FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 28, 2003
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 0-362
FRANKLIN ELECTRIC CO., INC.
---------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INDIANA 35-0827455
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) 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)
NOT APPLICABLE
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(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS OF COMMON STOCK AUGUST 7, 2003
--------------------- --------------
$.10 PAR VALUE 10,823,200 SHARES
<Page> 2
FRANKLIN ELECTRIC CO., INC.
Index
Page
PART I. FINANCIAL INFORMATION Number
- --------------------------------- ------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
as of June 28, 2003
and December 28, 2002 ........................ 3
Condensed Consolidated Statements of
Income for the Second Quarter and First
Half ended June 28, 2003 and
June 29, 2002 ................................ 4
Condensed Consolidated Statements
Of Cash Flows for the First Half
Ended June 28, 2003 and
June 29, 2002 ................................ 5
Notes to Condensed Consolidated
Financial Statements ......................... 6-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations......................... 9-11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk............................. 11
Item 4. Controls and Procedures ...................... 11
PART II. OTHER INFORMATION
- -----------------------------
Item 6. Exhibits and Reports on Form 8-K.............. 12
Signatures................................................ 13
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Exhibit Index............................................. 14
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Exhibits.................................................. 15-20
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<Page> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) June 28, December 28,
2003 2002
---- ----
ASSETS
Current assets:
Cash and equivalents.................... $ 10,712 $ 20,133
Receivables, less allowances of
$1,964 and $1,907, respectively....... 39,311 31,711
Inventories (Note 2).................... 62,611 48,268
Other current assets (including
deferred income taxes of $8,612
and $8,615, respectively)............. 12,155 12,897
-------- --------
Total current assets.................. 124,789 113,009
Property, plant and equipment,
net (Note 3)............................ 75,843 76,033
Deferred and other assets (including
deferred income taxes of $1,391)........ 30,156 30,795
Goodwill.................................. 40,365 38,746
-------- --------
Total assets.............................. $271,153 $258,583
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Current maturities of long-term
debt and short-term borrowings........ $ 1,483 $ 1,467
Accounts payable........................ 14,831 18,584
Accrued expenses........................ 29,690 28,484
Income taxes............................ 4,109 1,712
-------- --------
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:
Common stock (Note 5)................... 1,079 1,082
Additional capital...................... 41,459 34,079
Retained earnings....................... 122,093 125,308
Loan to ESOP Trust...................... (897) (1,130)
Accumulated other comprehensive
loss (Note 7)......................... (2,241) (6,201)
-------- --------
Total shareowners' equity............. 161,493 153,138
-------- --------
Total liabilities and shareowners' equity. $271,153 $258,583
======== ========
See Notes to Condensed Consolidated Financial Statements.
<Page> 4
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
---- ---- ---- ----
Net sales.............................. $93,840 $93,682 $163,618 $161,751
Cost of sales.......................... 64,900 67,082 114,863 117,300
------- ------- -------- --------
Gross Profit........................... 28,940 26,600 48,755 44,451
Selling and administrative expenses.... 14,767 13,428 28,634 25,089
------- ------- ------- -------
Operating Income....................... 14,173 13,172 20,121 19,362
Interest expense....................... 325 321 662 659
Other expense (income), net............ (98) 19 (234) (207)
Foreign exchange gain.................. (231) (1,312) (682) (1,104)
-------- ------- ------- --------
Income before income taxes............. 14,177 14,144 20,375 20,014
Income taxes........................... 4,809 5,138 6,979 7,326
------- ------- -------- --------
Net income............................. $ 9,368 $ 9,006 $ 13,396 $ 12,688
======= ======= ======== ========
Per share data (Note 6):
Net income per common share.......... $ 0.87 $ 0.83 $ 1.24 $ 1.18
======= ======= ======== ========
Net income per common share,
assuming dilution.................. $ 0.83 $ 0.79 $ 1.19 $ 1.11
======= ======= ======== ========
Dividends per common share........... $ 0.14 $ 0.13 $ 0.27 $ 0.25
======= ======= ======== ========
See Notes to Condensed Consolidated Financial Statements.
<Page> 5
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands) Six Months Ended
----------------
June 28, June 29,
2003 2002
---- ----
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)
------- -------
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)
------- -------
Net cash flows from financing activities.... (3,646) 7,219
------- -------
Effect of exchange rate changes on cash..... 771 180
------- -------
Net change in cash and equivalents.......... (9,421) (10,173)
Cash and equivalents at beginning of period. 20,133 20,750
------- -------
Cash and equivalents at end of period....... $10,712 $10,577
======= =======
See Notes to Condensed Consolidated Financial Statements.
<Page> 6
FRANKLIN ELECTRIC CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Condensed Consolidated Financial Statements
- ----------------------------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the first half
ended June 28, 2003 are not necessarily indicative of the results that may be
expected for the year ending January 3, 2004. For further information,
including a discussion of Franklin Electric's significant accounting policies,
refer to the consolidated financial statements and footnotes thereto included
in Franklin Electric Co., Inc.'s annual report on Form 10-K for the year ended
December 28, 2002.
Note 2: Inventories
- --------------------
Inventories consist of the following:
(In thousands) June 28, December 28,
2003 2002
---- ----
Raw Materials........................ $15,953 $16,115
Work in Process...................... 6,923 7,481
Finished Goods....................... 49,392 33,905
LIFO Reserve......................... (9,657) (9,233)
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Total Inventory...................... $62,611 $48,268
======= =======
Note 3: Property, Plant and Equipment
- --------------------------------------
Property, plant and equipment, at cost, consists of the following:
(In thousands) June 28, December 28,
2003 2002
---- ----
Land and Building.................... $ 39,716 $ 34,126
Machinery and Equipment.............. 142,019 141,347
-------- --------
181,735 175,473
Allowance for Depreciation........... 105,892 99,440
-------- --------
$ 75,843 $ 76,033
======== ========
Note 4: Tax Rates
- ------------------
The effective tax rate on income before income taxes in 2003 and 2002 varies
from the United States statutory rate of 35 percent principally due to the
effect of state and foreign income taxes and tax planning activities.
<Page> 7
Note 5: Shareowners' Equity
- ----------------------------
The Company had 10,787,000 shares of common stock (25,000,000 shares
authorized, $.10 par value) outstanding as of June 28, 2003.
During the second quarter of 2003, pursuant to the stock repurchase program
authorized by the Company's Board of Directors, the Company repurchased a
total of 25,000 shares for $1.4 million. All repurchased shares were retired.
Note 6: Earnings Per Share
- ---------------------------
Following is the computation of basic and diluted earnings per share:
(In thousands, except Second Qtr. Ended First Half Ended
----------------- ----------------
per share amounts) June 28, June 29, June 28, June 29,
2003 2002 2003 2002
---- ---- ---- ----
Numerator:
Net Income..................... $9,368 $9,006 $13,396 $12,688
====== ====== ======= =======
Denominator:
Basic
-----
Weighted average common
shares....................... 10,772 10,824 10,768 10,760
Diluted
-------
Effect of dilutive securities:
Employee and director
stock options.............. 468 626 472 659
------ ------ ------- ------
Adjusted weighted average
common shares................ 11,240 11,450 11,240 11,419
====== ====== ======= =======
Basic earnings per share......... $ 0.87 $ 0.83 $ 1.24 $ 1.18
====== ====== ======= =======
Diluted earnings per share....... $ 0.83 $ 0.79 $ 1.19 $ 1.11
====== ====== ======= =======
Note 7: Other Comprehensive Income
- -----------------------------------
Comprehensive income is as follows:
(In thousands) Second Qtr. Ended First Half Ended
----------------- ----------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
---- ---- ---- ----
Net income......................... $ 9,368 $ 9,006 $13,396 $ 12,688
Other comprehensive gain:
Foreign currency translation
adjustments..................... 2,832 4,279 3,960 4,117
------ ------ ------ -------
Comprehensive income, net of tax... $12,200 $13,285 $17,356 $16,805
======= ======= ======= =======
<Page> 8
Accumulated other comprehensive loss consists of the following:
(In thousands) June 28, December 28,
2003 2002
---- ----
Cumulative translation adjustment........... $ 1,709 $(2,251)
Minimum pension liability adjustment,
net of tax................................ (3,950) (3,950)
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$(2,241) $(6,201)
======= =======
Note 8: Contingencies and Commitments
- --------------------------------------
The Company is defending various claims and legal actions including
environmental matters, which have arisen in the ordinary course of business.
In the opinion of management, after discussion with counsel, these claims and
legal actions can be successfully defended or resolved without a material
adverse effect on the Company's financial position, results of operations, and
net cash flows.
The Company provides warranties on most of its products. The warranty terms
vary but are generally two years from date of manufacture or one year from
date of installation. Provisions for estimated expenses related to product
warranty are made at the time products are sold or when specific warranty
issues are identified. These estimates are established using historical
information about the nature, frequency, and average cost of warranty claims.
The Company actively studies trends of warranty claims and takes action to
improve product quality and minimize warranty claims. The Company believes
that the warranty reserve is appropriate; however, actual claims incurred
could differ from the original estimates, requiring adjustments to the
reserve.
Below is a table that shows the activity in the warranty accrual accounts:
(In thousands) Second Qtr. Ended First Half Ended
----------------- ----------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
---- ---- ---- ----
Beginning Balance.................. $5,210 $4,752 $5,308 $4,970
Accruals related to
product warranties............... 1,457 1,239 2,369 2,241
Reductions for payments made....... 1,136 770 2,146 1,990
------ ------ ------ ------
Ending Balance..................... $5,531 $5,221 $5,531 $5,221
====== ====== ====== ======
Note 9: Stock-Based Compensation
- ---------------------------------
The Company accounts for stock-based employee compensation plans under the
recognition and measurement principles of APB Opinion No. 25, "Accounting for
Stock Issued to Employees." No stock-based employee compensation cost is
reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the stock at date of grant. As
permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," and
amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure, an amendment of FASB Statement No. 123," the Company follows
<Page> 9
the disclosure requirements only of SFAS No. 123. The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123:
(In Thousands, Except Second Qtr. Ended First Half Ended
----------------- ----------------
Per Share Amounts) June 28, June 29 June 28, June 29
2003 2002 2003 2002
---- ---- ---- ----
Net income .................... $9,368 $9,006 $13,396 $12,688
Deduct: Stock-based
employee compensation
cost, net of income tax....... 401 332 842 622
------ ------ ------- -------
Pro forma net income .......... $8,967 $8,674 $12,554 $12,066
====== ====== ======= =======
Earnings per share:
Basic - as reported............ $ 0.87 $ 0.83 $ 1.24 $ 1.18
Basic - pro forma.............. $ 0.83 $ 0.80 $ 1.17 $ 1.12
Diluted - as reported.......... $ 0.83 $ 0.79 $ 1.19 $ 1.11
Diluted - pro forma............ $ 0.80 $ 0.76 $ 1.12 $ 1.06
Note 10: Subsequent Event
- ---------------------------------
On July 30, 2003, the Company paid off foreign denominated debt and
outstanding interest of approximately $18,117,000. The payoff of this debt
and interest was funded from cash accumulated in excess of ongoing
requirements and $3.0 million of borrowings under the Company's revolving
credit agreement.
Item 2. Management's Discussion And Analysis Of Financial Condition And
- ------------------------------------------------------------------------
Results Of Operations
- ---------------------
Operations
- ----------
Sales for the second quarter of 2003 were $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. Excluding the impact of stronger foreign currencies and INCON
sales, the Company's sales were down about 6.5 percent primarily due to lower
demand for water systems products in North America and Europa (i.e., Europe,
Middle East and North Africa). Lower demand in North America is attributed to
extremely wet weather conditions in the eastern half of the country. Lower
demand in Europa is attributed to disrupted markets in the Middle East. For
the first half of 2003, sales were $163.6 million, an increase of 1 percent
compared to 2002 sales of $161.8 million. Sales for the first six months of
2003 were increased by the strengthening of foreign currencies ($7.8 million)
and inclusion of INCON sales ($3.8 million). Excluding the impact of the
change in exchange rates and INCON sales, the Company's sales were down about
<Page> 10
6.1 percent primarily due to lower demand in North America and Europa.
Cost of sales as a percent of net sales for the second quarter of 2003 was
69.2 percent, a decrease from 71.6 percent for the same period in 2002. Cost
of sales as a percent of net sales for the year to date 2003 was 70.2 percent,
a decrease from 72.5 percent for the same period in 2002. The decrease is
primarily the result of productivity improvements and cost reductions.
Selling and administrative expense as a percent of net sales for the second
quarter of 2003 was 15.7 percent compared to 14.3 percent for the same period
in 2002. Selling and administrative expense as a percent of net sales for the
year to date 2003 was 17.5 percent compared to 15.5 percent for the year to
date 2002. The increases in selling and administrative expense were primarily
due to the INCON acquisition ($0.6 million and $1.4 million for second quarter
and year to date, respectively); the impact of stronger foreign currencies
($0.5 million and $0.9 million for second quarter and year to date,
respectively), primarily the euro; and selling costs associated with new
product launches.
Foreign currency based transactions for the second quarter of 2003 produced a
gain of $0.2 million compared to a $1.3 million gain for the same period in
2002. Foreign currency based transactions for the first half of 2003 produced
a gain of $0.7 million compared to a $1.1 million gain for the same period in
2002. The foreign currency transaction gains are due primarily to the
strengthening euro relative to the U.S. dollar.
The effective tax rate on income before income taxes in 2003 and 2002 varies
from the United States statutory rate of 35 percent principally due to the
effect of state and foreign income taxes and tax planning activities.
Net income for the second quarter of 2003 was $9.4 million, or $.83 per
diluted share, a 4.4 percent increase compared to net income of $9.0 million,
or $.79 per diluted share, for the same period a year ago. Year to date 2003
net income was $13.4 million, or $1.19 per diluted share, a 5.5 percent
increase compared to year to date 2002 net income of $12.7 million, or $1.11
per diluted share.
Capital Resources and Liquidity
- -------------------------------
Cash and cash equivalents decreased $9.4 million during the first half of
2003. The principal use of cash for operating activities was the seasonal
increase in inventories. Working capital increased $11.9 million during the
first half of 2003. The current ratio was 2.5 and 2.2 at June 28, 2003 and
December 28, 2002, respectively.
Net cash flows used in investing activities were $4.1 million and were
principally used for additions to plant and equipment. The Company also
purchased $9.8 million of its common stock during the first half of 2003.
On July 30, 2003, (i.e., subsequent to the balance sheet date) the Company
paid off foreign denominated debt and outstanding interest of approximately
$18,117,000. The payoff of this debt and interest was funded from cash
accumulated in excess of ongoing requirements and $3.0 million of borrowings
under the Company's revolving credit agreement.
<Page> 11
Critical Accounting Policies and Estimates
- ------------------------------------------
Management's discussion and analysis of its financial condition and results of
operations are based upon the Company's condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
the related disclosure of contingent assets and liabilities. On an on-going
basis, management evaluates its estimates, including those related to revenue
recognition allowance for doubtful accounts, accounts receivable, inventories,
recoverability of long-lived assets, intangible assets, income taxes, warranty
obligations, pensions and other employee benefit plan obligations, and
contingencies. Management bases its estimates on historical experience and on
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.
"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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
The Company is subject to market risk associated with changes in foreign
currency exchange rates and interest rates. Foreign currency exchange rate
risk is mitigated through several means: maintenance of local production
facilities in the markets served, invoicing of customers in the same currency
as the source of the products, prompt settlement of intercompany balances
utilizing a global netting system and limited use of foreign currency
denominated debt. Interest rate exposure is principally limited to variable
rate interest borrowings under the Company's revolving credit agreement.
Item 4. Controls and Procedures
- --------------------------------
The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this report. Based upon that evaluation, the Company's Chief
Executive Officer and the Company's Chief Financial Officer concluded that as
of the end of the period covered by this report, the Company's disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company and its subsidiaries required to be
included in the Company's periodic SEC filings.
<Page> 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (Filed with this quarterly report)
(31) Rule 13a-14(a)/15d-14 Certifications
(i) Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
(ii) Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
(32) Section 1350 Certifications
(i) Chief Executive Officer Certification Pursuant to 18
U.S.C. Section 1350 As Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(ii) Chief Financial Officer Certification Pursuant to 18
U.S.C. Section 1350 As Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed with the SEC by the Company on
April 15, 2003, pursuant to Item 9, "Regulation FD Disclosure" and
Item 12, "Disclosure of Results of Operations and Financial
Condition", to report the Company's issuance of a press release
setting forth its first-quarter 2003 earnings.
<Page> 13
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
FRANKLIN ELECTRIC CO., INC.
---------------------------
Registrant
Date August 11, 2003 By /s/ R. Scott Trumbull
------------------------ ---------------------------------
R. Scott Trumbull, Chairman
and Chief Executive Officer
(Principal Executive Officer)
Date August 11, 2003 By /s/ Gregg C. Sengstack
------------------------- ---------------------------------
Gregg C. Sengstack, Senior Vice
President, Chief Financial
Officer and Secretary (Principal
Financial and Accounting Officer)
<Page> 14
FRANKLIN ELECTRIC CO., INC.
EXHIBIT INDEX TO THE SECOND QUARTER REPORT ON FORM 10-Q
FOR THE SECOND QUARTER ENDED June 28, 2003
Exhibit
Number Description
- ------ -----------
(31) Rule 13a-14(a)/15d-14 Certifications
(i) Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(ii) Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(32) Section 1350 Certifications
(i) Chief Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350 As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(ii) Chief Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350 As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
<Page> 15
EXHIBIT (31)(i)
---------------
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
----------------------------------------
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
---------------------------------------------------------
I, R. Scott Trumbull, Chairman and Chief Executive Officer of Franklin
Electric Co., Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric
Co., Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors:
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
<Page> 16
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 11, 2003
-------------------------
/s/ R. Scott Trumbull
--------------------------
R. Scott Trumbull
Chairman and Chief Executive Officer
Franklin Electric Co., Inc.
<Page> 17
EXHIBIT (31)(ii)
------------------
CERTIFICATION OF CHIEF FINANCIAL OFFICER
----------------------------------------
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
---------------------------------------------------------
I, Gregg C. Sengstack, Senior Vice President, Chief Financial Officer
and Secretary of Franklin Electric Co., Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric
Co., Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors:
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
<Page> 18
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 11, 2003
----------------------
/s/ Gregg C. Sengstack
----------------------
Gregg C. Sengstack
Senior Vice President, Chief Financial Officer and Secretary
Franklin Electric Co., Inc.
<Page> 19
EXHIBIT (32)(i) CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C.
---------------------------------------------------------------------------
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
----------------------------------------------------------------------------
2002
----
In connection with the Quarterly Report of Franklin Electric Co., Inc.
(the "Company") on Form 10-Q for the period ending June 28, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
R. Scott Trumbull, Chairman and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: August 11, 2003
------------------------------
/s/ R. Scott Trumbull
------------------------------
R. Scott Trumbull
Chairman and Chief Executive Officer
Franklin Electric Co., Inc.
The certification accompanies the Report pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Franklin Electric
Co., Inc. for purposes of section 18 of the Securities Exchange Act of 1934,
as amended.
A signed original of the written statement required by section 906 has been
provided to Franklin Electric Co., Inc. and will be retained by Franklin
Electric Co., Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
<Page> 20
EXHIBIT (32)(ii) CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C.
----------------------------------------------------------------------------
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
----------------------------------------------------------------------------
2002
----
In connection with the Quarterly Report of Franklin Electric Co., Inc.
(the "Company") on Form 10-Q for the period ending June 28, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Gregg C. Sengstack, Senior Vice President, Chief Financial Officer and
Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: August 11, 2003
------------------------------
/s/ Gregg C. Sengstack
------------------------------
Gregg C. Sengstack
Senior Vice President, Chief Financial Officer and Secretary
Franklin Electric Co., Inc.
The certification accompanies the Report pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Franklin Electric
Co., Inc. for purposes of section 18 of the Securities Exchange Act of 1934,
as amended.
A signed original of the written statement required by section 906 has been
provided to Franklin Electric Co., Inc. and will be retained by Franklin
Electric Co., Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
5