UNITED STATES
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 15, 2005
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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) 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)
NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 Results of Operations and Financial Condition
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The following information is furnished pursuant to Item 2.02 "Results of
Operations and Financial Condition."
On July 15, 2005, Franklin Electric Co., Inc. issued a press release
announcing its second-quarter 2005 earnings. A copy of the press release is
attached hereto as Exhibit (99) and hereby incorporate by reference.
Item 9.01 Financial Statements and Exhibits
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The following information is furnished pursuant to Item 9.01, "Financial
Statements and Exhibits": (99) Press Release, dated July 15, 2005 issued by
Franklin Electric Co., Inc.
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 15, 2005 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 15, 2005 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 RECORD INCOME AND SALES
FOR THE SECOND QUARTER OF 2005
BLUFFTON, INDIANA - JULY 15, 2005 -- Franklin Electric Co., Inc.
(NASDAQ:FELE) reported record second quarter 2005 net income of $13.5
million, an increase of 25 percent from $10.9 million for the same period a
year ago. Diluted earnings per share were $0.59 compared to $0.48 for the
second quarter of 2004.
Sales for 2005 were also a second quarter record $123.5 million, an increase
of $17.4 million or about 16 percent from $106.1 million for the same period
a year ago. Foreign exchange rates accounted for $1.1 million of the
increase.
Operating earnings in the second quarter of 2005 were a record $20.9 million,
up $3.8 million or 22 percent compared to $17.1 million a year ago. The
improvement in operating earnings was primarily driven by the record sales
and was partially offset by the increased costs of certain commodities used
in the manufacture of electric motors and costs incurred in connection with
the company's distribution channel strategy change and the global
manufacturing realignment program.
R. Scott Trumbull, Chairman and Chief Executive Officer, stated, "We are
pleased with our second quarter financial results as well as with the sales
mix that we are achieving. During 2004, 40 percent of our sales were to two
major pump OEMs, while this year these two customers accounted for about one
quarter of our sales. As our distributor pump and motor sales continue to
grow rapidly, we expect the major pump OEM customers will continue to
represent a smaller portion of our overall sales mix.
Also, as we continue the implementation of our Global Manufacturing
Realignment Program, our production mix is improving. In the second quarter
of this year about 22 percent of our global water systems manufacturing man-
hours were in low cost countries (Mexico, Czech Republic, and China) versus
about 13 percent in second quarter last year. This percentage will increase
significantly during the balance of 2005 and 2006 as we continue to ramp up
our motor and component manufacturing in these countries. Also, during the
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second quarter this year we broke ground on a new pump manufacturing facility
located adjacent to our motor plant in Linares, Mexico."
Water system product sales worldwide were up about 21 percent compared to the
second quarter of 2004. The growth was attributable to increasing unit sales
of pumps and motors, as well as improved sales mix due to growing volume sold
directly to distributors. During the quarter Franklin introduced 3 new pump
brands-SCHAEFER(tm), AQUADUTY(tm), and J-CLASS(tm). The company is in the
process of establishing nationwide distributor networks for each of these
brands.
Fueling system product sales worldwide during the second quarter, recovering
from a soft first quarter, were comparable to the same period in the prior
year. During the second quarter Franklin Fueling Systems introduced its new
electronic tank gauging and monitoring product (TS-5 SERIES). The new
product is being performance tested by major petroleum marketers worldwide.
Franklin Electric is a global leader in the production and marketing of
groundwater 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)
Second Quarter Ended First Half Ended
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July 2, July 3, July 2, July 3,
2005 2004 2005 2004
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Net sales $123,537 $106,144 $205,971 $186,351
Cost of sales 82,117 71,632 139,072 128,219
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Gross profit 41,420 34,512 66,899 58,132
Selling and administrative
expenses 19,976 16,003 36,248 30,981
Restructuring expense 505 1,387 710 1,952
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Operating income 20,939 17,122 29,941 25,199
Interest expense (183) (93) (355) (199)
Other income 190 10 341 28
Foreign exchange gain/(loss) (43) (174) (32) (224)
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Income before income taxes 20,903 16,865 29,895 24,804
Income taxes 7,358 5,987 10,539 8,805
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Net income $ 13,545 $10,878 $ 19,356 $ 15,999
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Net income per share:
Basic $ 0.61 $ 0.50 $ 0.88 $ 0.73
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Diluted $ 0.59 $ 0.48 $ 0.84 $ 0.70
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Weighted average shares and
equivalent shares outstanding:
Basic 22,040 21,952 22,090 21,928
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Diluted 22,994 22,897 23,127 22,864
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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) July 2, Jan. 1,
2005 2005
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ASSETS:
Cash and equivalents $ 25,480 $ 50,604
Investments 15,525 -
Receivables 47,249 39,312
Inventories 75,772 62,442
Other current assets 14,378 13,784
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Total current assets 178,404 166,142
Property, plant and equipment, net 89,492 95,924
Goodwill and other assets 69,188 71,407
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Total assets $337,084 $333,473
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LIABILITIES AND SHAREOWNERS' EQUITY:
Current maturities of long-term
debt and short-term borrowings $ 1,269 $ 1,304
Accounts payable 17,603 16,594
Accrued liabilities 38,320 36,547
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Total current liabilities 57,192 54,445
Long-term debt 13,271 13,752
Deferred income taxes 6,998 6,304
Employee benefit plan obligations 18,467 18,801
Other long-term liabilities 5,770 5,838
Shareowners' equity 235,386 234,333
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Total liabilities and shareowners' equity $337,084 $333,473
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FRANKLIN ELECTRIC CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) July 2, July 3,
2005 2004
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Cash flows from operating activities:
Net income $ 19,356 $ 15,999
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 7,783 7,758
Deferred income taxes 694 -
Loss on disposals of plant and equipment 51 7
Changes in assets and liabilities:
Receivables (9,244) (8,163)
Inventories (16,879) (12,904)
Accounts payable and other accrued expenses 6,879 12,258
Employee benefit plans 451 (3,713)
Other, net (234) 1,173
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Net cash flows from operating activities 8,857 12,415
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Cash flows from investing activities:
Additions to plant and equipment (5,569) (10,110)
Proceeds from sale of plant and equipment 1,048 -
Additions to deferred assets (1,005) (5)
Cash paid for securities (93,500) -
Proceeds from sale of securities 77,975 -
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Net cash flows from investing activities (21,051) (10,115)
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Cash flows from financing activities:
Repayment of long-term debt (142) (414)
Proceeds from issuance of common stock 4,356 3,034
Purchases of common stock (12,318) (3,091)
Reduction of loan to ESOP Trust 233 232
Dividends paid (3,970) (3,296)
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Net cash flows from financing activities (11,841) (3,535)
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Effect of exchange rate changes on cash (1,089) 121
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Net change in cash and equivalents (25,124) (1,114)
Cash and equivalents at beginning of period 50,604 29,962
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Cash and equivalents at end of period $ 25,480 $ 28,848
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