,583
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FRANKLIN ELECTRIC CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands) June 28, June 29,
2003 2002
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Cash flows from operating activities:
Net income $ 13,396 $ 12,688
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 6,750 6,574
Loss on disposals of plant and equipment 368 2
Changes in assets and liabilities:
Receivables (6,203) (8,276)
Inventories (12,401) (4,611)
Accounts payable and other accrued expenses (253) (1,808)
Employee benefit plan obligations (3,709) 562
Other, net (357) (1,425)
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Net cash flows from operating activities (2,409) 3,706
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Cash flows from investing activities:
Additions to plant and equipment (3,932) (3,887)
Proceeds from sale of plant and equipment 216 18
Additions to deferred assets (421) (2,933)
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 (4,137) (21,278)
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Cash flows from financing activities:
Borrowing on long-term debt 6,648 8,350
Repayment of long-term debt (224) (9)
Borrowing on line of credit and short-term borrowings 8,000 3,000
Repayment of line of credit and short-term borrowings (8,006) (3,009)
Proceeds from issuance of common stock 2,390 1,554
Purchases of common stock (9,782) (206)
Reduction of loan to ESOP Trust 233 232
Dividends paid (2,905) (2,693)
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Net cash flows from financing activities (3,646) 7,219
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Effect of exchange rate changes on cash 771 180
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Net change in cash and equivalents (9,421) (10,173)
Cash and equivalents at beginning of period 20,133 20,750
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Cash and equivalents at end of period $ 10,712 $10,577
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