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) OCTOBER 9, 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 October 9, 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 October 9, 2003, Franklin Electric Co., Inc. issued a press release setting
forth its third-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 October 13, 2003 By /s/ Gregg C. Sengstack
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Gregg C. Sengstack, Senior Vice
President and 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 October 9, 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 THIRD QUARTER AND FIRST NINE MONTHS OF 2003
Bluffton, Indiana-October 9, 2003--Franklin Electric Co., Inc. (NASDAQ:FELE)
reported record third quarter 2003 diluted earnings per share of $0.93, a 9
percent increase from $0.85 for the third quarter of 2002. Third quarter 2003
net income was a record $10.5 million, an increase of 9 percent from $9.6
million for the same period a year ago. For the first three quarters of 2003,
diluted earnings per share were a record $2.12, an increase of 8 percent
compared to 2003 earnings per share of $1.96, and net income was a record
$23.9 million, an increase of 7 percent compared to last year's $22.3 million.
Sales for the third quarter of 2003 were a record $99.7 million, an increase
of 3 percent compared to sales of $97.1 million for the same period a year
ago. Foreign currencies, particularly the euro, strengthened relative to the
U.S. dollar since the third quarter of 2002. The impact of this change in
exchange rates was a $3.7 million increase in the Company's reported third
quarter 2003 sales. For the first three quarters of 2003, sales were a record
$263.3 million, an increase of 2 percent compared to 2002 sales of $258.9
million. The impact of strengthening foreign currencies on the first three
quarters of 2003 was an $11.3 million increase in the Company's reported
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 $4.1 million in the first three quarters of 2003
compared to last year.
Operating earnings in the third quarter of 2003 were $15.8 million, up
slightly compared to $15.6 million a year ago. For the first three quarters
of 2003, operating earnings were $36.0 million compared to last year's $35.0
million.
R. Scott Trumbull, Chairman and Chief Executive Officer, stated, "We are
pleased that our earnings increased in spite of reduced unit sales in one of
our key markets. Last year we had unusually strong sales in the North
American Residential water well market as drought conditions prevailed over
much of the East coast. This year our residential water sales have fallen
back to normal levels. We were pleased with the growth of our motor sales to
the agricultural, industrial and municipal markets during the quarter; and we
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were also encouraged by the continuing improvement of our fueling systems
business.During the quarter we completed the construction and moved into our
new motor components facilities in the Czech Republic and China; and we
initiated the construction phase of the planned expansion of our motor plant
in Linares Mexico. Also during the quarter our Board approved the construction
of a new motor plant in the Czech Republic. These initiatives - which will
require approximately 2 years to complete - will result in moving a significant
amount of our production to lower cost regions of the world.
North America water systems products sales were down slightly in the third
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 partially offset by
strong export sales.
Water System sales in Europa (Europe, the Middle East and North Africa) were
up due primarily to sales in the Middle East. South Africa showed higher
quarter over quarter sales. Sales in the Asia/Pacific region were higher as
well.
Sales of the SubDrive(tm) family of electronic drive systems for water wells
continued to grow quarter over quarter. Another SubDrive(tm) product will be
launched in the fourth quarter further extending the product line.
Fueling system product sales continued to strengthen in the quarter and
margins were up significantly as compared to the first half of the year and
the third quarter last year. The integration of INCON remained on schedule.
Third quarter industrial motor products sales were down primarily due to the
slowness of the market. During the quarter, the Company started sales of its
new V Series(tm) product line manufactured in China. The Company's
HydroDuty(tm)(patents pending) product line was made commercially available at
the end of the quarter as well."
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)
Third Qtr. Ended Nine Months Ended
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Sept 27, Sept 28, Sept 27, Sept 28,
2003 2002 2003 2002
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Net sales $99,685 $97,125 $263,303 $258,876
Cost of sales 68,917 67,572 183,780 184,872
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Gross Profit 30,768 29,553 79,523 74,004
Selling and administrative expenses 14,933 13,957 43,567 39,046
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Operating income 15,835 15,596 35,956 34,958
Interest expense (313) (367) (975) (1,026)
Other income 14 61 248 268
Foreign exchange gain /(loss) (278) (327) 404 777
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Income before income taxes 15,258 14,963 35,633 34,977
Income taxes 4,745 5,335 11,724 12,661
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Net income $10,513 $ 9,628 $ 23,909 $ 22,316
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Net income per share:
Basic $ 0.97 $ 0.89 $ 2.22 $ 2.07
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Diluted $ 0.93 $ 0.85 $ 2.12 $ 1.96
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Weighted average shares and equivalent
shares outstanding:
Basic 10,813 10,824 10,783 10,781
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Diluted 11,357 11,326 11,286 11,388
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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) Sept. 27, Dec. 28,
2003 2002
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ASSETS:
Cash and equivalents $ 18,064 $ 20,133
Receivables 34,302 31,711
Inventories 53,233 48,268
Other current assets 13,262 12,897
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Total current assets 118,861 113,009
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Property, plant and equipment, net 77,740 76,033
Goodwill and other assets 69,975 69,541
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Total Assets $266,576 $258,583
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LIABILITIES AND SHAREOWNERS' EQUITY:
Current maturities of long-term
debt and short-term borrowing $ 1,477 $ 1,467
Accounts payable and accrued liabilities 50,689 48,780
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Total current liabilities 52,166 50,247
Long-term debt 15,923 25,946
Employee benefit plan obligations 20,868 23,988
Other long-term liabilities 5,386 5,264
Shareowners' equity 172,233 153,138
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Total liabilities and shareowners' equity $266,576 $258,583
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FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Nine Months Ended
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Sept 27, Sept 28,
2003 2002
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Cash flows from operating activities:
Net income $23,909 $22,316
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 10,329 9,848
Loss on disposals of plant
and equipment 436 2
Changes in assets and liabilities:
Receivables (1,083) 1
Inventories (2,882) 3,504
Accounts payable and other accrued
expenses 1,992 1,096
Employee benefit plan obligations (3,245) 885
Other, net (915) (1,965)
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Net cash flows from
operating activities 28,541 35,687
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Cash flows from investing activities:
Additions to plant and equipment (8,925) (9,016)
Proceeds from sale of plant and
equipment 243 19
Additions to deferred assets (433) (14,232)
Cash paid for acquisitions, net of cash
acquired - (30,344)
Proceeds from maturities of marketable
securities - 2,999
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Net cash flows from
investing activities (9,115) (50,574)
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Cash flows from financing activities:
Borrowing on long-term debt 6,648 8,350
Repayment of long-term debt (18,407) (208)
Borrowing on line of credit
and short-term borrowings 11,000 3,000
Repayment of line of credit
and short-term borrowings (11,024) (3,013)
Proceeds from issuance of common stock 3,282 1,731
Purchases of common stock (9,782) (2,253)
Reduction of loan to ESOP Trust 233 232
Dividends paid (4,420) (4,098)
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Net cash flows from
financing activities (22,470) 3,741
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Effect of exchange rate changes on cash 975 935
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Net change in cash and equivalents (2,069) (10,211)
Cash and equivalents at beginning of period 20,133 20,750
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Cash and equivalents at end of period $18,064 $10,539
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