-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, X2E6oDOEVGwqdbfVWSXTwu6x/ErBk0iG8PeFIPeyiJ1OLYRwBojKDwW+5AFGnqkQ b83EELG5em7FgxwMmaX4oQ== 0000038725-95-000011.txt : 19950727 0000038725-95-000011.hdr.sgml : 19950727 ACCESSION NUMBER: 0000038725-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950701 FILED AS OF DATE: 19950726 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN ELECTRIC CO INC CENTRAL INDEX KEY: 0000038725 STANDARD INDUSTRIAL CLASSIFICATION: MOTORS & GENERATORS [3621] IRS NUMBER: 350827455 STATE OF INCORPORATION: IN FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00362 FILM NUMBER: 95556176 BUSINESS ADDRESS: STREET 1: 400 E SPRING ST CITY: BLUFFTON STATE: IN ZIP: 46714 BUSINESS PHONE: 2198242900 MAIL ADDRESS: STREET 1: 400 E SPRING STREET CITY: BLUFFTON STATE: IN ZIP: 46714 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 1995 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 35-0826-7455 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 East Spring Street 46714 Bluffton, Indiana (Zip Code) (Address of principal executive offices) (219) 824-2900 (Registrant's telephone number, including area code) Not Applicable (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 NO ----- ----- 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 July 21, 1995 --------------------- ------------- $.10 par value 6,239,602 shares FRANKLIN ELECTRIC CO., INC. Index PART I. FINANCIAL INFORMATION - --------------------------------- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of July 1, 1995 (Unaudited) and December 31, 1994 Condensed Consolidated Statements of Income for the Second Quarter and First Half ended July 1, 1995 and July 2, 1994 (Unaudited) Condensed Consolidated Statements of Cash Flows for the First Half ended July 1, 1995 and July 2, 1994 (Unaudited) Notes to Condensed Consolidated Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION - ----------------------------- Item 4. Results of Votes of Holders Item 6. Exhibits and Reports on Form 8-K Signatures - ---------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) July 1, December 31, 1995 1994 (Unaudited) (Audited) ----------- --------- ASSETS Current assets: Cash and equivalents.................... $ 17,708 $ 38,890 Receivables (less allowances of $1,388 and $1,271, respectively)...... 31,922 21,864 Inventories (Note 2).................... 48,884 37,755 Other current assets (including deferred income taxes of $7,383 and $6,287, respectively)............. 8,758 7,669 ------- ------- Total current assets.................. 107,272 106,178 Property, plant and equipment, at cost (Note 3)........................ 41,229 41,896 Deferred and other assets................. 2,880 3,507 ------- ------- Total assets.............................. $151,381 $151,581 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings (Note 5).......... $ 9,800 $ 15,200 Accounts payable........................ 11,012 12,296 Accrued expenses........................ 28,554 27,372 Income taxes............................ 2,044 2,890 ------- ------- Total current liabilities............. 51,410 57,758 Long-term debt............................ 20,000 20,000 Other long-term liabilities............... 7,723 8,096 Deferred income taxes..................... 850 862 Shareowners' equity: Common stock (Note 6)................... 624 620 Additional capital...................... 5,556 4,667 Retained earnings....................... 69,296 64,231 Stock subscriptions..................... (2,434) (2,112) Cumulative translation adjustments...... 756 59 Loan to ESOP Trust...................... (2,400) (2,600) ------- ------- Total shareowners' equity............. 71,398 64,865 ------- ------- Total liabilities and shareowners' equity. $151,381 $151,581 ======== ======== See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Second Qtr Ended First Half Ended ---------------- ------------ - ----] (In thousands, except per share amounts) July 1, July 2, July 1, July 2, 1995 1994 1995 1994 ---- ---- ---- - - --- Net sales $76,442 $64,772 $136,230 $115,122 Costs and expenses: Cost of sales....................... 58,869 47,485 105,361 85,332 Selling and administrative expenses. 9,995 8,494 20,406 16,211 Interest expense.................... 518 591 1,171 1,180 Other income........................ (279) (665) (716) (1,009) ------ ------ ------- --- - ---- 69,103 55,905 126,222 101,714 Equity in earnings of affiliates...... - 202 - 670 ------ ------ ------- --- - ---- Income before income taxes............ 7,339 9,069 10,008 14,078 Income taxes.......................... 2,797 3,419 3,822 5,167 ------ ------ ------- --- - ---- Net income............................ 4,542 5,650 6,186 8,911 Dividends on preferred stock.......... - - - 153 ------ ------ ------- --- - ---- Net income available to common shares and common share equivalents........ $ 4,542 $ 5,650 $ 6,186 $ 8,758 ======= ======= ======== ======== Per share data: Weighted average common shares...... 6,598 6,494 6,594 6,506 ===== ===== ===== ===== Net income available to common shares..................... $ .69 $ .87 $ .94 $ 1.35 ======= ======= ======== ======== Dividends per common share............ $ .10 $ .08 $ .18 $ .13 Dividends per preferred share......... $ - $ - $ - $ 2.63 See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) First Half Ended ---------------- July 1, July 2, 1995 1994 ---- ---- Cash flows from operating activities: Net income................................ $ 6,186 $ 8,911 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization........... 5,020 3,439 Equity in earnings of affiliates, less dividends........................ - (670) Deferred income taxes................... (24) - Gain on disposals of plant and equipment................... (29) (136) Changes in assets and liabilities: Receivables............................. (9,562) (5,684) Inventories............................. (10,567) (4,279) Other current assets.................... (1,040) 23 Accounts payable and other current liabilities................... (433) 4,491 Other long-term liabilities............. (295) 522 ------- ------- Net cash flows from operating activities................ (10,744) 6,617 ------- ------- Cash flows from investing activities: Additions to plant and equipment........ (2,436) (1,993) Proceeds from sale of plant and equipment................... 33 258 Additions to deferred assets............ (634) - ------- ------- Net cash flows from investing activities................ (3,037) (1,735) ------- ------- Cash flows from financing activities: Repayment of short-term borrowings...... (8,500) (69) Additions of short-term borrowings...... 3,100 - Redemption of preferred stock........... - (5,818) Proceeds from issuance of common stock.. 219 93 Purchases of common stock............... - (3,757) Repayment of loan to ESOP Trust......... 200 200 Dividends (preferred and common stock) paid........................... (1,121) (951) ------- ------- Net cash flows from financing activities................ (6,102) (10,302) ------- ------- Effect of exchange rate changes on cash... (1,299) (122) ------- ------- Net decrease in cash and equivalents...... (21,182) (5,542) Cash and equivalents at beginning of period..................... 38,890 39,087 ------- ------- Cash and equivalents at end of period........................... $ 17,708 $ 33,545 ======== ======== See Notes to Condensed Consolidated Financial Statements. 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 adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter and first half ended July 1, 1995 are not necessarily indicative of the results that may be expected for the year ended December 30, 1995. For further information, 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 31, 1994. Note 2: Inventories - -------------------- Inventories consist of the following: (In thousands) July 1, December 31, 1995 1994 ---- ---- Raw Materials........................ $ 21,214 $ 17,584 Work in Process...................... 5,002 5,201 Finished Goods....................... 34,214 25,982 LIFO Reserve......................... (11,546) (11,012) ------- ------- Total Inventory...................... $ 48,884 $ 37,755 ======== ======== Note 3: Property, Plant and Equipment - -------------------------------------- Property, plant and equipment at cost consists of the following: (In thousands) July 1, December 31, 1995 1994 ---- ---- Land and Buildings................... $ 28,532 $ 28,210 Machinery and Equipment.............. 90,926 88,169 ------- ------- 119,458 116,379 Allowance for Depreciation........... 78,229 74,483 ------- ------- $ 41,229 $ 41,896 ======== ======== Note 4: Tax Rates - ------------------ The effective tax rate on income before income taxes in 1995 and 1994 varies from the United States statutory rate of 35 percent principally due to the effect of state and foreign income taxes. Note 5: Short-Term Borrowings - ------------------------------ On May 12, 1995, the Company repaid $8.5 million of short-term borrowings on a line of credit, bearing interest at LIBOR plus 1.5 percent, that would have been due November 27, 1995. Note 6: Shareowners' Equity - ---------------------------- During the first quarter, the Company issued 20,000 common shares valued at $640,000 under the 1988 Executive Stock Purchase Plan. The Company had 6,239,602 shares of common stock (10,000,000 shares authorized, $.10 par value) outstanding as of July 1, 1995. Item 2. Management's Discussion And Analysis Of Financial Condition - --------------------------------------------------------------------- And Results Of Operations - ------------------------- Operations - ---------- Net sales for the second quarter of 1995 were $76.4 million, an increase of 18 percent from 1994 second quarter net sales of $64.8 million. Year to date 1995 net sales were $136.2 million, an increase of 18 percent from year to date 1994 net sales of $115.1 million. The increase in net sales was due to both the inclusion of Oil Dynamics, Inc. on a fully consolidated basis for 1995 and due to increases in unit volume. Previously, Oil Dynamics, Inc. was a fifty percent owned equity investee. Net income for the second quarter of 1995 was $4.5 million, or $.69 per share, a decrease of 20 percent compared to the second quarter of 1994 net income of $5.7 million, or $.87 per share. Year to date 1995 net income was $6.2 million, or $.94 per share, a decrease of 31 percent compared to year to date 1994 net income of $8.9 million, or $1.35 per share. The decrease in net income was principally due to an increase in cost of sales as a percent of net sales and foreign currency transaction losses in both the second quarter and year to date 1995 compared to the same periods in 1994. Cost of sales as a percent of net sales for the second quarter of 1995 was 77.0 percent compared to 73.3 percent for the same period in 1994. Cost of sales as a percent of net sales for the first half of 1995 was 77.3 percent compared to 74.1 percent for the same period in 1994. Cost of sales as a percent of net sales increased in the second quarter of 1995 due to a 3.0 percent increase in fixed manufacturing expenses as a percent of net sales. Cost of sales as a percent of net sales increased for the first half of 1995 due to a 3.3 percent increase in fixed manufacturing expenses as a percent of net sales. The increase in fixed manufacturing expenses as a percent of net sales was due to the inclusion of Oil Dynamics, Inc. and increases in planned expenses in support of international operations. Selling and administrative expenses in the second quarter of 1995 were $10.0 million compared to $8.5 million for the same period in 1994. Selling and administrative expenses for the first half of 1995 were $20.4 million compared to $16.2 million for the same period in 1994. The increase was due to the inclusion of Oil Dynamics, Inc. on a fully consolidated basis and due to investments in systems and people in support of international operations. Included in other expense (income) was $336,000 of interest income and $271,000 of foreign currency transaction losses for the second quarter of 1995 compared to $376,000 of interest income and $140,000 of foreign currency transaction gains for the same period a year ago. Included in other expense (income) was $877,000 of interest income and $454,000 of foreign currency transaction losses for the first half of 1995 compared to $684,000 of interest income and $119,000 of foreign currency transaction gains for the same period a year ago. The increase in foreign currency transaction losses was due to the fluctuation of the Italian Lira against the German Mark and the fluctuation of the U.S. Dollar against the Australian Dollar and the German Mark. Interest income was attributable to amounts invested principally in short-term U.S. treasury bills and notes. Equity in the earnings of affiliates was $0 for the second quarter and first half of 1995 compared to $202,000 and $670,000 for the same periods a year ago. The results of operations of previously 50 percent owned joint venture, Oil Dynamics, Inc., were incorporated on a fully consolidated basis for the second quarter and first half of 1995. Capital Resources and Liquidity - ------------------------------- Cash at the end of the second quarter of 1995 was $17.7 million compared to $38.9 million at the end of 1994. Accounts receivable increased $10.1 million and inventories increased $11.1 million from 1994. Accounts receivable increased due to increased sales in June as the result of a sales promotion. Inventories increased primarily due to a decrease in North American submersible motor shipments compared to plan as the industry continued to use accumulated inventory. Working capital increased $7.4 million and the current ratio of the Company was 2.1 at the end of the second quarter of 1995 and 1.8 at the end of 1994. During the first half of 1995, the Company borrowed an additional $3.1 million on a short-term basis to finance current working capital requirements. During the second quarter, the Company repaid $8.5 million of short-term borrowings on a line of credit (see Note 5). PART II. OTHER INFORMATION Item 4. Results of Votes of Holders - ------------------------------------ The Annual Meeting of Shareholders of the Company was held on April 13, 1995 for the following purposes: 1. To elect two directors for terms expiring at the 1998 Annual Meeting of Shareholders; and 2. To ratify the appointment of Deloitte & Touche LLP as independent auditors for the 1995 fiscal year. The results were: Nominee for Director For Withhold Authority - ------------------- --- ------------------ William H. Lawson 5,703,058 10,550 Donald J. Schneider 5,702,904 10,704 For Against Abstain --- ------- ------- Ratification of Deloitte & Touche LLP 5,680,887 7,670 25,051 Total broker non-votes were 360,634 shares. Total shares represented at the Annual Meeting in person or by proxy were 5,713,608 shares of a total of 6,221,522 shares outstanding. This represented 92 percent of Company common stock and constituted a quorum. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits (11) Computations of Earnings per Share (b) Reports on Form 8-K There were no reports on Form 8-K filed for the second quarter ended July 1, 1995. 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 July 26 By William H. Lawson --------------------- -------------------------------- William H. Lawson, Chairman and Chief Executive Officer Date July 26 By D. W. Pfister --------------------- -------------------------------- D. W. Pfister, Chief Financial Officer (Principal Financial and Accounting Officer) Exhibit Index (11) Computation of Earnings per Share EXHIBIT 11 FRANKLIN ELECTRIC CO., INC. COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE (In thousands, except per share amounts) Second Qtr Ended First Half Ended ---------------- ---------------- July 1, July 2, July 1, July 2, 1995 1994 1995 1994 ---- ---- ---- ---- Net income available to common shares and common share equivalents........... $ 4,542 $ 5,650 $ 6,186 $ 8,758 ======= ======= ======= ======= Common shares outstanding beginning of period......... 6,222 6,143 6,199 6,231 Weighted average of common shares issued during the period.................. 9 24 23 28 Weighted average of common shares purchased during the period.................. - - - (95) Dilutive effect of options outstanding during the period.................. 367 327 372 342 ----- ----- ----- ----- Weighted average of common shares outstanding during the period.................. 6,598 6,494 6,594 6,506 ===== ===== ===== ===== Net income per weighted average common share........ $.69 $.87 $.94 $1.35 ==== ==== ==== ===== EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE PERIOD ENDED JULY 1, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000038725 FRANKLIN ELECTRIC CO., INC. 6-MOS DEC-30-1995 JAN-1-1995 JUL-1-1995 17,708 0 31,922 1,388 48,884 107,272 119,458 78,229 151,381 51,410 0 624 0 0 0 151,381 136,230 0 105,361 126,222 0 0 1,171 10,008 3,822 6,186 0 0 0 6,186 .94 .94
-----END PRIVACY-ENHANCED MESSAGE-----