Franklin Electric First Quarter 10-Q

0000038725-05-000061.txt : 20050506 0000038725-05-000061.hdr.sgml : 20050506 20050506171644 ACCESSION NUMBER: 0000038725-05-000061 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20050402 FILED AS OF DATE: 20050506 DATE AS OF CHANGE: 20050506 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: 05809023 BUSINESS ADDRESS: STREET 1: 400 E SPRING ST CITY: BLUFFTON STATE: IN ZIP: 46714 BUSINESS PHONE: 2608242900 MAIL ADDRESS: STREET 1: 400 E SPRING STREET CITY: BLUFFTON STATE: IN ZIP: 46714 10-Q 1 form10-q.htm FRANKLIN ELECTRIC FIRST QUARTER 10-Q Franklin Electric First Quarter 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________

FORM 10-Q

_________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2005

o 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
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

400 East Spring Street
Bluffton, Indiana		46714
(Address of principal executive offices)		(Zip Code)

(260) 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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES x

NO o

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		April 1, 2005
$.10 par value		22,220,180 shares

Page 1 of 37

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FRANKLIN ELECTRIC CO., INC.

Index

		Page
PART I.	FINANCIAL INFORMATION	Number

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of April 2, 2005 and January 1, 2005	3

	Condensed Consolidated Statements of Income for the First Quarter Ended April 2, 2005 and April 3, 2004	4

	Condensed Consolidated Statements Of Cash Flows for the First Quarter Ended April 2, 2005 and April 3, 2004	5

	Notes to Condensed Consolidated Financial Statements	6-11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11-13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

Item 4.	Controls and Procedures	13-14

PART II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 4.	Submission of Matters to a Vote of Security Holders	14-15

Item 6.	Exhibits	15

Signatures		16

Exhibits		17-37

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FRANKLIN ELECTRIC CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)	April, 2			January 1,
	2005			2005
ASSETS
Current assets:
Cash and equivalents	$	23,064		$	50,604
Investments		18,011			-
Receivables, less allowances of $2,259 and $2,281 respectively		35,299			39,312
Inventories		79,172			62,442
Other current assets (including deferred income taxes of $10,655 and $10,391 respectively		14,402			13,784
Total current assets		169,948			166,142
Property, plant and equipment, net		91,674			95,924
Deferred and other assets		13,594			14,010
Goodwill		56,555			57,397
Total assets	$	331,771		$	333,473

LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Current maturities of long-term debt and short-term borrowings	$	1,290		$	1,304
Accounts payable		18,083			16,594
Accrued expenses		28,529			33,354
Income taxes		998			3,193
Total current liabilities		48,900			54,445

Long-term debt		13,626			13,752
Deferred income taxes		7,154			6,304
Employee benefit plan obligations		18,178			18,801
Other long-term liabilities		5,740			5,838

Shareowners' equity:
Common shares (45,000 shares authorized, $.10 par value)
outstanding (22,220 and 22,041, respectively)		2,222			2,204
Additional capital		58,490			52,743
Retained earnings		168,495			166,557
Loan to ESOP Trust		(432	)		(665	)
Accumulated other comprehensive income		9,398			13,494
Total shareowners' equity		238,173			234,333

Total liabilities and shareowners' equity	$	331,771		$	333,473

See Notes to Condensed Consolidated Financial Statements.

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FRANKLIN ELECTRIC CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

	First Quarter Ended
	April 2,			April 3,
	2005			2004

Net sales	$	82,434		$	80,207

Cost of sales		56,955			56,587

Gross profit		25,479			23,620

Selling and administrative expenses		16,272			14,978

Restructuring expense		205			565

Operating income		9,002			8,077

Interest expense		(172	)		(106	)
Other income, net		151			18
Foreign exchange income/(loss)		11			(50	)

Income before income taxes		8,992			7,939

Income taxes		3,181			2,818

Net income	$	5,811		$	5,121

Per share data:

Basic Earnings per Share	$	.26		$	.23

Diluted Earnings per Share	$	.25		$	.22


Dividends per common share	$	.08		$	.07

See Notes to Condensed Consolidated Financial Statements.

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FRANKLIN ELECTRIC CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)	First Quarter Ended
	April 2,			April 3,
	2005			2004
Cash flows from operating activities:
Net income	$	5,811		$	5,121
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization.		3,944			3,878
Deferred income taxes		849			-
Loss on disposals of plant and equipment		28			7
Changes in assets and liabilities:
Receivables		3,337			(3,988	)
Inventories		(18,297	)		(12,987	)
Accounts payable and other accrued expenses		(2,657	)		1,089
Employee benefit plan obligations		(324	)		(4,264	)
Other, net		(827	)		(146	)
Net cash flows from operating activities		(8,136	)		(11,290	)

Cash flows from investing activities:
Additions to plant and equipment		(2,145	)		(3,956	)
Proceeds from sale of plant and equipment		1,023			-
Additions to deferred assets		(3	)		(1	)
Cash paid for securities		(60,000	)		-
Proceeds from sale of securities		41,989			-
Net cash flows from investing activities		(19,136	)		(3,957	)

Cash flows from financing activities:
Repayment of long-term debt		(72	)		(347	)
Proceeds from issuance of common stock		3,710			2,187
Purchases of common stock		(2,110	)		(2,208	)
Reduction of loan to ESOP Trust		233			232
Dividends paid		(1,768	)		(1,538	)
Net cash flows from financing activities		(7	)		(1,674	)

Effect of exchange rate changes on cash		(261	)		(376	)
Net change in cash and equivalents		(27,540	)		(17,297	)
Cash and equivalents at beginning of period		50,604			29,962
Cash and equivalents at end of period	$	23,064		$	12,665

See Notes to Condensed Consolidated Financial Statements.

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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 accounting entries and adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and the results of operation for the interim period have been made. Prior year amounts are reclassified when necessary to conform to current year presentation. Operating results for the first quarter ended April 2, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005. For further information, including a description of Franklin Electric's critical 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 January 1, 2005.

Note 2: Current Investments

As of April 2, 2005 the Company held $18 million of current investments consisting of auction rate municipal bonds classified as available-for-sale securities and titled “Investments” in the current balance sheet. The Company has not had an investment in these securities prior to the first quarter of 2005. Investments in these securities are recorded at cost, which approximates fair market value due to the variable interest rates, which typically reset every 7 to 35 days. While the underlying municipal bonds have stated contractual maturities which may be long-term, the Company has the ability to quickly liquidate these securities. As a result, there were no cumulative gross unrealized holding gains (losses) or gross realized gains (losses) from these current investments. All income generated from these current investments was recorded as interest income. The purchase and sale of these securities has been included under the investing section of the cash flow statement.

Note 3: Inventories

Inventories consist of the following:

(In millions)	April 2,			January 1,
	2005			2005
Raw Materials	$	24.2		$	25.3
Work in Process		6.8			7.9
Finished Goods		64.4			44.9
LIFO Reserve		(16.2	)		(15.7	)
Total Inventory	$	79.2		$	62.4

Note 4: Property, Plant and Equipment

Property, plant and equipment, at cost, consists of the following:

(In millions)	April 2,			January 1,
	2005			2005
Land and Building	$	51.0		$	52.8
Machinery and Equipment		162.6			164.0
		213.6			216.8
Allowance for Depreciation		(121.9	)		(120.9	)
	$	91.7		$	95.9

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Note 5: Goodwill and Other Intangible Assets

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”, the Company tests goodwill and intangible assets for impairment on an annual basis, or more frequently if circumstances warrant. During the fourth quarter of 2004, the Company performed its annual impairment testing and it was determined that no impairment exists.

The carrying amount of the Company’s intangible assets, which is included in deferred and other assets, and goodwill include:

	April 2,			Jan 1,
(In millions)	2005			2005

Amortized intangibles
Patents	$	3.5		$	3.5
Supply agreements		10.2			10.4
Other		1.7			1.7
Accumulated amortization		(9.4	)		(9.3	)
Total	$	6.0		$	6.3

Goodwill	$	56.6		$	57.4

Changes in the carrying amount of goodwill reflect foreign currency fluctuations.

Amortization expense related to intangible assets for the first quarter ended April 2, 2005 and April 3, 2004, was $0.4 and $0.5 million respectively.

During the first fiscal quarter, there has been no change in the projected amortization expense for each of the five succeeding years, as reported in the Company’s annual report on Form 10-K for the year ended January 1, 2005.

Note 6: Employee Benefits

The following table sets forth aggregated net domestic periodic benefit cost:


(In millions)
	Pension Benefits
	First Quarter Ended
	April 2,			April 3,
	2005			2004
Service cost	$	1.1		$	1.1
Interest cost		1.8			1.9
Expected return on assets		(2.5	)		(2.7	)
Amortization of unrecognized:
obligation/(asset)		-			-
Prior service cost		0.3			0.4

Net periodic benefit cost		0.7			0.7
Settlement cost		0.1			0.1
Total benefit cost	$	0.8		$	0.8

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	Other Benefits
	First Quarter Ended
	April 2,		April 3,
	2005		2004
Service cost	$	0.1	$	0.1
Interest cost		0.2		0.2
Amortization of unrecognized:
obligation/(asset)		0.1		0.1
Prior service costs		0.1		-
Loss/(Gain)		-		-

Net periodic benefit cost		0.5		0.4

Total benefit cost	$	0.5	$	0.4

The Company previously disclosed in its financial statements for the year ended January 1, 2005, that it expected to contribute $3.4 million in 2005 to the plans. As of April 2, 2005 the Company has made contributions of $1.4 million and expects to make additional contributions of $2.6 million in 2005.

Note 7: Tax Rates

The effective tax rate on income before income taxes in 2005 and 2004 varies from the United States statutory rate of 35 percent primarily due to the foreign income exclusion and R & D credits and to the effects of state and foreign income taxes net of federal tax benefits.

Note 8: Shareowners' Equity

The Company had 22,220,180 shares of common stock (45,000,000 shares authorized, $.10 par value) outstanding as of April 2, 2005.

For year to date 2005, pursuant to the stock repurchase program authorized by the Company's Board of Directors, the Company has repurchased a total of 54,400 shares for $2.1 million. All repurchased shares were retired.

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Note 9: Earnings Per Share

Following is the computation of basic and diluted earnings per share:

(In millions, except	First Quarter Ended
per share amounts)	April 2,		April 3,
	2005		2004
Numerator:
Net Income	$	5.8	$	5.1

Denominator:

Basic
Weighted average common shares		22.1		21.9

Diluted
Effect of dilutive securities:

Employee and director incentive stock options and awards		1.1		0.9

Adjusted weighted average common shares		23.2		22.8

Basic earnings per share	$	.26	$	.23

Diluted earnings per share	$	.25	$	.22

Note 10: Other Comprehensive Income

Comprehensive income is as follows:

(In millions)	First Quarter Ended
	April 2,			April 3,
	2005			2004
Net income	$	5.8		$	5.1
Other comprehensive loss:
Foreign currency translation adjustments		(4.1	)		(2.5	)
Comprehensive income, net of tax	$	1.7		$	2.6

Accumulated other comprehensive income consists of the following:

(In millions)	April 3,			January 1,
	2005			2005
Cumulative translation adjustment	$	11.6		$	15.7
Minimum pension liability adjustment, net of tax		(2.2	)		(2.2	)
	$	9.4		$	13.5

Note 11: Warranty

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.

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Below is a table that shows the activity in the warranty accrual accounts:

(In millions)	First Quarter Ended
	April 2,			April 3,
	2005			2004
Beginning Balance	$	7.1		$	5.4
Accruals related to product warranties		0.7			1.1
Reductions for payments made		(1.5	)		(1.0	)
Ending Balance	$	6.3		$	5.5

Note 12: 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 (loss), 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 the disclosure requirements only of SFAS No. 123. The following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of SFAS No. 123:

(In millions, except	First Quarter Ended
per share amounts)	April 2,			April 3,
	2005			2004
Net income	$	5.8		$	5.1
Deduct: Stock-based employee compensation cost, net of income tax		(0.5	)		(0.4	)
Pro forma net income	$	5.3		$	4.7
Earnings per share:
Basic — as reported	$	.26		$	.23
Basic — pro forma	$	.24		$	.21
Diluted — as reported	$	.25		$	.22
Diluted — pro forma	$	.23		$	.20

On December 16, 2004, the FASB issued SFAS No. 123(R) “Share-Based Payment”, that requires compensation costs related to share-based payment transactions be recognized in the financial statements. With minor exceptions, the amount of compensation costs will be measured based on the grant-date fair value of the equity or liability instruments issued, over the period that the employee provides service in exchange for the award. In addition liability awards will be re-measured each reporting period. This pronouncement is effective as of the beginning of the first fiscal year beginning after June 15, 2005. The impact on the Company’s results of operations or financial position as of the adoption of this pronouncement is not expected to be materially different from the pro-forma results.

Note 13: Restructuring

The Company incurred $0.2 million of expenses during the first quarter of 2005 (included as "Restructuring expense" on the income statement) related to its Global Manufacturing Realignment Program. The costs in the first quarter were primarily equipment transfers, travel, and employee relocations related to the consolidation of the Company's Motta di Livenza, Italy factory into other European factories and to the ramp-up of production at the Linares, Mexico four inch motor manufacturing plant. The Company will incur additional severance expenses as well as costs to transfer equipment and other related expenses. As previously disclosed, the Program is estimated to cost in total $10.0 million pre-tax and is expected to be substantially complete by the end of third quarter 2005.

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The components and use of the restructuring reserve is summarized below:

(In millions)
	Severance
	Benefits:			Other:
Balance January 1, 2005	$	0.3		$	0.0
Restructuring Expense		0.0			0.2
Costs Incurred		(0.3	)		(0.2	)
Balance April 2, 2005	$	0.0		$	0.0

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

Overview

Sales and earnings for the first quarter of 2005 were up from the same quarter of 2004. The increase in sales is attributable to the impact of changes in the discount programs, price increases, improved mix of direct sales to distributors and foreign exchange rate changes. Prior year first quarter sales and earnings were up from the same quarter of 2003. The prior year’s increase in sales is attributable to the impact of foreign exchange rate changes and an improvement in sales of submersible motors for water well and fueling applications and related products, and international product sales. Earnings improved in the first quarter of 2005 and 2004 primarily due to the increased sales. Increased earnings were partially offset in both quarters by increased commodity prices and expenses associated with the Company’s Global Manufacturing Realignment Program. This Program, when substantially complete by the third quarter of 2005, will result in the transfer of a significant amount of production to lower cost regions of the world as well as a consolidation of certain manufacturing operations. The Company projects it will incur approximately $10 million of pre-tax restructuring expenses as this Program is implemented between the first quarter of 2004 and the fourth quarter of 2005. These expenses primarily include: severance, relocation, and the movement of equipment. These expenses will be identified quarterly during the implementation period and reflected as “Restructuring expense” in our income statement. Included in the results for the first quarter of 2005 and 2004 are restructuring expenses of $0.2 and $0.6 million pre-tax, respectively.

Results of Operations

Net sales for the first quarter of 2005 were $82.4 million, an increase of $2.2 million or 3 percent from 2004 first quarter net sales of $80.2 million. Foreign currencies, particularly the euro and the Rand, strengthened relative to the U.S. dollar compared to the first quarter of 2004. The impact of the changes in exchange rates was a $1.5 million increase in the Company’s reported 2005 sales. Excluding the impact of changes in foreign currencies, net sales increased $0.7 million or 1 percent. The impact of previously announced price increases and changes in the customer discount programs which were necessary due to significant increased costs for certain commodities used in the manufacture of the electric motors, primarily steel and copper, resulted in an increase of about 13 percent for the first quarter of 2005. The increase from pricing changes was offset by volume decreases of small and large submersible motor products to North American customers of about 10 percent and lower demand by European customers of about 3 percent (when comparing both quarters at the current year exchange rate). The decrease in unit volumes occurred because our major OEM customers liquidated inventories of motors purchased from us last year ahead of our announced changes to sales discount programs and price increases. Sales related to the acquisition of certain assets of JBD, Inc. resulted in a year over year increase of about 5 percent for the first quarter of 2005. Fueling systems product sales decreased 7 percent compared to the first quarter of 2004 as a large 2004 first quarter order was not repeated.

Net sales for the first quarter of 2004 were $80.2 million, an increase of $10.4 million or 15 percent from 2003 first quarter net sales of $69.8 million. Foreign currencies, particularly the euro, strengthened relative to the U.S. dollar compared to the first quarter of 2003. The impact of the changes in exchange rates was a $3.7 million increase in the Company’s reported 2004 sales. Excluding the impact of changes in foreign currencies, net sales increased $6.7 million or 10 percent. The sales increase of $6.7 million relates primarily to increased sales of small and large submersible motor products to North American customers of about 6 percent and higher

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demand by European customers of about 2 percent (when comparing both quarters at the current year exchange rate). Sales of fueling systems motors and related products increased about 3 percent during the first quarter of 2004 from the first quarter of 2003. Fueling systems motors and related products have increased primarily due to increased demand from service station equipment suppliers for submersible motors and monitoring equipment.

Cost of sales as a percent of net sales for the first quarter of 2005 was 69.1 percent, down from the first quarter of 2004 of 70.6 percent. Cost of sales as a percent of net sales decreased primarily as a result of the increased sales. Cost of sales as a percent of net sales for the first quarter of 2004 was 70.6 percent, down from the first quarter of 2003 of 71.8 percent. Cost of sales as a percent of net sales decreased primarily as a result of the increased sales. The decrease in costs of sales as a percent of net sales during the first quarter of 2005 and 2004 was partially offset by increased costs for certain commodities used in the manufacture of the electric motors, primarily steel and copper.

Selling and administrative (“SG&A”) expenses at $16.3 million for the first quarter of 2005 were up $1.3 million or 9 percent from the first quarter of 2004 of $15.0 million. The increase of SG&A expenses in the first quarter of 2005 from the same period for 2004 due to the effect of changes in the foreign exchange rate was $0.2 million. The Company also incurred additional SG&A costs related to its Water Systems Distribution Channel initiative, and the acquisition of the pump manufacturer. SG&A expenses at $15.0 million for the first quarter of 2004 were up $1.1 million or 8 percent from the first quarter of 2003 of $13.9 million. The increase of SG&A expenses in the first quarter of 2004 from the same period for 2003 was primarily due to the effect of changes in the foreign exchange rate, $0.4 million. The Company also incurred additional SG&A costs in 2004 for the launch of new electronic products related to submersible motors, approximately $0.2 million, higher commissions related to the increased sales, approximately $0.2 million and costs of compliance procedures associated with the Sarbanes-Oxley Act.

Interest expense for the first quarter of 2005 of $0.2 million is $0.1 million higher than the prior year of $0.1 million due to higher rates. The first quarter interest expense of 2004 was $0.1 million which was $0.2 million less than the same period of 2003 due primarily to lower outstanding debt.

Foreign currency-based transactions resulted in a slight gain for the first quarter 2005 results. Foreign currency-based transactions produced a loss for the first quarter of 2004 of $0.1 million compared to a gain of $0.5 million for the first quarter of 2003.

The provision for income taxes for the first quarter of 2005 is $3.2 million. The effective tax rate for 2005 is projected at 35.4 percent, about the same as the prior year rate of 35.5 percent. The effective tax rate differs from the United States statutory rate of 35 percent, due to the foreign income exclusion and R&D credits and to the effects of state and foreign income taxes, net of federal tax benefits.

Net income for the first quarter of 2005 was $5.8 million, or $0.25 per diluted share, compared to the first quarter of 2004 net income of $5.1 million, or $0.22 per diluted share.

Capital Resources and Liquidity

Operating activities consumed approximately $8.1 million of cash during the first quarter of 2005 compared to cash consumed during the first quarter of 2004 of $11.3 million. The operating cash flow used in the first quarter of 2005 is primarily related to an increase in inventory, about $18.3 million. Inventories increased primarily in finished goods as the Company’s sales are generally lower during the first quarter of the year.

The primary sources and uses of cash for investing activities for the first quarter of 2005 were for the buying and selling of short term investment securities (See footnote for further discussion of these securities). The primary uses of cash for the first quarter of 2004 were additions to property, plant and equipment of $4.0 million. Additions during the first quarter of 2004 were primarily related to the building additions included in the Global Manufacturing Realignment Program.

Net cash flows from financing activities during the first quarters of 2005 and 2004 were $0.0 million and $1.7 million, respectively. The principal uses of cash during 2005 and 2004 were for purchases of Company common stock under the Company’s repurchase program and the payment of dividends. The principal source of cash

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from financing activities during 2005 and 2004 was from the issuance of common stock related to the exercise of stock options.

Cash and equivalents at the end of the first quarters of 2005 and 2004 were $23.1 million and $12.7 million, respectively.

In September 2004, the Company entered into an unsecured, 60 month $80.0 million revolving credit agreement (the “Agreement”). The Agreement includes a facility fee of one-tenth of one percent on the committed amount. As of April 2, 2005, the Company had no outstanding borrowings under the agreement.

During the first fiscal quarter, there has been no significant change in the Company’s current commitments, as reported in its annual report on Form 10-K for the year ended January 1, 2005.

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 ongoing 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. Certain liabilities have also been adjusted based on the announced change in distribution channels. 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, 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 described in detail in Exhibit 99.1 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2005. 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 limited to variable rate interest borrowings under the Company's revolving credit agreement and an interest rate swap.

Item 4. Controls and Procedures

As of the end of the period covered by this report (the "Evaluation Date"), 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 such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Company's Chief Executive Officer and the Company's Chief Financial Officer concluded that as of the Evaluation Date, 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.

- 13 - -

During the first fiscal quarter there have been no changes in the Company's internal control over financial reporting that have materially affected or that are reasonably likely to materially affect the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Total Number

Maximum Number

Total

of Shares

Number

Average

Purchased as

that May Yet be

Of Shares

Price Paid

Part of Publicly

Purchased Under

Purchased

per Share

Announced Plan

the Plan

Period

Jan 2, 2005

Feb 5, 2005

827,412

Feb 6, 2005

Mar 5, 2005

1,000,000

Mar 6, 2005

Apr 2, 2005

54,400

38.8044

54,400

945,600

Total

54,400

On February 16, 2001, the Company’s Board of Directors unanimously approved a resolution to repurchase 2,000,000 shares. The plan was announced in the Company’s 10-Q for the third quarter ending September 29, 2001. There is no expiration date for the plan.

On February 11, 2005, the Company’s Board of Directors unanimously approved a resolution to increase the number of shares remaining for repurchase from 827,412 to 1,000,000 shares.

Item 4. Submission of Matters to a Vote of Security Holders

The 2005 Annual Meeting of Shareholders of the Company was held on April 29, 2005 to: 1) Elect two directors for terms expiring at the 2008 Annual Meeting of Shareholders; 2) Approve the amendment and restatement of the Franklin Electric Co., Inc. Performance Incentive Stock Plan; and 3) Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the 2005 fiscal year.

All of the matters submitted to a vote of shareholders were approved, as shown by the following voting results.

1) Nominees for Director		For		Withhold Authority

David A. Roberts		20,736,636		309,026
Howard B. Witt		20,637,925		407,737

2) Approve aforementioned amendment and restatement of the Franklin Electric Co., Inc. Performance Incentive Stock Plan.

For	Against		Abstain		Broker Non-votes
14,497,207	1,541,247		2,506,074		2,501,134

- 14 - -


3) Ratification of Deloitte & Touche LLP

For	Against	Abstain	Broker Non-votes
20,898,361	115,569	31,732	0

Total shares represented at the Annual Meeting in person or by proxy were 21,045,662 of a total of 22,136,192 shares outstanding. This represented 95.1 percent of Company common stock and constituted a quorum.

Item 6. Exhibits

See the Exhibit Index located on page 17. Management Contract, Compensatory Plan, or Arrangement is denoted by an asterisk (*).

- 15 - -

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 May 6, 2005	By	/s/ R. Scott Trumbull
		R. Scott Trumbull, Chairman and Chief Executive Officer (Principal Executive Officer)



Date May 6, 2005	By	/s/ Gregg C. Sengstack
		Gregg C. Sengstack, Senior Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)

- 16 - -

FRANKLIN ELECTRIC CO., INC.

EXHIBIT INDEX TO THE QUARTERLY REPORT ON FORM 10-Q

FOR THE FIRST QUARTER ENDED APRIL 2, 2005


Number	Description

10.1	Form of Non-Qualified Stock Option Agreement for Non-Director Employees*

10.2	Form of Non-Qualified Stock Option Agreement for Director Employees*

10.3	Form of Restricted Stock Agreement for Non-Director Employees*

10.4	Form of Restricted Stock Agreement for Director Employees*

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	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

32.2	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

	* Management contract or compensatory plan or arrangement

- 17 - -

EX-10.1 2 exhibit10-1.htm EXHIBIT 10.1 Exhibit 10.1

EXHIBIT 10.1

[Non-Director Employees]

THIS DOCUMENT CONSTITUTES PART OF THE SECTION 10(a) PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

Franklin Electric Co., Inc. Stock Plan

Non-Qualified Stock Option Agreement

The employee identified below has been selected to be a Participant in the Franklin Electric Co., Inc. Stock Plan (the “Plan”) and has been granted a Non-Qualified Option as outlined below:

Participant:

Date of Grant:

Shares Covered by the Option:

Option Exercise Price: $

Expiration Date:

Vesting Schedule:

This Agreement, effective as of the Date of Grant set forth above, is between Franklin Electric Co., Inc., an Indiana corporation (the “Company”), and the Participant named above. The parties hereto agree as follows:

The Plan provides a complete description of the terms and conditions governing the Option. If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless otherwise set forth herein. A copy of the Plan is attached hereto and the terms of the Plan are hereby incorporated by reference.

1. Stock Option Grant. Subject to the provisions set forth herein and the terms and conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the Company hereby grants to the Participant an Option to purchase from the Company the number of shares of Common Stock, at the exercise price per share, and on the schedule, set forth above.

2. Acceptance by Participant. The exercise of the Option is conditioned upon the execution of this Agreement by the Participant and the return of an executed copy of the Agreement to the Secretary of the Company no later than 60 days after the Date of Grant or, if later, 30 days after the Participant receives this Agreement.

3. Exercise of Option. Subject to Section 4 below, the Participant may exercise the vested portion of the Option at any time prior to the Expiration Date. Written notice of an election to exercise any portion of the Option shall be given by the Participant, or his personal representative in the event of the Participant’s death, to the Company’s Chief Financial Officer, in accordance with procedures established by the Personnel and Compensation Committee of the Board of Directors of the Company (the “Committee”) as in effect at the time of such exercise.

At the time of exercise of the Option, payment of the purchase price for the shares of Common Stock with respect to which the Option is exercised must be made by one or more of the following methods: (i) in cash, (ii) in cash received from a broker-dealer to whom the Participant has submitted an exercise notice and irrevocable instructions to deliver the purchase price to the Company from the proceeds of the sale of shares subject to the Option, or (iii) by delivery to the Company of other Common Stock owned by the Participant that is acceptable to the Company, valued at its then fair market value.

- 18 - -

If applicable, an amount sufficient to satisfy all minimum Federal, state and local withholding tax requirements prior to delivery of any certificate for shares of Common Stock must also accompany the exercise. Payment of such taxes can be made by a method specified above, and/or by directing the Company to withhold such number of shares of Common Stock otherwise issuable upon exercise of the Option with a fair market value equal to the amount of tax to be withheld.

No shares shall be issued upon exercise of the Option until full payment of the exercise price and tax withholding obligation has been made.

4. Exercise Upon Termination of Employment. If the Participant’s employment with the Company and all subsidiaries terminates without cause (as determined by the Committee in its sole discretion) and for any reason other than death, disability or retirement, the then vested portion of the Option shall continue to be exercisable until the earlier of the 90th day after the date of the Participant’s termination or the date the Option expires by its terms. If the Participant’s employment with the Company and all subsidiaries is terminated by the Company for cause (as determined by the Committee in its sole discretion), the Option shall expire on the date of such termination, and no portion shall be exercisable after the date of such termination.

In the event of the Participant’s death, disability or retirement during employment with the Company or any subsidiary, the outstanding portion of the Option shall become fully vested on such date. The Option shall continue to be exercisable until the earlier of (i) the date the Option expires by its terms and (ii) in the case of termination due to disability or retirement, 36 months after the date of such termination, and in the case of termination due to death, 12 months after the date of such termination. For this purpose (A) “disability” has the meaning, and will be determined, as set forth in the Company’s long term disability program in which the Participant participates, and (B) “retirement” means the Participant’s termination from employment with the Company and all subsidiaries without cause (as determined by the Committee in its sole discretion) when the Participant is 65 or older or 55 or older with 10 years of service with the Company and its subsidiaries.

The foregoing provisions of this Section 4 shall be subject to the provisions of any written employment or severance agreement that has been or may be executed by the Participant and the Company, and the provisions in such employment or severance agreement concerning exercise of the Option shall supercede any inconsistent or contrary provision of this Section 4.

5. Nontransferability of Options. The Option may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Notwithstanding the preceding provisions of this Section 5, the Participant, at any time prior to his or her death, may assign all or any portion of the Option to (i) his or her spouse or lineal descendant, (ii) the trustee of a trust established for the primary benefit of his or her spouse or lineal descendant, (iii) a partnership of which his or her spouse and lineal descendants are the only partners, or (iv) a tax-exempt organization as described in Section 501(c)(3) of the Code. In such event, the spouse, lineal descendants, trustee, partnership or tax-exempt organization will be entitled to all the rights of the Participant with respect to the assigned portion of the Option, and such portion of the Option will continue to be subject to all of the terms, conditions and restrictions applicable to the Option as set forth in the Plan and this Agreement. Any such assignment will be permitted only if (i) the Participant does not receive any consideration therefor, and (ii) the assignment is expressly approved by the Board. Any such assignment shall be evidenced by an appropriate written document executed by the Participant and a copy thereof shall be delivered to the Board on or prior to the effective date of the assignment.

6. Beneficiary Designation. The Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Option is to be paid in the event of his or her death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Board, and will be effective only when filed by the Participant in writing with the Board during his or her lifetime. In the absence of any such designation, or if all beneficiaries predecease the Participant, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

- 19 - -

7. Rights as a Stockholder. The Participant shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to the Option and this Agreement until such time as the exercise price has been paid and the shares have been issued and delivered to him or her.

8. Surrender of or Changes to Agreement. In the event the Option shall be exercised in whole, this Agreement shall be surrendered to the Company for cancellation. In the event the Option shall be exercised in part or a change in the number of designation of the shares of Common Stock shall be made, this Agreement shall be delivered by the Participant to the Company for the purpose of making appropriate notation thereon, or of otherwise reflecting, in such manner as the Company shall determine, the change in the number or designation of such shares.

9. Administration. The Option shall be exercised in accordance with such administrative regulations as the Committee shall from time to time adopt. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of, the Plan and this Agreement, all of which shall be binding upon the Participant.

10. Governing Law. This Agreement, and the Option, shall be construed, administered and governed in all respects under and by the laws of the State of Indiana.

IN WITNESS WHEREOF, this Agreement is executed by the parties this ____ day of ________, ____, effective as of the ____ day of ________, ____.

	FRANKLIN ELECTRIC CO., INC.



______________________________	By: ____________________________
Participant

- 20 - -

Franklin Electric Co., Inc. Stock Plan

Name (Please Print)

In the event of my death, the following person is to receive any benefits payable under the Franklin Electric Co., Inc. Stock Plan.

NOTE: The primary beneficiary(ies) will receive your Stock Plan benefits. If more than one primary beneficiary is indicated, the benefits will be split among them equally. If you desire to provide for a distribution of benefits among primary beneficiaries on other than an equal basis, please attach a sheet explaining the desired distribution in full detail. If any primary beneficiary is no longer living on the date of your death, the benefit which the deceased primary beneficiary would otherwise receive will be distributed to the secondary beneficiary(ies), in a similar manner as described above for the primary beneficiary(ies).

			‘ Primary Beneficiary		‘ Secondary Beneficiary

__________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

__________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

____________________________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

____________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

____________________________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

____________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


If a trust or other arrangement is listed above, include name, address and date of arrangement below:
____________________________________________________________________________________________________________________________________________
Name		Address					Date

‘ For additional beneficiaries, check here and attach an additional sheet of paper.

This supersedes any beneficiary designation previously made by me under this Plan. I reserve the right to change the beneficiary at any time.


____________________________________				________________________________________
Date				Sign your full name here

Date received by Franklin Electric Co., Inc.				________________________________________

	By:			________________________________________

- 21 - -

EX-10.2 3 exhibit10-2.htm EXHIBIT 10.2 Exhibit 10.2

EXHIBIT 10.2

[Director Employees]

THIS DOCUMENT CONSTITUTES PART OF THE SECTION 10(a) PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

Franklin Electric Co., Inc. Stock Plan

Non-Qualified Stock Option Agreement

The employee identified below has been selected to be a Participant in the Franklin Electric Co., Inc. Stock Plan (the “Plan”) and has been granted a Non-Qualified Option as outlined below:

Participant:

Date of Grant:

Shares Covered by the Option:

Option Exercise Price: $

Expiration Date:

Vesting Schedule:

1. Stock Option Grant. Subject to the provisions set forth herein and the terms and conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the Company hereby grants to the Participant an Option to purchase from the Company the number of shares of Common Stock, at the exercise price per share, and on the schedule, set forth above.

2. Acceptance by Participant. The exercise of the Option is conditioned upon the execution of this Agreement by the Participant and the return of an executed copy of the Agreement to the Secretary of the Company no later than 60 days after the Date of Grant or, if later, 30 days after the Participant receives this Agreement.

3. Exercise of Option. Subject to Section 4 below, the Participant may exercise the vested portion of the Option at any time prior to the Expiration Date. Written notice of an election to exercise any portion of the Option shall be given by the Participant, or his personal representative in the event of the Participant’s death, to the Company’s Chief Financial Officer, in accordance with procedures established by the Personnel and Compensation Committee of the Board of Directors of the Company (the “Committee”) as in effect at the time of such exercise.

- 22 - -

No shares shall be issued upon exercise of the Option until full payment of the exercise price and tax withholding obligation has been made.

4. Exercise Upon Termination of Employment. If the Participant’s employment with the Company and all subsidiaries terminates due to death, disability or retirement, the outstanding portion of the Option shall become fully vested on such date. The Option shall continue to be exercisable until the earlier of (i) the Option’s Expiration Date and (ii) in the case of termination due to disability or retirement, 36 months after the date of such termination, and in the case of termination due to death, 12 months after the date of such termination. In such case, the Participant’s concurrent or subsequent termination of service on the Board shall have no effect on the Option.

In the event the Participant’s employment with the Company and all subsidiaries terminates without cause (as determined by the Committee in its sole discretion) and for any reason other than death, disability or retirement, and the Participant’s service on the Board continues thereafter, the Option shall continue to vest and remain exercisable in accordance with its terms. If the Participant’s service on the Board subsequently terminates, then (i) if the termination of service is due to death, disability or retirement, the outstanding portion of the Option shall become fully vested on such date and shall continue to be exercisable until the earlier of (A) the Expiration Date and (B) in the case of termination due to disability or retirement, 36 months after the date of termination of service, and in the case of termination of service due to death, 12 months after the date of termination of service, (ii) if the termination of service is without cause (as determined by the Committee in its sole discretion) and for any reason other than death, disability or retirement, the Option shall expire on the earlier of the 90th day after the date of the Participant’s termination or the date the Option expires by its terms and (iii) if the termination of service is for cause (as determined by the Committee in its sole discretion), the Option shall expire on the date of such termination of service, and no portion shall be exercisable after the date of such termination.

For purposes of this Section 4, (i) “disability” (A) while the Participant is employed, has the meaning, and will be determined, as set forth in the Company’s long term disability program in which the Participant participates, and (B) while the Participant is a Non-Employee Director, means (as determined by the Committee in its sole discretion) the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months and (ii) “retirement” (A) while the Participant is employed, means the Participant’s termination from employment with the Company and all subsidiaries without cause (as determined by the Committee in its sole discretion) when the Participant is 65 or older or 55 or older with 10 years of service with the Company and its subsidiaries, and (B) while the Participant is a Non-Employee Director, means termination of service on the Board when he is 70 or older.

- 23 - -

5. Nontransferability of Options. The Option may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Notwithstanding the preceding provisions of this Section 5, the Participant, at any time prior to his or her death, may assign all or any portion of the Option to (i) his or her spouse or lineal descendant, (ii) the trustee of a trust established for the primary benefit of his or her spouse or lineal descendant, (iii) a partnership of which his or her spouse and lineal descendants are the only partners, or (iv) a tax-exempt organization as described in Section 501(c)(3) of the Code. In such event, the spouse, lineal descendants, trustee, partnership or tax-exempt organization will be entitled to all the rights of the Participant with respect to the assigned portion of the Option, and such portion of the Option will continue to be subject to all of the terms, conditions and restrictions applicable to the Option as set forth in the Plan and this Agreement. Any such assignment will be permitted only if (i) the Participant does not receive any consideration therefor, and (ii) the assignment is expressly approved by the Board. Any such assignment shall be evidenced by an appropriate written document executed by the Participant and a copy thereof shall be delivered to the Board on or prior to the effective date of the assignment.

6. Beneficiary Designation. The Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Option is to be paid in the event of his or her death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Board, and will be effective only when filed by the Participant in writing with the Board during his or her lifetime. In the absence of any such designation, or if all beneficiaries predecease the Participant, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

7. Rights as a Stockholder. The Participant shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to the Option and this Agreement until such time as the exercise price has been paid and the shares have been issued and delivered to him or her.

8. Surrender of or Changes to Agreement. In the event the Option shall be exercised in whole, this Agreement shall be surrendered to the Company for cancellation. In the event the Option shall be exercised in part or a change in the number of designation of the shares of Common Stock shall be made, this Agreement shall be delivered by the Participant to the Company for the purpose of making appropriate notation thereon, or of otherwise reflecting, in such manner as the Company shall determine, the change in the number or designation of such shares.

9. Administration. The Option shall be exercised in accordance with such administrative regulations as the Committee shall from time to time adopt. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of, the Plan and this Agreement, all of which shall be binding upon the Participant.

10. Governing Law. This Agreement, and the Option, shall be construed, administered and governed in all respects under and by the laws of the State of Indiana.

IN WITNESS WHEREOF, this Agreement is executed by the parties this ____ day of ________, ____, effective as of the ____ day of ________, ____.

	FRANKLIN ELECTRIC CO., INC.



______________________________	By: ____________________________
Participant

- 24 - -

Franklin Electric Co., Inc. Stock Plan

Name (Please Print)

In the event of my death, the following person is to receive any benefits payable under the Franklin Electric Co., Inc. Stock Plan.

			‘ Primary Beneficiary		‘ Secondary Beneficiary

______________________________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

____________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

______________________________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

______________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

______________________________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

______________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


If a trust or other arrangement is listed above, include name, address and date of arrangement below:
______________________________________________________________________________________________________________________________________________
Name		Address					Date

‘ For additional beneficiaries, check here and attach an additional sheet of paper.

This supersedes any beneficiary designation previously made by me under this Plan. I reserve the right to change the beneficiary at any time.


____________________________________				________________________________________
Date				Sign your full name here

Date received by Franklin Electric Co., Inc.				________________________________________

	By:			________________________________________

- 25 - -

EX-10.3 4 exhiit10-3.htm EXHIBIT 10.3 Exhibit 10.3

EXHIBIT 10.3

[Non-Director Employees]

THIS DOCUMENT CONSTITUTES PART OF THE SECTION 10(a) PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

Franklin Electric Co., Inc. Stock Plan

Restricted Stock Award Agreement

The employee identified below has been selected to be a Participant in the Franklin Electric Co., Inc. Stock Plan (the “Plan”), and has been granted a Restricted Stock Award (“Award”) as outlined below:

Participant:

Date of Award:

Number of Shares Subject to Award:

End of Restriction Period:

Performance Objectives:

This Agreement, effective as of the Date of Award set forth above, is between Franklin Electric Co., Inc., an Indiana corporation (the “Company”), and the Participant named above. The parties hereto agree as follows:

The Plan provides a complete description of the terms and conditions governing the Award. If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. A copy of the Plan is attached hereto and the terms of the Plan are hereby incorporated by reference.

1.	Grant of Restricted Stock. Subject to the provisions set forth herein and the terms and conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the Company hereby grants to the Participant the number of shares of Common Stock set forth above.

Acceptance by Participant. The receipt of the Award is conditioned upon the execution of this Agreement by the Participant and the return of an executed copy of this Agreement to the Secretary of the Company no later than 60 days after the Award Date set forth therein or, if later, 30 days after the Participant receives this Agreement.

Transfer Restrictions. Except as set forth in Section 8.1 of the Plan, none of the shares of Common Stock subject to the Award (“Award Shares”) shall be sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the Participant (or his estate or personal representative, as the case may be), until such restrictions lapse in accordance with Sections 4 and 5 below.

4.	Lapse of Restrictions. The restrictions set forth in Section 3 above shall lapse on the last day of the Restriction Period if the Committee determines that the Performance Objectives described above have been met as of such date.

- 26 - -

Death, Disability or Retirement. To the extent the restrictions set forth in Section 3 above have not lapsed in accordance with Section 4 above, in the event that the Participant’s employment with the Company and all subsidiaries terminates due to the Participant’s death, disability or retirement, such restrictions shall lapse with respect to a number of Award Shares determined by multiplying the number of Award Shares by a fraction, the numerator of which is the number of full months that have elapsed from the Date of Award to the termination of employment and the denominator of which is the number of full months in the Restriction Period. The Committee may in its discretion waive the restrictions on the remaining Award Shares. Award Shares with respect to which restrictions do not lapse shall be forfeited. For this purposes (a) “disability” has the meaning, and will be determined, as set forth in the Company’s long term disability program in which the Participant participates, and (b) “retirement” means the Participant’s termination from employment with the Company and all subsidiaries without cause (as determined by the Committee in its sole discretion) when the Participant is 65 or older or 55 or older with 10 years of service with the Company and its subsidiaries.

Forfeiture. The Award shall be forfeited to the Company (a) upon the Participant’s termination of employment with the Company and all subsidiaries for any reason other than the Participant’s death, disability or retirement (as described in Section 5 above) that occurs prior to the date the restrictions lapse as provided in Section 4 above or (b) if at the end of the Restriction Period the Committee determines that the Performance Objectives are not met. The foregoing provisions of this Section 6 shall be subject to the provisions of any written employment or severance agreement that has been or may be executed by the Participant and the Company, and the provisions in such employment or severance agreement concerning the lapse of restrictions of an Award shall supercede any inconsistent or contrary provision of this Section 6.

Withholding Taxes. If applicable, the Participant shall pay to the Company an amount sufficient to satisfy all minimum Federal, state and local withholding tax requirements prior to the delivery of any certificate for Award Shares. Payment of such taxes may be made by one or more of the following methods: (i) in cash, (ii) in cash received from a broker-dealer to whom the Participant has submitted a notice and irrevocable instructions to deliver to the Company proceeds from the sale of a portion of the shares subject to the Award, (iii) by delivery to the Company of other Common Stock owned by the Participant that is acceptable to the Company, valued at its then fair market value, and/or (iv) by directing the Company to withhold such number of shares of Common Stock otherwise issuable in connection with the Award with a fair market value equal to the amount of tax to be withheld.

Rights as Shareholder. The Participant shall be entitled to all of the rights of a shareholder of the Company with respect to the outstanding Award Shares, including the right to vote such shares and to receive dividends and other distributions payable with respect to such Award Shares from the Award Date.

Escrow of Share Certificates. Certificates for the Award Shares shall be issued in the Participant’s name and shall be held in escrow by the Company until all restrictions lapse or such Award Shares are forfeited or resold to the Company as provided herein. A certificate or certificates representing the Award Shares as to which restrictions have lapsed shall be delivered to the Participant (or the Participant’s executor or personal representative in the case of the Participant’s death) upon such lapse of restrictions.

10.

Section 83(b) Election. The Participant may make an election pursuant to Section 83(b) of the Internal Revenue Code to recognize income with respect to the Award Shares before the restrictions lapse, by filing such election with the Internal Revenue Service within 30 days of the Award Date and providing a copy of that filing to the Company.

- 27 - -

11.

Administration. The Award shall be administered in accordance with such administrative regulations as the Committee shall from time to time adopt. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Participant.

12.

Governing Law. This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Indiana.

IN WITNESS WHEREOF, this Agreement is executed by the parties this ___ day of __________, ______, effective as of the ___ day of __________, ______.

	FRANKLIN ELECTRIC CO., INC.



______________________________	By: ____________________________
Participant

- 28 - -

Franklin Electric Co., Inc. Stock Plan

Restricted Stock Award

Name (Please Print)

In the event of my death, the following person is to receive any outstanding Award Shares granted to me under the Franklin Electric Co., Inc. Stock Plan.

			‘ Primary Beneficiary		‘ Secondary Beneficiary

____________________________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

_____________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

___________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

_____________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

___________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

___________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


If a trust or other arrangement is listed above, include name, address and date of arrangement below:
___________________________________________________________________________________________________________________________
Name		Address					Date

‘ For additional beneficiaries, check here and attach an additional sheet of paper.

This supersedes any beneficiary designation previously made by me under this Plan. I reserve the right to change the beneficiary at any time.


____________________________________				________________________________________
Date				Sign your full name here

Date received by Franklin Electric Co., Inc.				________________________________________

	By:			________________________________________

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EX-10.4 5 exhibit10-4.htm EXHIBIT10.4 exhibit10.4

EXHIBIT 10.4

[Director Employees]

THIS DOCUMENT CONSTITUTES PART OF THE SECTION 10(a) PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

Franklin Electric Co., Inc. Stock Plan

Restricted Stock Award Agreement

Participant:

Date of Award:

Number of Shares Subject to Award:

End of Restriction Period:

Performance Objectives:

1.	Grant of Restricted Stock. Subject to the provisions set forth herein and the terms and conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the Company hereby grants to the Participant the number of shares of Common Stock set forth above.

4.	Lapse of Restrictions. The restrictions set forth in Section 3 above shall lapse on the last day of the Restriction Period if the Committee determines that the Performance Objectives described above have been met as of such date.

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5.	Death, Disability or Retirement. To the extent the restrictions set forth in Section 3 above have not lapsed in accordance with Section 4 above:

In the event that the Participant’s employment with the Company and all subsidiaries terminates due to the Participant’s death, disability or retirement, such restrictions shall lapse with respect to a number of Award Shares determined by multiplying the number of Award Shares by a fraction, the numerator of which is the number of full months that have elapsed from the Date of Award to the termination of employment and service and the denominator of which is the number of full months in the Restriction Period. In such case, the Participant’s concurrent or subsequent termination of service on the Board shall have no effect on the remainder of the Award.

In the event the Participant’s employment with the Company and all subsidiaries terminates for any reason other than death, disability or retirement, and the Participant’s service on the Board continues thereafter, the restrictions shall continue in effect. If the Participant’s service on the Board subsequently terminates, then, if the termination of service is due to death, disability or retirement, the restrictions shall lapse with respect to a number of Award Shares as described in (a) above based on the full months that have elapsed from the Date of Award to the Participant’s termination of service on the Board.

c)	The Committee may in its discretion waive the restrictions on the remaining Award Shares. Award Shares with respect to which restrictions do not lapse shall be forfeited.

For purposes of this Section 5, (i) “disability” (A) while the Participant is employed, has the meaning, and will be determined, as set forth in the Company’s long term disability program in which the Participant participates, and (B) while the Participant is a Non-Employee Director, means (as determined by the Committee in its sole discretion) the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months; and (ii) “retirement” (A) while the Participant is employed, means the Participant’s termination from employment with the Company and all subsidiaries without cause (as determined by the Committee in its sole discretion) when the Participant is 65 or older or 55 or older with 10 years of service with the Company and its subsidiaries, and (B) while the Participant is a Non-Employee Director, means termination of service on the Board when he is 70 or older.

Forfeiture. The Award shall be forfeited to the Company (a) upon the Participant’s termination of employment with the Company and all subsidiaries, and service on the Board, for any reason other than the Participant’s death, disability or retirement (as described in Section 5 above) that occurs prior to the date the restrictions lapse as provided in Section 4 above or (b) if at the end of the Restriction Period the Committee determines that the Performance Objectives are not met. The foregoing provisions of this Section 6 shall be subject to the provisions of any written employment or severance agreement that has been or may be executed by the Participant and the Company, and the provisions in such employment or severance agreement concerning the lapse of restrictions of an Award shall supercede any inconsistent or contrary provision of this Section 6.

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10.

11.

12.

Governing Law. This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Indiana.

IN WITNESS WHEREOF, this Agreement is executed by the parties this ___ day of __________, ______, effective as of the ___ day of __________, ______.

	FRANKLIN ELECTRIC CO., INC.



______________________________	By: ____________________________
Participant

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Franklin Electric Co., Inc. Stock Plan

Restricted Stock Award

Name (Please Print)

In the event of my death, the following person is to receive any outstanding Award Shares granted to me under the Franklin Electric Co., Inc. Stock Plan.

			‘ Primary Beneficiary		‘ Secondary Beneficiary

__________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

____________________________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

__________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

__________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


			‘ Primary Beneficiary		‘ Secondary Beneficiary

__________________________________________________________________________________________________________________________
Last Name	First			M.I.		Relationship

__________________________________________________________________________________________________________________________
Street Address				City, State, Zip Code


If a trust or other arrangement is listed above, include name, address and date of arrangement below:
__________________________________________________________________________________________________________________________
Name		Address					Date

‘ For additional beneficiaries, check here and attach an additional sheet of paper.

This supersedes any beneficiary designation previously made by me under this Plan. I reserve the right to change the beneficiary at any time.


____________________________________				________________________________________
Date				Sign your full name here

Date received by Franklin Electric Co., Inc.				________________________________________

	By:			________________________________________

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EX-31.1 6 exhibit31-1.htm EXHIBIT 31.1 Exhibit 31.1

EXHIBIT 31.1

CERTIFICATIONS

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., for the first quarter ending April 2, 2005;

Based on my knowledge, this Quarterly 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 Quarterly Report;

3.	Based on my knowledge, the financial statements, and other financial information included in this Quarterly 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 Quarterly Report;

The registrant’s other certifying officer 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

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 Quarterly Report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c.	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 end of the period covered by this Quarterly Report based on such evaluation; and

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 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 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 registrant’s board of directors or persons performing similar functions:

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

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:	May 6, 2005


	/s/ R. Scott Trumbull
	R. Scott Trumbull
	Chairman and Chief Executive Officer
	Franklin Electric Co., Inc.

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EX-31.2 7 exhibit31-2.htm EXHIBIT 31.2 Exhibit 31.2

EXHIBIT 31.2

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., for the first quarter ending April 2, 2005;

3.	Based on my knowledge, the financial statements, and other financial information included in this Quarterly 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 Quarterly Report;

c.	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 end of the period covered by this Quarterly Report based on such evaluation; and

5.	The registrant’s other certifying officer 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 registrant’s board of directors or persons performing similar functions:

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

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:	May 6, 2005


	/s/ Gregg C. Sengstack
	Gregg C. Sengstack
	Senior Vice President, Chief Financial Officer and Secretary
	Franklin Electric Co., Inc.

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EX-32.1 8 exhibit32-1.htm EXHIBIT 32.1 Exhibit 32.1

EXHIBIT 32.1

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 first quarter ending April 2, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Scott Trumbull, Chairman, Chief Executive Officer and President 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:	May 6, 2005


	/s/ R. Scott Trumbull
	R. Scott Trumbull
	Chairman and Chief Executive Officer
	Franklin Electric Co., Inc.

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EX-32.2 9 exhibit32-2.htm EXHIBIT 32.2 Exhibit 32.2

EXHIBIT 32.2

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 first quarter ending April 2, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregg C. Sengstack, Senior Vice President and Chief Financial 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:	May 6, 2005


	/s/ Gregg C. Sengstack
	Gregg C. Sengstack
	Senior Vice President, Chief Financial Officer and Secretary
	Franklin Electric Co., Inc.

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