EX-99 2 exhibit99.htm EXHIBIT 99 Exhibit 99
Exhibit Index

EXHIBIT NO. (99) Press release, dated January 27, 2005 issued by Franklin Electric Co., Inc.
 
EXHIBIT 99

ADDITIONAL EXHIBITS

Press Release


For Immediate Release
For Further Information
 
Refer to: Thomas J. Strupp
 
260-824-2900


FRANKLIN ELECTRIC COMPANY
REPORTS RECORD INCOME AND SALES
FOR THE FOURTH QUARTER AND FISCAL YEAR OF 2005

Bluffton, Indiana - January 27, 2006 -- Franklin Electric Co., Inc. (NASDAQ:FELE) reported record diluted earnings per share of $1.98 for fiscal 2005, an increase of 20 percent compared to 2004 earnings per share of $1.65 and net income was a record $46.0 million, an increase of 21 percent compared to last year’s $38.1 million. The Company reported diluted earnings per share for the fourth quarter of $0.58, a 23 percent increase from $0.47 for the fourth quarter of 2004. Fourth quarter 2005 net income was a record $13.4 million, an increase of 22 percent from $11.0 million for the same period a year ago.

Sales for fiscal year 2005 were a record $439.6 million, an increase of $35.3 million or 9 percent compared to 2004 sales of $404.3 million. Incremental sales related to acquisitions for fiscal year 2005 were about $17.5 million or 4 percent of sales. The majority of the sales growth from acquisitions resulted from the JBD, Inc. (the former Jacuzzi Brand) pump company. Sales growth was benefited by price realization gains and solid organic growth in Water Systems pump unit shipments. Water Systems product sales worldwide were up about 10 percent for fiscal year 2005 compared to 2004. Sales increased across all of our Water Systems product categories during the year including submersible motors, pumps, and drives and controls. Fueling Systems product sales worldwide were up slightly compared to the prior year, mostly because of strong new product sales in the fourth quarter. These included the acquisition of Phil-Tite Enterprises, a manufacturer of fuel containment equipment, our new UL 971 approved flexible pipe, and our new modular, multi-language, electronic fuel station management platform.

Fourth quarter sales were a record $114.5 million, an increase of $6.9 million or 6 percent for the same quarter of 2004. The fourth quarter of 2004 included the JBD, Inc. acquisition which closed in October 2004. Foreign currencies, particularly the euro, weakened relative to the U.S. dollar since the fourth quarter of 2004. The impact of this change in exchange rates was a $2.4 million decrease in the Company’s reported fourth quarter 2005 sales compared to the same period in 2004. The sales decrease related to currency translation was more than offset by unit volume increases for both Water Systems and Fueling Systems products as well as price realization gains in the quarter.

 
- 3 -

For fiscal year 2005, operating earnings were $70.4 million, up $10.7 million or 18 percent compared to $59.8 million a year ago. The improvement in operating earnings was primarily driven by the record sales as well as reduced manufacturing cost from the Company’s growing production base in Mexico, The Czech Republic and China. These improvements were partially offset by higher commodity costs and increased fixed costs incurred in connection with the Company’s channel strategy change for Water Systems product distribution. Operating earnings for the fourth quarter of 2005 were $20.3 million, an increase of 18 percent compared to $17.1 million a year ago. The improvement was primarily attributable to the record sales level and the reduced global manufacturing costs.

R. Scott Trumbull, Chairman and Chief Executive Officer, stated, “The people of Franklin Electric achieved record sales and earnings and made solid progress on our most important strategic initiatives. Our revenues grew across all of our product lines as we diversified our customer base by selling directly to a growing list of distributors. We also diversified our Water Systems product offering by successfully introducing three new pump brands. Largely as a result of these Water Systems brand introductions, we enter 2006 with strong sales growth momentum. We have an attractive pipeline of new products which will rollout during 2006 and will help us to sustain this momentum. The Company is also well positioned for best quality and best cost with the completion of the first phase of our previously announced Global Manufacturing Realignment Program. The ramp-up of our new manufacturing plants in Mexico, The Czech Republic and China continues and initiatives to improve our overall product cost structure and quality will be a cornerstone of our long-term competitive strategy. Finally, Franklin enters 2006 with a strong balance sheet that positions us to capitalize on strategic opportunities within our consolidating global markets.”

In the third quarter of 2003, the Company announced the first phase of its ongoing Global Manufacturing Realignment Program; a program that is resulting in a shift of a significant amount of production to lower cost regions of the world as well as consolidating certain manufacturing operations. The Company originally projected it would incur approximately $10 million of pre-tax restructuring expenses on the first phase. This phase of the ongoing program resulted in actual pre-tax restructuring expense of $7.5 million over the two year period. The first phase of the Realignment Program is considered substantially complete at the end of 2005.

Franklin Electric is a global leader in the production and marketing of groundwater and fuel pumping systems and is a technical leader in submersible motors, drives controls, and monitoring devices.

########

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward looking statements contained herein involve risks and uncertainties, including but not limited to, general economic and currency conditions, various conditions specific to the Company’s business and industry, market demand, competitive factors, changes in distribution channels, supply constraints, technology factors, litigation, government and regulatory actions, the Company’s accounting policies, future trends, and other risks which are detailed in the Company’s Securities and Exchange Commission filings. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements.

- 4 -


FRANKLIN ELECTRIC CO., INC.
                  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  
 
                  
                   
(In thousands, except per share amounts)
                  
                   
   
Fourth Quarter Ended
 
Fiscal Year Ended
  
   
Dec. 31,
 
Jan. 1,
 
Dec. 31,
 
Jan. 1,
 
 
 
2005
 
2005
 
2005
 
2005
  
                   
Net sales
  
$
114,545
  
$
107,618
  
$
439,559
  
$
404,305
  
                           
Cost of sales
    
73,953
   
71,621
   
291,745
   
274,120
 
                           
Gross profit
    
40,592
   
35,997
   
147,814
   
130,185
 
                           
Selling and administrative expenses
    
20,128
   
17,011
   
75,448
   
64,867
 
                           
Restructuring expense
    
171
   
1,860
   
1,920
   
5,536
 
                           
Operating income
    
20,293
   
17,126
   
70,446
   
59,782
 
                           
Interest expense
    
(213
)
  
(126
)
  
(766
)
  
(488
)
Other income
   
655
   
121
   
1,200
   
219
 
Foreign exchange gain / (loss)
   
6
   
(146
)
  
213
   
(479
)
                   
Income before income taxes
    
20,741
   
16,975
   
71,093
   
59,034
 
                           
Income taxes
    
7,334
   
6,021
   
25,084
   
20,951
 
                           
Net income
  
$
13,407
  
$
10,954
  
$
46,009
  
$
38,083
  
                           
                           
 
                          
Net income per share:
                      
Basic
  
$
0.60
  
$
0.50
  
$
2.07
  
$
1.73
  
Diluted
  
$
0.58
  
$
0.47
  
$
1.98
  
$
1.65
  
 
                          
Weighted average shares and equivalent
                          
shares outstanding:
                          
Basic
    
22,458
   
22,021
   
22,229
   
21,968
 
Diluted
    
23,284
   
23,202
   
23,181
   
23,033
 
                           
 
 
- 5 -


           
           
FRANKLIN ELECTRIC CO., INC.
          
CONDENSED CONSOLIDATED BALANCE SHEETS
          
           
(In thousands)
  
Dec. 31,
 
Jan. 1,
 
 
 
2005
 
2005
  
           
ASSETS:
          
 
          
Cash and equivalents
  
$
52,136
  
$
50,604
  
Investments
    
35,988
   
-
 
Receivables
    
30,165
   
39,312
 
Inventories
   
70,381
   
62,442
 
Other current assets
    
14,350
   
13,784
 
Total current assets
    
203,020
   
166,142
 
 
              
Property, plant and equipment, net
    
95,732
   
95,924
 
Goodwill and other assets
    
81,010
   
71,407
 
Total assets
  
$
379,762
  
$
333,473
  
               
               
LIABILITIES AND SHAREOWNERS' EQUITY:
              
 
              
Current maturities of long-term
            
debt and short-term borrowings
  
$
1,303
  
$
1,304
  
Accounts payable
   
26,409
   
16,594
 
Accrued liabilities
    
36,310
   
36,547
 
Total current liabilities
    
64,022
   
54,445
 
               
Long-term debt
    
12,324
   
13,752
 
Deferred income taxes
    
4,296
   
6,304
 
Employee benefit plan obligations
    
25,830
   
18,801
 
Other long-term liabilities
    
5,728
   
5,838
 
               
Shareowners' equity
    
267,562
   
234,333
 
Total liabilities and shareowners' equity
  
$
379,762
  
$
333,473
  
               
 
              

 
- 6 -
 

           
FRANKLIN ELECTRIC CO., INC.
          
CONSOLIDATED STATEMENTS OF CASH FLOWS
          
           
   
 
      
(In thousands)
  
Dec. 31,
 
Jan. 1,
 
 
 
2005
 
2005
  
           
           
Cash flows from operating activities:
              
Net income
  
$
46,009
  
$
38,083
  
Adjustments to reconcile net income to net
              
cash flows from operating activities:
              
Depreciation and amortization
    
14,971
   
15,143
 
Deferred income taxes
    
284
   
1,219
 
Loss on disposals of plant and equipment
    
174
   
187
 
Changes in assets and liabilities:
              
Receivables
    
7,354
   
(1,243
)
Inventories
    
(10,642
)
  
(1,167
)
Accounts payable and other accrued expenses
    
14,006
   
7,305
 
Employee benefit plans
   
2,420
   
(3,491
)
Other, net
    
(412
)
  
1,471
 
Net cash flows from operating activities
    
74,164
   
57,507
 
Cash flows from investing activities:
              
Additions to plant and equipment
    
(17,845
)
  
(21,110
)
Proceeds from sale of plant and equipment
    
1,073
   
29
 
Additions to other assets
    
(2,184
)
  
(10
)
Purchases of securities
    
(236,773
)
  
-
 
Proceeds from sale of securities
    
200,785
   
-
 
Cash paid for acquisitions, net of cash acquired
    
(8,509
)
  
(9,307
)
Net cash flows from investing activities
    
(63,453
)
  
(30,398
)
Cash flows from financing activities:
              
Repayment of long-term debt
    
(1,280
)
  
(1,553
)
Proceeds from issuance of common stock
    
14,298
   
4,110
 
Purchases of common stock
    
(13,775
)
  
(3,091
)
Reduction of loan to ESOP Trust
    
233
   
232
 
Dividends paid
    
(8,447
)
  
(6,815
)
Net cash flows from financing activities
    
(8,971
)
  
(7,117
)
Effect of exchange rate changes on cash
    
(208
)
  
650
 
Net change in cash and equivalents
    
1,532
   
20,642
 
Cash and equivalents at beginning of period
    
50,604
   
29,962
 
Cash and equivalents at end of period
  
$
52,136
  
$
50,604
  
               
               

 
- 7 -