-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EkpPp++4sHb3IKPv2ZrxZLIxCMoI/PJzmUtBKvYU8vKcXpr8QCh88yKvRPgd/d5q nCRmRG4iv7ttpy2NAaEbnA== 0000038725-96-000019.txt : 19960726 0000038725-96-000019.hdr.sgml : 19960726 ACCESSION NUMBER: 0000038725-96-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960725 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: 96599029 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 June 29, 1996 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 __X__ 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 22, 1996 --------------------- ------------- $.10 par value 6,327,099 shares The Exhibit Index is located on page 11 FRANKLIN ELECTRIC CO., INC. Index PART I. FINANCIAL INFORMATION - --------------------------------- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 29, 1996 (Unaudited) and December 30, 1995 Condensed Consolidated Statements of Income for the Second Quarter and First Half ended June 29, 1996 and July 1, 1995 (Unaudited) Condensed Consolidated Statements of Cash Flows for the First Half ended June 29, 1996 and July 1, 1995 (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. Submission of Matters to a Vote of Security 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) June 29, December 30, 1996 1995 (Unaudited) (Audited) ----------- --------- ASSETS Current assets: Cash and equivalents $ 22,975 $ 32,077 Receivables, less allowances of $1,411 and $1,351, respectively 25,601 22,526 Inventories (Note 2) 56,701 45,839 Other current assets (including deferred income taxes of $7,690 and $7,823, respectively) 8,514 8,879 ------- ------- Total current assets 113,791 109,321 Property, plant and equipment, net (Note 3) 39,038 41,670 Deferred and other assets 2,238 2,366 ------- ------- Total assets $155,067 $153,357 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings $ 212 $ 461 Accounts payable 10,417 15,882 Accrued expenses 24,289 23,228 Income taxes 1,309 1,726 ------- ------- Total current liabilities 36,227 41,297 Long-term debt 20,313 20,171 Employee benefit plan obligations 6,691 6,069 Other long-term liabilities 4,359 4,956 Deferred income taxes 307 307 Shareowners' equity: Common stock (Note 5) 633 626 Additional capital 6,420 5,683 Retained earnings 84,064 77,363 Stock subscriptions (1,136) (1,315) Cumulative translation adjustment ( 287) 600 Loan to ESOP Trust (2,524) (2,400) ------- ------- Total shareowners' equity 87,170 80,557 ------- ------- Total liabilities and shareowners' equity $155,067 $153,357 ======== ======== See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts) Second Qtr Ended First Half Ended ---------------- ---------------- June 29, July 1, June 29, July 1, 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $73,107 $76,442 $135,861 $136,230 Costs and expenses: Cost of sales 53,895 58,869 101,739 105,361 Selling and admin expenses 10,779 9,995 21,008 20,406 Interest expense 340 518 660 1,171 Other income, net (142) (279) (639) (716) ------ ------ ------- ------- 64,872 69,103 122,768 126,222 Income before income taxes 8,235 7,339 13,093 10,008 Income taxes 3,154 2,797 5,004 3,822 ------ ------ ------- ------- Net income $ 5,081 $ 4,542 $ 8,089 $ 6,186 ======= ======= ======= ======= Per share data: Weighted average common shares 6,674 6,598 6,667 6,594 ======= ======= ======= ======= Net income available to common shares $ .76 $ .69 $ 1.21 $ .94 ======= ======= ======= ======= Dividends per common share $ .12 $ .10 $ .22 $ .18 ======= ======= ======= ======= See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) First Half Ended ---------------- June 29, July 1, 1996 1995 ---- ---- Cash flows from operating activities: Net income $ 8,089 $ 6,186 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 4,272 4,916 Deferred income taxes - (24) Gain on disposals of plant and equipment (34) (29) Changes in assets and liabilities: Receivables (3,503) (9,562) Inventories (12,056) (10,567) Other current assets 320 (1,040) Accounts payable and other accrued expenses (4,199) (433) Employee benefit plan obligations 622 3 Other long-term liabilities (384) (298) Other, net (217) 104 ------- ------- Net cash flows from operating activities (7,090) (10,744) ------- ------- Cash flows from investing activities: Additions to plant and equipment (1,100) (2,436) Proceeds from sale of plant and equipment 41 33 Additions to deferred assets (246) (634) ------- ------- Net cash flows from investing activities (1,305) (3,037) ------- ------- Cash flows from financing activities: Additions to long-term debt 166 - Repayment of long-term debt (10) - Repayment of short-term debt (197) (8,500) Additions to short-term borrowings - 3,100 Proceeds from issuance of common stock 468 219 Loan to ESOP Trust (324) - Repayment of loan to ESOP Trust 200 200 Proceeds from stock subscriptions 25 - Dividends paid (1,388) (1,121) ------- ------- Net cash flows from financing activities (1,060) (6,102) ------- ------- Effect of exchange rate changes on cash 353 (1,299) ------- ------- Net decrease in cash and equivalents (9,102) (21,182) Cash and equivalents at beginning of period 32,077 38,890 ------- ------- Cash and equivalents at end of period $ 22,975 $ 17,708 ======== ======== 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 accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and first half ended June 29, 1996 are not necessarily indicative of the results that may be expected for the year ending December 28, 1996. 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 30, 1995. Note 2: Inventories - -------------------- Inventories consist of the following: (In thousands) June 29, December 30, 1996 1995 ---- ---- Raw Materials $ 16,942 $ 17,080 Work in Process 6,223 5,899 Finished Goods 45,688 34,614 LIFO Reserve (12,152) (11,754) ------- ------- Total Inventory $ 56,701 $ 45,839 ======== ======== Note 3: Property, Plant and Equipment - -------------------------------------- Property, plant and equipment at cost consists of the following: (In thousands) June 29, December 30, 1996 1995 ---- ---- Land and Building $ 28,917 $ 29,173 Machinery and Equipment 92,840 92,523 ------- ------- 121,757 121,696 Allowance for Depreciation 82,719 80,026 ------- ------- $ 39,038 $ 41,670 ======== ======== Note 4: Tax Rates - ------------------ The effective tax rate on income before income taxes in 1996 and 1995 varies from the United States statutory rate of 35 percent principally due to the effect of state and foreign income taxes. Note 5: Shareowners' Equity - ---------------------------- The Company had 6,327,099 shares of common stock (10,000,000 shares authorized, $.10 par value) outstanding as of June 29, 1996. Item 2. Management's Discussion And Analysis Of Financial Condition - --------------------------------------------------------------------- And Results of Operations - ------------------------- Operations - ---------- Net sales for the second quarter of 1996 were $73.1 million, a decrease of 4 percent from 1995 second quarter net sales of $76.4 million. Year to date 1996 net sales were $135.9 million, compared to year to date 1995 net sales of $136.2 million. The change in net sales was primarily due to lower unit volume, partially offset by increases in average selling prices. Net income for the second quarter of 1996 was $5.1 million, or $.76 per share, an increase of 12 percent compared to the second quarter of 1995 net income of $4.5 million, or $.69 per share due primarily to improvements in the Company's European operations and Oil Dynamics, Inc., a wholly owned subsidiary. Year to date 1996 net income was $8.1 million, or $1.21 per share, an increase of 31 percent compared to year to date 1995 net income of $6.2 million, or $.94 per share. The increase in year to date net income was primarily attributable to improvements in the Company's European operations. Cost of sales as a percent of net sales for the second quarter of 1996 was 73.7 percent compared to 77.0 percent for the same period in 1995. Cost of sales as a percent of net sales for the year to date 1996 was 74.9 percent compared to 77.3 percent for the same period in 1995. Cost of sales as a percent of net sales decreased for both the quarter and year to date primarily due to decreases in both fixed and variable manufacturing expenses at the Company's European operations. Selling and administrative expenses as a percent of net sales for the second quarter of 1996 was 14.7 percent compared to 13.1 percent for the same period in 1995. Selling and administrative expenses as a percent of net sales for the year to date 1996 was 15.5 percent compared to 15.0 percent for the same period of last year. Interest expense in the second quarter of 1996 was $.3 million compared to $.5 million for the same period in 1995. Interest expense for the first half of 1996 was $.7 million compared to $1.2 million for the same period in 1995. The decrease was due to lower short-term borrowings during the first half of this year. Included in other income, net for the second quarter of 1996 and 1995 was $.3 million of interest income and $.3 million of foreign currency losses. Included in other income, net for the year to date 1996 was $.7 million of interest income and $.3 million of foreign currency losses compared to $.9 million of interest income and $.5 million of foreign currency losses for the same period in 1995. Interest income was attributable to amounts invested principally in short-term US treasury bills and notes. Capital Resources and Liquidity - ------------------------------- Cash and equivalents decreased $9.1 million during the first half of 1996 principally due to cash used in operating activities of $7.1 million. Changes in working capital items accounted for most of the cash used in operating activities. The primary factor was an increase in inventory due to a typical seasonal build up and lower sales because of unusually wet weather conditions over much of the Company's principal markets. Working capital increased $9.5 million and the current ratio of the Company was 3.1 and 2.6 at the end of the second quarter of 1996 and 1995, respectively. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ The Annual Meeting of Shareholders of the Company was held on April 12, 1996 for the following purposes: 1) To elect three directors for terms expiring at the 1999 Annual Meeting of Shareholders; 2) To ratify the appointment of Deloitte & Touche LLP as independent auditors for the 1996 fiscal year; 3) To approve the 1996 Employee Stock Option Plan; and 4) To approve the 1996 Nonemployee Director Stock Option Plan. The results were: 1) Nominees for Director For Withhold Authority --------------------- --- ------------------ John B. Lindsay 5,707,909 10,357 Juris Vikmanis 5,707,183 11,083 Howard B. Witt 5,708,547 9,719 Delivered For Against Abstain Non-Votes --- ------- ------- --------- 2) Ratification of Deloitte & Touche LLP 5,708,860 6,275 3,131 - 3) Approval of 1996 Employee Stock Option Plan 4,677,490 142,659 33,247 864,870 4) Approval of 1996 Nonemployee Director Stock Option Plan 3,943,549 291,610 675,833 807,274 Total shares represented at the Annual Meeting in person or by proxy were 5,718,266 of a total of 6,288,999 shares outstanding. This represented 91 percent of Company common stock and constituted a quorum. Total broker non-votes were 467,568 shares. 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 June 29, 1996. 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 25, 1996 By William H. Lawson -------------------- -------------------------------- William H. Lawson, Chairman and Chief Executive Officer Date July 25, 1996 By Jess B. Ford -------------------- -------------------------------- Jess B. Ford, Vice President and 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 ---------------- ---------------- June 29, July 1, June 29, July 1, 1996 1995 1996 1995 ---- ---- ---- ---- Net income available to common shares and common share equivalents $5,081 $4,542 $8,089 $6,186 ====== ====== ====== ====== Common shares outstanding beginning of period 6,314 6,222 6,254 6,199 Weighted average of common shares issued during the period 9 9 52 23 Dilutive effect of options outstanding during the period 351 367 361 372 ----- ----- ----- ----- Weighted average of common shares outstanding during the period 6,674 6,598 6,667 6,594 ====== ====== ====== ====== Net income per weighted average common share $ .76 $ .69 $ 1.21 $ .94 ====== ====== ====== ====== 15 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE PERIOD ENDED JUNE 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-28-1996 JUN-29-1996 22,975 0 25,601 1,411 56,701 113,791 121,757 82,719 155,067 36,227 0 0 0 633 0 155,067 135,861 0 101,739 122,768 0 0 660 13,093 5,004 8,089 0 0 0 8,089 1.21 1.21
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