10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________

FORM 10-Q

_________

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 4, 2015

OR

oTRANSITION 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.)
9255 Coverdale Road
Fort Wayne, Indiana	46809
(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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YESx NOo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YESx NOo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filerx Accelerated Filero Non-Accelerated Filero Smaller Reporting Companyo

1

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

YESo NOx

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 27, 2015
$.10 par value	47,627,476 shares

2

FRANKLIN ELECTRIC CO., INC.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	Number
Item 1.	Financial Statements	4
	Condensed Consolidated Statements of Income for the First Quarters Ended April 4, 2015 and March 29, 2014	4
	Condensed Consolidated Statements of Comprehensive Income/(Loss) for the First Quarters Ended April 4, 2015 and March 29, 2014	5
	Condensed Consolidated Balance Sheets as of April 4, 2015 and January 3, 2015	6
	Condensed Consolidated Statements of Cash Flows for the First Quarters Ended April 4, 2015 and March 29, 2014	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 4.	Mine Safety Disclosures	29
Item 6.	Exhibits	29
Signatures		30
Exhibit Index		31
Exhibits

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	First Quarter Ended
(In thousands, except per share amounts)	April 4, 2015			March 29, 2014
Net sales	$	225,728		$	231,421
Cost of sales	154,238			153,310
Gross profit	71,490			78,111
Selling, general, and administrative expenses	55,160			52,015
Restructuring expense	463			136
Operating income	15,867			25,960
Interest expense	(2,708		)	(2,784		)
Other income, net	3,019			325
Foreign exchange income/(expense)	416			(420		)
Income before income taxes	16,594			23,081
Income tax expense/(benefit)	(3,382		)	5,660
Net income	$	19,976		$	17,421
Less: Net income attributable to noncontrolling interests	(181		)	(464		)
Net income attributable to Franklin Electric Co., Inc.	$	19,795		$	16,957
Income per share:
Basic	$	0.41		$	0.35
Diluted	$	0.41		$	0.35
Dividends per common share	$	0.0900		$	0.0775

See Notes to Condensed Consolidated Financial Statements.

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FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

	First Quarter Ended
(In thousands)	April 4, 2015			March 29, 2014
Net income	$	19,976		$	17,421
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	(27,882		)	2,178
Employee benefit plan activity	987			745
Other comprehensive income/(loss)	(26,895		)	2,923
Income tax related to items of other comprehensive income	(333		)	(257		)
Other comprehensive income/(loss), net of tax	(27,228		)	2,666
Comprehensive income/(loss)	(7,252		)	20,087
Comprehensive income/(loss) attributable to noncontrolling interest	(170		)	326
Comprehensive income/(loss) attributable to Franklin Electric Co., Inc.	$	(7,082	)	$	19,761

See Notes to Condensed Consolidated Financial Statements.

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FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)	April 4, 2015			January 3, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	69,593		$	59,141
Receivables, less allowances of $3,310 and $3,212, respectively	155,087			143,787
Inventories:
Raw material	94,767			88,961
Work-in-process	19,319			19,148
Finished goods	107,410			112,419
Total inventories	221,496			220,528
Deferred income taxes	15,055			8,364
Other current assets	38,387			37,719
Total current assets	499,618			469,539
Property, plant, and equipment, at cost:
Land and buildings	122,780			127,782
Machinery and equipment	229,542			234,617
Furniture and fixtures	38,485			39,001
Other	18,644			20,539
Property, plant, and equipment, gross	409,451			421,939
Less: Allowance for depreciation	(211,272		)	(212,153		)
Property, plant, and equipment, net	198,179			209,786
Asset held for sale	2,041			2,405
Deferred income tax	3,313			3,899
Intangible assets, net	153,533			160,314
Goodwill	204,108			208,828
Other assets	19,965			21,116
Total assets	$	1,080,757		$	1,075,887

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	April 4, 2015			January 3, 2015
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	59,143		$	70,806
Deferred tax liability	637			637
Accrued expenses and other current liabilities	57,436			94,782
Income taxes	1,096			788
Current maturities of long-term debt and short-term borrowings	103,237			34,092
Total current liabilities	221,549			201,105
Long-term debt	143,189			143,695
Deferred income taxes	43,915			45,568
Employee benefit plans	55,989			58,709
Other long-term liabilities	20,784			21,407
Commitments and contingencies (see Note 16)	—			—
Redeemable noncontrolling interest	6,335			6,420
Shareowners' equity:
Common stock (65,000 shares authorized, $.10 par value) outstanding (47,627 and 47,594, respectively)	4,763			4,759
Additional capital	211,187			207,446
Retained earnings	505,697			492,548
Accumulated other comprehensive loss	(134,790		)	(107,913		)
Total shareowners' equity	586,857			596,840
Noncontrolling interest	2,139			2,143
Total equity	588,996			598,983
Total liabilities and equity	$	1,080,757		$	1,075,887

See Notes to Condensed Consolidated Financial Statements.

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FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	First Quarter Ended
(In thousands)	April 4, 2015			March 29, 2014
Cash flows from operating activities:
Net income	$	19,976		$	17,421
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	8,840			8,847
Share-based compensation	2,354			1,392
Deferred income taxes	(6,540		)	(214		)
Loss on disposals of plant and equipment	46			5
Realized gain on share purchase liability	(2,723		)	—
Foreign exchange expense/(income)	(416		)	420
Excess tax from share-based payment arrangements	(515		)	(1,448		)
Changes in assets and liabilities, net of acquisitions:
Receivables	(17,901		)	(31,451		)
Inventory	(7,360		)	(31,408		)
Accounts payable and accrued expenses	(18,081		)	8,408
Income taxes	292			1,117
Employee benefit plans	(9		)	(2,551		)
Other, net	221			(5,918		)
Net cash flows from operating activities	(21,816		)	(35,380		)
Cash flows from investing activities:
Additions to property, plant, and equipment	(4,205		)	(8,172		)
Proceeds from sale of property, plant, and equipment	8			1,592
Cash paid for acquisitions, net of cash acquired	(3,616		)	—
Cash paid for minority equity investments	—			(2,449		)
Net cash flows from investing activities	(7,813		)	(9,029		)
Cash flows from financing activities:
Proceeds from issuance of debt	77,918			21,191
Repayment of debt	(9,105		)	(6,550		)
Proceeds from issuance of common stock	883			635
Excess tax from share-based payment arrangements	515			1,448
Purchases of common stock	(2,288		)	(1,581		)
Dividends paid	(4,283		)	(3,709		)
Share purchase liability payment	(20,200		)	—
Net cash flows from financing activities	43,440			11,434
Effect of exchange rate changes on cash	(3,359		)	559
Net change in cash and equivalents	10,452			(32,416		)
Cash and equivalents at beginning of period	59,141			134,553
Cash and equivalents at end of period	$	69,593		$	102,137

8

	First Quarter Ended
	April 4, 2015		March 29, 2014
Cash paid for income taxes, net of refunds	$	3,210	$	7,905
Cash paid for interest	$	2,755	$	3,002
Non-cash items:
Additions to property, plant, and equipment, not yet paid	$	221	$	610
Payable to seller of Bombas Leao	$	267	$	—

See Notes to Condensed Consolidated Financial Statements.

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FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed consolidated balance sheet as of January 3, 2015, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of April 4, 2015, and for the first quarters ended April 4, 2015 and March 29, 2014, 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. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations.  In the opinion of management, all accounting entries and adjustments (including normal, recurring adjustments) considered necessary for a fair presentation of the financial position and the results of operations for the interim period have been made. Operating results for the first quarter ended April 4, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2016. For further information, including a description of the Company’s critical accounting policies, refer to the consolidated financial statements and notes thereto included in Franklin Electric Co., Inc.'s Annual Report on Form 10-K for the year ended January 3, 2015.

2. ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis. The amendments affect both the variable interest entity and voting interest entity consolidation models. The need to assess an entity under a different consolidation model may change previous consolidation conclusions. The standard is effective for both interim and annual reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company has adopted this standard with no impact on the Company's consolidated financial position, results of operations, or cash flows.

Accounting Standards Issued But Not Yet Adopted

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The standard will not change the amortization of debt issuance costs, which will continue to follow the existing accounting guidance. The ASU will be effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company is still in the process of analyzing the effect of this new standard to determine the impact on the Company's consolidated financial position, results of operations, and cash flows.

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. However, on April 1, 2015, the FASB voted to propose a one-year deferral to the effective date, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The proposal will be subject to the FASB's due process requirement, which includes a period for public comments. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt the new ASU. The Company is still in the process of analyzing the effect of this new standard to determine the impact on the Company's consolidated financial position, results of operations, and cash flows.

3. ACQUISITIONS

In 2012, the Company acquired a controlling interest in Pioneer Pump Holdings, Inc. ("PPH"). Pursuant to the terms of the 2012 stock purchase agreement, the remaining 29.5 percent noncontrolling interest was recorded at $22.9 million and accounted for as a share purchase liability. During the first quarter of 2015, the Company purchased the remaining 29.5 percent of outstanding shares of PPH for $20.2 million, increasing the Company's ownership in PPH to 100 percent. The purchase was considered the settlement of a financing obligation, and the resulting $2.7 million gain is recorded in the Company's condensed consolidated statements of income in the "Other income, net" line.

Transaction costs for all acquisition related activity were expensed as incurred under the guidance of FASB ASC Topic 805, Business Combinations. Transaction costs included in selling, general, and administrative expenses in the Company’s condensed consolidated statements of income were $0.1 million for the first quarters ended April 4, 2015 and March 29, 2014.

4. REDEEMABLE NONCONTROLLING INTERESTS

On May 2, 2011, the Company completed the acquisition of 80 percent of Impo. In 2014, the Company redeemed 10 percent of the noncontrolling interest of Impo, increasing the Company's ownership to 90 percent. The noncontrolling interest holders have the option, which is embedded in the noncontrolling interest, to require the Company to redeem their ownership interests. The combination of a noncontrolling interest and a redemption feature resulted in a redeemable noncontrolling interest.

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The Company uses the interest method to accrete changes in the anticipated redemption value of the Impo redeemable noncontrolling interest over an amortization period to the earliest projected redemption date. Accretion adjustments for the first quarter ended April 4, 2015 were $0.1 million. No adjustments were necessary for the first quarter ended March 29, 2014. These adjustments were reflected in the computation of earnings per share using the two-class method.

5. FAIR VALUE MEASUREMENTS

FASB ASC Topic 820, Fair Value Measurements and Disclosures, provides guidance for defining, measuring, and disclosing fair value within an established framework and hierarchy. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs and to minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value within the hierarchy are as follows:

Level 1 – Quoted prices for identical assets and liabilities in active markets;

Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of April 4, 2015 and January 3, 2015, the assets measured at fair value on a recurring basis were as set forth in the table below.

(In millions)	April 4, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	3.1	$	3.1	$	—	$	—
	January 3, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	5.4	$	5.4	$	—	$	—

The Company's Level 1 assets consist of cash equivalents which are generally comprised of foreign bank guaranteed certificates of deposit.

Total debt, including current maturities, have carrying amounts of $245.8 million and $177.2 million and estimated fair values of $259.7 million and $191.1 million as of April 4, 2015 and January 3, 2015, respectively. The fair value assumed floating rate debt was valued at par. In the absence of quoted prices in active markets, considerable judgment is required in developing estimates of fair value. Estimates are not necessarily indicative of the amounts the Company could realize in a current market transaction. In determining the fair value of its debt, the Company uses estimates based on rates currently available to the Company for debt with similar terms and remaining maturities. Accordingly, the fair value of debt is classified as Level 2 within the valuation hierarchy.

As of April 4, 2015, the Company had $2.0 million of assets held for sale recorded at carrying value in the Water Systems segment relating to a facility in Brazil.

6. FINANCIAL INSTRUMENTS

The Company’s deferred compensation stock program is subject to variable plan accounting and, accordingly, is adjusted for changes in the Company’s stock price at the end of each reporting period. During February 2014, the Company entered into a share swap transaction agreement ("the swap") to mitigate the Company’s exposure to these fluctuations in the Company's stock price. The Company renewed the swap agreement in February 2015. The swap was not designated as a hedge for accounting purposes and is cancellable with 30 days written notice by either party. The swap has a notional value based on

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147,750 shares. For the first quarters ended April 4, 2015 and March 29, 2014, the swap resulted in losses of $0.1 million and $0.2 million, respectively. All gains or losses and expenses related to the swap are recorded in the Company's condensed consolidated statements of income within the “Selling, general, and administrative expenses” line.

7. OTHER ASSETS

The Company has equity interests in various companies for strategic purposes. The investments are accounted for under the equity method and are included in the “Other assets” line on the Company’s condensed consolidated balance sheet. The carrying amount of the investments are adjusted for the Company's proportionate share of earnings, losses, and dividends. The investments are not considered material to the Company’s financial position, neither individually nor in the aggregate. The Company’s proportionate share of earnings from its equity interests, included in the "Other income, net" line of the Company's condensed consolidated statements of income, was immaterial for the first quarters ended April 4, 2015 and March 29, 2014.

8. GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying amounts of the Company’s intangible assets are as follows:

(In millions)	April 4, 2015					January 3, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangibles:
Patents	$	7.5	$	(6.1	)	$	7.6	$	(6.1	)
Supply agreements	4.4		(4.4		)	4.4		(4.4		)
Technology	7.5		(4.4		)	7.5		(4.3		)
Customer relationships	137.1		(37.6		)	140.2		(36.5		)
Software	2.7		(1.7		)	2.9		(1.7		)
Other	1.0		(1.0		)	1.2		(1.2		)
Total	$	160.2	$	(55.2	)	$	163.8	$	(54.2	)
Unamortized intangibles:
Trade names	48.5		—			50.7		—
Total intangibles	$	208.7	$	(55.2	)	$	214.5	$	(54.2	)

Changes in carrying values for intangible assets are primarily attributed to the impact of foreign exchange for the first quarter ended April 4, 2015.

Amortization expense related to intangible assets for the first quarters ended April 4, 2015 and March 29, 2014 was $2.2 million and $2.0 million, respectively.

Amortization expense for each of the five succeeding years is projected as follows:

(In millions)	2015		2016		2017		2018		2019
	$	8.7	$	8.7	$	8.5	$	8.5	$	8.2

The change in the carrying amount of goodwill by reporting segment for the first quarter ended April 4, 2015, is as follows:

(In millions)
	Water Systems			Fueling Systems			Consolidated
Balance as of January 3, 2015	$	145.3		$	63.5		$	208.8
Acquisitions	0.1			—			0.1
Foreign currency translation	(4.6		)	(0.2		)	(4.8		)
Balance as of April 4, 2015	$	140.8		$	63.3		$	204.1

9. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of April 4, 2015, the Company maintained two domestic pension plans and three German pension plans. The Company used a January 3, 2015 measurement date for these plans. One of the Company's domestic pension plans covers two management employees, while the other domestic plan covers all other eligible employees. The two domestic and three German plans collectively comprise the 'Pension Benefits' disclosure caption.

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Other Benefits - The Company's other postretirement benefit plan provides health and life insurance to domestic employees hired prior to 1992.

The following table sets forth the aggregated net periodic benefit cost for all pension and postretirement plans for the first quarters ended April 4, 2015 and March 29, 2014, respectively:

(In millions)	Pension Benefits						Other Benefits
	First Quarter Ended						First Quarter Ended
	April 4, 2015			March 29, 2014			April 4, 2015		March 29, 2014
Service cost	$	0.3		$	0.3		$	—	$	—
Interest cost	1.8			2.0			0.1		0.1
Expected return on assets	(2.5		)	(2.6		)	—		—
Amortization of prior service cost	—			—			0.1		0.1
Amortization of loss	0.8			0.6			0.1		—
Net periodic benefit cost	$	0.4		$	0.3		$	0.3	$	0.2
Settlement cost	0.3			0.2			—		—
Total net periodic benefit cost	$	0.7		$	0.5		$	0.3	$	0.2

In the first quarter ended April 4, 2015, the Company made contributions of $0.8 million to the funded plans. The amount of contributions to be made to the plans during the calendar year 2015 will be finalized September 15, 2015, based upon the plan's year-end valuation at January 3, 2015, and the funding level required for the plan year ended January 3, 2015.

10. INCOME TAXES

The effective tax rate continues to be lower than the U.S. statutory rate of 35.0 percent primarily due to the indefinite reinvestment of foreign earnings taxed at rates below the U.S. statutory rate, recognition of U.S and foreign tax credits and discrete items in the quarter.  The Company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its operations as well as cash on hand and available credit. In addition, the Company redeemed the minority shareholdings of a subsidiary during the first quarter. This transaction resulted in the recording of tax benefits in the first quarter of $7.3 million from the reversal of related deferred tax liabilities along with an additional $1.0 million current benefit related to the gain of the mandatory share purchase liability included in the "Other income, net" line in the Company’s condensed consolidated statements of income.

11. DEBT

Debt consisted of the following:

(In millions)	April 4, 2015			January 3, 2015
Prudential Agreement - 5.79 percent	$	150.0		$	150.0
Tax increment financing debt	23.2			23.7
Revolver	69.9			—
Capital leases	0.6			0.6
Foreign subsidiary debt	2.7			3.5
	246.4			177.8
Less current maturities	(103.2		)	(34.1		)
Long-term debt	$	143.2		$	143.7

During the first quarter ended April 4, 2015, a portion of the Revolver borrowing (the "Credit Agreement") was used for working capital needs.

On May 5, 2015, the Company executed the following agreements:  Amendment No. 6 to the Prudential Agreement; Amendment No. 3 to the Credit Agreement; and Amendment No. 1 to the Bond Purchase and Loan Agreement. Each of those agreements provides for debt repayment guarantees from certain Company subsidiaries and waives certain non-financial covenants related to subsidiary guarantees.

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The following debt payments are expected to be paid in accordance with the following schedule:

(In millions)	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More Than 5 Years
Debt	$	245.8	$	102.9	$	31.1	$	31.1	$	31.4	$	31.1	$	18.2
Capital leases	0.6		0.3		0.1		0.1		0.1		—		—
	$	246.4	$	103.2	$	31.2	$	31.2	$	31.5	$	31.1	$	18.2

12. EARNINGS PER SHARE

The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company's participating securities consist of share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders.

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table sets forth the computation of basic and diluted earnings per share:

	First Quarter Ended
(In millions, except per share amounts)	April 4, 2015		March 29, 2014
Numerator:
Net income attributable to Franklin Electric Co., Inc.	$	19.8	$	17.0
Less: Undistributed earnings allocated to participating securities	0.2		0.3
Less: Undistributed earnings allocated to redeemable noncontrolling interest	0.1		—
	$	19.5	$	16.7
Denominator:
Basic
Weighted average common shares	47.6		47.7
Diluted
Effect of dilutive securities:
Non-participating employee incentive stock options and performance awards	0.5		0.6
Adjusted weighted average common shares	48.1		48.3
Basic earnings per share	$	0.41	$	0.35
Diluted earnings per share	$	0.41	$	0.35
Anti-dilutive stock options	0.2		—

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13. EQUITY ROLL FORWARD

The schedule below sets forth equity changes in the first quarter ended April 4, 2015:

(In thousands)	Common Stock			Additional Paid in Capital		Retained Earnings			Minimum Pension Liability			Cumulative Translation Adjustment			Noncontrolling Interest			Total Equity			Redeemable Noncontrolling Interest
Balance as of January 3, 2015	$	4,759		$	207,446	$	492,548		$	(56,124	)	$	(51,789	)	$	2,143		$	598,983		$	6,420
Net income						19,795									150			19,945			31
Adjustment to Impo redemption value						(81		)										(81		)	81
Dividends on common stock						(4,283		)										(4,283		)
Common stock issued	5			878														883
Common stock repurchased or received for stock options exercised	(6		)			(2,282		)										(2,288		)
Share-based compensation	5			2,349														2,354
Tax benefit of stock options exercised				514														514
Currency translation adjustment												(27,531		)	(154		)	(27,685		)	(197		)
Pension liability, net of tax									654									654
Balance as of April 4, 2015	$	4,763		$	211,187	$	505,697		$	(55,470	)	$	(79,320	)	$	2,139		$	588,996		$	6,335

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14. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Changes in accumulated other comprehensive income/(loss) by component for the first quarters ended April 4, 2015 and March 29, 2014, are summarized below:

(In millions)
For the first quarter ended April 4, 2015:	Foreign Currency Translation Adjustments			Pension and Post-Retirement Plan Benefit Adjustments				Total
Balance as of January 3, 2015	$	(51.8	)	$	(56.1	)		$	(107.9	)
Other comprehensive income/(loss) before reclassifications:
Pre-tax income/(loss)	(27.8		)	—				(27.8		)
Income tax expense	—			—				—
Other comprehensive income/(loss) before reclassifications, net of income taxes	(27.8		)	—				(27.8		)
Amounts reclassified from accumulated other comprehensive income/(loss):
Pre-tax income	—			1.0			(1)	1.0
Income tax expense	—			(0.4		)		(0.4		)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	—			0.6				0.6
Net current period other comprehensive income/(loss), net of income taxes	(27.8		)	0.6				(27.2		)
Other comprehensive income/(loss) attributable to noncontrolling interest	(0.3		)	—				(0.3		)
Balance as of April 4, 2015	$	(79.3	)	$	(55.5	)		$	(134.8	)
For the first quarter ended March 29, 2014:
Balance as of December 28, 2013	$	(16.0	)	$	(38.7	)		$	(54.7	)
Other comprehensive income/(loss) before reclassifications:
Pre-tax income/(loss)	2.1			—				2.1
Income tax expense	—			—				—
Other comprehensive income/(loss) before reclassifications, net of income taxes	2.1			—				2.1
Amounts reclassified from accumulated other comprehensive income/(loss):
Pre-tax income	—			0.7			(1)	0.7
Income tax expense	—			(0.3		)		(0.3		)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	—			0.4				0.4
Net current period other comprehensive income/(loss), net of income taxes	2.1			0.4				2.5
Other comprehensive income/(loss) attributable to noncontrolling interest	(0.3		)	—				(0.3		)
Balance as of March 29, 2014	$	(13.6	)	$	(38.3	)		$	(51.9	)

(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 9 for additional details) and is included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income.

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15. SEGMENT INFORMATION

Financial information by reportable business segment is included in the following summary:

	First Quarter Ended
(In millions)	April 4, 2015			March 29, 2014
	Net sales to external customers
Water Systems	$	179.2		$	184.6
Fueling Systems	46.5			46.8
Other	—			—
Consolidated	$	225.7		$	231.4
	First Quarter Ended
	April 4, 2015			March 29, 2014
	Operating income (loss)
Water Systems	$	19.4		$	29.2
Fueling Systems	9.6			9.1
Other	(13.1		)	(12.3		)
Consolidated	$	15.9		$	26.0
	April 4, 2015			January 3, 2015
	Total assets
Water Systems	$	761.6		$	757.5
Fueling Systems	251.6			252.7
Other	67.6			65.7
Consolidated	$	1,080.8		$	1,075.9

Property, plant, and equipment is the major asset group in "Other" of total assets at April 4, 2015 and January 3, 2015.

16. COMMITMENTS AND CONTINGENCIES    

In August 2010, the California Air Resources Board (“CARB”) and South Coast Air Quality Management District (“SCAQMD”) filed civil complaints in the Los Angeles Superior Court against the Company and Franklin Fueling Systems, Inc.  The complaints related to a third-party-supplied component part of the Company's Healy 900 Series nozzle, which is part of the Company's Enhanced Vapor Recovery (“EVR”) Systems installed in California gasoline filling stations.  This part, a diaphragm, was the subject of a retrofit during the first half of 2008.  As the Company previously reported, in October 2008 CARB issued a Notice of Violation to the Company alleging that the circumstances leading to the retrofit program violated California statutes and regulations.

The claims in the complaints mirrored those that CARB presented to the Company in the Notice of Violation, and included claims that the Company negligently and intentionally sold nozzles with a modified diaphragm without required CARB certification. Those complaints were consolidated into one case in the Superior Court of California, County of Los Angeles (People of the State of California vs. Franklin Fueling Systems, Inc. et al.) which was tried in the later part of December 2012 and early part of January 2013 (“CARB Case”).

On July 25, 2013, the Court issued a Final Statement of Decision (“Decision”) in the CARB Case.  In its Decision, the Court found on behalf of the Company and issued a complete defense verdict.  Judgment was entered on August 27, 2013.  An Amended Judgment awarding the Company $0.1 million in costs was entered by the Court on January 22, 2014. On July 16, 2014, CARB appealed and filed its brief in support of the appeal. The Company filed its response brief on December 23, 2014 and CARB filed its reply brief on February 2, 2015. The case is now with the California Court of Appeals to either make a ruling on these briefs or schedule an oral argument. The Company has not been notified regarding the status of this matter at this time.

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Neither of these suits has had any effect on CARB's certification of the Company's EVR System or any other products of the Company or its subsidiaries, and did not interfere with continuing sales.  CARB has never decertified the Company's EVR System and has never proposed to do so.

The Company is defending various other claims and legal actions, including environmental matters, which have arisen in the

ordinary course of business. In the opinion of management, based on current knowledge of the facts and after discussion with

counsel, these claims and legal actions can be successfully defended or resolved without a material adverse effect on the

Company’s financial position, results of operations, and net cash flows.

At April 4, 2015, the Company had $12.0 million of commitments primarily for capital expenditures and purchase of raw materials to be used in production.

The Company provides warranties on most of its products. The warranty terms vary but are generally 2 years from date of manufacture or 1 year from date of installation. In 2007, the Company began offering an extended warranty program to certain Water Systems customers which provides warranty coverage up to 5 years from date of manufacture. 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 actions 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.

The changes in the carrying amount of the warranty accrual, as recorded in the "Accrued expenses and other current liabilities" line of the Company's condensed consolidated balance sheet for the first quarter ended April 4, 2015, are as follows:

(In millions)
Balance as of January 3, 2015	$	9.4
Accruals related to product warranties	1.4
Reductions for payments made	(2.1		)
Balance as of April 4, 2015	$	8.7

17. SHARE-BASED COMPENSATION

The Company maintains the Franklin Electric Co., Inc. 2012 Stock Plan (the "2012 Stock Plan"), which is a stock-based compensation plan that provides for discretionary grants of stock options, stock awards, and stock unit awards to key employees and non-employee directors.

The 2012 Stock Plan authorizes 2,400,000 shares for issuance as follows:

2012 Stock Plan	Authorized Shares
Stock Options	1,680,000
Stock/Stock Unit Awards	720,000

The Company also maintains the Amended and Restated Franklin Electric Co., Inc. Stock Plan (the "2009 Stock Plan") which, as amended in 2009, provided for discretionary grants of stock options and stock awards. The 2009 Stock Plan authorized 4,400,000 shares for issuance as follows:

2009 Stock Plan	Authorized Shares
Stock Options	3,200,000
Stock Awards	1,200,000

All options in the 2009 Stock Plan have been awarded.

The Company currently issues new shares from its common stock balance to satisfy option exercises and the settlement of stock awards and stock unit awards made under the 2009 Stock Plan and/or the 2012 Stock Plan.

Stock Options:

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The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model with a single approach and amortized using a straight-line attribution method over the option’s vesting period.

The assumptions used for the Black-Scholes model to determine the fair value of options granted during the first quarters ended April 4, 2015 and March 29, 2014, are as follows:

	April 4, 2015		March 29, 2014
Risk-free interest rate	1.59	%	1.68	%
Dividend yield	0.95	%	0.70	%
Volatility factor	0.379		0.387
Expected term	5.5 years		5.6 years
Forfeiture rate	3.67	%	3.81	%

There were 184,706 and 92,946 stock options granted during the first quarters ended April 4, 2015 and March 29, 2014.

A summary of the Company’s outstanding stock option activity and related information for the first quarters ended April 4, 2015 and March 29, 2014, is as follows:

(Shares in thousands)	April 4, 2015				March 29, 2014
Stock Options	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at beginning of period	1,397		$	21.17	1,476		$	19.01
Granted	185		36.67		93		43.27
Exercised	(46	)	19.36		(34	)	18.57
Forfeited	—		—		(2	)	26.95
Outstanding at end of period	1,536		$	23.09	1,533		$	20.48
Expected to vest after applying forfeiture rate	1,511		$	22.86	1,511		$	20.31
Vested and exercisable at end of period	1,124		$	18.75	1,070		$	16.34

A summary of the weighted-average remaining contractual term and aggregate intrinsic value for the first quarter ended April 4, 2015 is as follows:

	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Outstanding at end of period	5.87 years	$	23,421
Expected to vest after applying forfeiture rate	5.82 years	$	23,365
Vested and exercisable at end of period	4.77 years	$	21,781

The total intrinsic value of options exercised was $0.8 million during the first quarters ended April 4, 2015 and March 29, 2014.

As of April 4, 2015, there was $2.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to stock options granted under the 2012 Stock Plan and the 2009 Stock Plan. That cost is expected to be recognized over a weighted-average period of 3.03 years.

Stock/Stock Unit Awards:

A summary of the Company’s restricted stock/stock unit award activity and related information for the first quarters ended April 4, 2015 and March 29, 2014, is as follows:

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(Shares in thousands)	April 4, 2015				March 29, 2014
Stock/Stock Unit Awards	Shares		Weighted-Average Grant- Date Fair Value		Shares		Weighted-Average Grant- Date Fair Value
Non-vested at beginning of period	554		$	32.72	551		$	24.75
Awarded	120		36.67		172		43.37
Vested	(74	)	25.01		(110	)	15.75
Forfeited	—		—		(56	)	27.81
Non-vested at end of period	600		$	34.47	557		$	31.96

As of April 4, 2015, there was $11.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to stock/stock unit awards granted under the 2012 Stock Plan and the 2009 Stock Plan.  That cost is expected to be recognized over a weighted-average period of 2.70 years.

18. RESTRUCTURING

On July 1, 2014, the Company announced a plan to close its Wittlich, Germany manufacturing facility. As part of this action, the Company will transfer the existing Wittlich manufacturing activity to its Brno, Czech Republic facility. The Company will maintain its European Water Systems headquarters and distribution center in Wittlich, only the manufacturing operations will be relocating. The realignment began in the third quarter of 2014 and is estimated to conclude by the end of 2016. Charges for the realignment are expected to be approximately $19.4 million and will include severance expenses, professional service fees, asset write-offs, and temporarily leased facilities costs.

Costs incurred in the first quarter ended April 4, 2015, included in the “Restructuring expense” line of the Company's condensed consolidated statements of income, are as follows:

	First Quarter Ended
	April 4, 2015
(In millions)	Water Systems		Fueling Systems		Other		Consolidated
Employee severance	$	—	$	0.2	$	—	$	0.2
Equipment relocation	0.1		—		—		0.1
Other	0.2		—		—		0.2
Total	$	0.3	$	0.2	$	—	$	0.5

Restructuring expenses, relating primarily to severance for the first quarter ended March 29, 2014, were approximately $0.1 million.

As of April 4, 2015, there was $6.4 million in restructuring reserves primarily for severance. As of March 29, 2014, there were no restructuring reserves.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

First Quarter 2015 vs. First Quarter 2014

OVERVIEW

Sales in the first quarter of 2015 decreased from the first quarter last year.  The sales decrease was primarily due to the negative impact of foreign currency translation. The Company's consolidated gross profit was $71.5 million for the first quarter of 2015, a decrease of $6.6 million or about 8 percent from the prior year’s first quarter. The gross profit as a percent of net sales decreased 210 basis points to 31.7 percent in 2015 from 33.8 percent in first quarter of 2014. Reported earnings per share of $0.41 were positively impacted by the purchase of the remaining minority shares of Pioneer Pump that was completed in the quarter and resulted in the realization of certain tax benefits and other income.

RESULTS OF OPERATIONS

Net Sales

Net sales in the first quarter of 2015 were $225.7 million, a decrease of $5.7 million or about 2 percent compared to 2014 first quarter sales of $231.4 million.  The incremental impact of sales from acquired businesses was $8.9 million or about 4 percent.  Sales revenue decreased by $16.5 million or about 7 percent in the first quarter of 2015 due to foreign currency translation. The sales change in the first quarter of 2015, excluding acquisitions and foreign currency translation, was an increase of $1.9 million or about 1 percent.

	Net Sales
(In millions)	Q1 2015		Q1 2014		2015 v 2014
Water Systems	$	179.2	$	184.6	$	(5.4	)
Fueling Systems	46.5		46.8		(0.3		)
Consolidated	$	225.7	$	231.4	$	(5.7	)

Net Sales-Water Systems

Water Systems revenues were $179.2 million in the first quarter 2015, a decrease of $5.4 million or about 3 percent versus the first quarter 2014 sales of $184.6 million. Sales from businesses acquired since the first quarter of 2014 were $8.8 million or about 5 percent. Water Systems sales were reduced by $13.8 million or about 8 percent in the quarter due to foreign currency translation. Water Systems sales were flat, excluding acquisitions and foreign currency translation, in the first quarter of 2015 versus the first quarter of 2014.

Water Systems sales in the U.S. and Canada represented 35 percent of consolidated sales and declined by about 10 percent compared to the prior year. Water Systems sales were reduced by $1.1 million or about 1 percent in the quarter due to foreign currency translation. Sales of mobile pumping equipment in the U.S. and Canada declined by about 50 percent in the first quarter of 2015 compared to the prior year first quarter due primarily to reduced demand in the oil and gas end markets. Sales of ground water pumping equipment declined by 6 percent and sales of surface water pumping equipment increased by about 4 percent in the U.S. and Canada compared to the first quarter 2014.

Water Systems sales in Latin America were about 16 percent of consolidated sales for the first quarter and grew by about 21 percent compared to the first quarter of the prior year. Sales from businesses acquired since the first quarter of 2014 were $6.3 million or about 21 percent. Water Systems sales were reduced by $4.8 million or about 16 percent in the quarter due to foreign currency translation. Excluding acquisitions and the impact of foreign currency translation, Latin American sales increased by about 16 percent compared to the first quarter 2014. The strong growth in sales was led by a 45 percent increase in sales in Mexico and continued double digit sales growth in Brazil.

Water Systems sales in the Middle East and Africa were about 12 percent of consolidated sales and decreased by about 3 percent compared to the first quarter 2014. Water Systems sales were reduced by about 7 percent in the quarter due to foreign currency translation. Excluding the impact of foreign currency translation, sales increased by about 4 percent compared to the first quarter 2014. The growth was driven by strong sales of groundwater pumping equipment sold under both the Impo and Franklin Electric brand names in Central and Southern Africa as well as Turkey, offset by weakness in North Africa and the Middle East due to increased political unrest.

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Water Systems sales in the Asia Pacific region were 8 percent of consolidated sales and were up about 4 percent compared to the first quarter prior year. Sales from businesses acquired since the first quarter of 2014 were $2.5 million or about 14 percent. Asia Pacific sales were reduced by about 4 percent in the quarter due to foreign currency translation. Excluding acquisitions and the impact of foreign currency translation, Asia Pacific sales decreased by about 5 percent compared to the first quarter 2014. The Asia Pacific region experienced a slowdown of sales in several end markets as customers deferred purchases due to the higher cost of U.S. dollar sourced product that resulted from the strengthening of the U.S. dollar against local currencies.

Water Systems sales in Europe were about 8 percent of consolidated sales and decreased by about 11 percent compared to the first quarter 2014. The impact of foreign currency translation decreased sales by about 26 percent compared to the first quarter 2014. Excluding the impact of foreign currency translation, European sales were up about 15 percent to the first quarter 2014 due to strong motor and pump sales.

Net Sales-Fueling Systems

Fueling Systems sales were $46.5 million in the first quarter 2015, a decrease of $0.3 million or about 1 percent versus the first quarter 2014 sales of $46.8 million. Sales from businesses acquired since the first quarter of 2014 were $0.1 million. Fueling Systems sales were decreased by $2.7 million or 6 percent in the quarter due to foreign currency translation. Fueling Systems sales growth, excluding acquisitions and foreign currency translation, was about 5 percent. Fueling Systems sales growth was primarily from fuel management systems and pressure pumping systems partially offset by a decline in sales of dispensing systems and storage tanks.

Cost of Sales

Cost of sales as a percentage of net sales for the first quarters of 2015 and 2014 was 68.3 percent and 66.2 percent, respectively. Correspondingly, the gross profit margin decreased to 31.7 percent from 33.8 percent, a 210 basis point decline. The Company’s consolidated gross profit was $71.5 million for the first quarter of 2015, a decrease of $6.6 million, or about 8 percent, from the first quarter of 2014 gross profit of $78.1 million. The gross profit decrease was primarily due to foreign currency translation and reduced sales of Pioneer branded equipment for the oil and gas industry. Additionally, gross profit decreased due to higher fixed cost and higher raw material costs due to the increased cost of U.S. dollar sourced products in advance of offsetting price increases, partially offset by lowered direct labor and variable costs.

Selling, General, and Administrative (“SG&A”)

Selling, general, and administrative (SG&A) expenses were $55.2 million in the first quarter of 2015 compared to $52.0 million in the first quarter of prior year, an increase of $3.2 million or about 6 percent. The increase in SG&A expenses from acquired businesses was $2.0 million. Excluding the acquisitions, the Company’s overall SG&A expenses in the first quarter of 2015 increased by $1.2 million or about 2 percent to prior year first quarter.

Restructuring Expenses

Restructuring expenses for the first quarter of 2015 were $0.5 million or about $0.01 impact on diluted earnings per share. Restructuring expenses were primarily for the continuing European manufacturing realignment started by the Company last year and include severance expenses and other miscellaneous manufacturing realignment activities. Restructuring expenses for the first quarter of 2014 were $0.1 million and had no impact on diluted earnings per share. Restructuring expenses were primarily severance expenses and other miscellaneous manufacturing realignment activities.

Operating Income

Operating income was $15.9 million in the first quarter of 2015, down $10.1 million or about 39 percent from $26.0 million in the first quarter of 2014.

	Operating income (loss)
(In millions)	Q1 2015			Q1 2014			2015 v 2014
Water Systems	$	19.4		$	29.2		$	(9.8	)
Fueling Systems	9.6			9.1			0.5
Other	(13.1		)	(12.3		)	(0.8		)
Consolidated	$	15.9		$	26.0		$	(10.1	)

There were specific items in the first quarters of 2015 and 2014 that impacted operating income that were not operational in

22

nature.  In the first quarter of 2015, there were two such items: $0.5 million of restructuring charges and $0.3 million in higher pension cost related to a CEO who retired in May 2014. In the first quarter of 2014, there were two such items: $0.1 million of restructuring charges and $0.1 million for acquisition related activities.

The Company refers to these items as “non-GAAP adjustments” for purposes of presenting the non-GAAP financial measures of operating income after non-GAAP adjustments and percent operating income to net sales after non-GAAP adjustments to net sales (operating income margin after non-GAAP adjustments).  The Company believes this information helps investors understand underlying trends in the Company's business more easily.  The differences between these non-GAAP financial measures and the most comparable GAAP measures are reconciled in the following tables:

Operating Income and Margins
Before and After Non-GAAP Adjustments
(In millions)	For the First Quarter 2015
	Water			Fueling			Other			Consolidated
Reported Operating Income	$	19.4		$	9.6		$	(13.1	)	$	15.9
% Operating Income To Net Sales	10.8		%	20.6		%				7.0		%
Non-GAAP Adjustments:
Restructuring	$	0.3		$	0.2		$	—		$	0.5
Non-GAAP	$	—		$	—		$	0.3		$	0.3
Operating Income after Non-GAAP Adjustments	$	19.7		$	9.8		$	(12.8	)	$	16.7
% Operating Income to Net Sales after Non-GAAP Adjustments (Operating Income Margin after Non-GAAP Adjustments)	11.0		%	21.1		%				7.4		%
	For the First Quarter 2014
	Water			Fueling			Other			Consolidated
Reported Operating Income	$	29.2		$	9.1		$	(12.3	)	$	26.0
% Operating Income To Net Sales	15.8		%	19.4		%				11.2		%
Non-GAAP Adjustments:
Restructuring	$	0.1		$	—		$	—		$	0.1
Non-GAAP	$	—		$	0.1		$	—		$	0.1
Operating Income after Non-GAAP Adjustments	$	29.3		$	9.2		$	(12.3	)	$	26.2
% Operating Income to Net Sales after Non-GAAP Adjustments (Operating Income Margin after Non-GAAP Adjustments)	15.9		%	19.7		%				11.3		%

Operating Income-Water Systems

Water Systems operating income, after non-GAAP adjustments, was $19.7 million in the first quarter 2015, down $9.6 million versus the first quarter 2014. The first quarter operating income margin after non-GAAP adjustments was 11.0 percent, down 490 basis points from 15.9 percent in the first quarter of 2014. Operating income after non-GAAP adjustments decreased in Water Systems primarily due to foreign currency translation and reduced sales of Pioneer branded equipment for the oil and gas industry. The strengthening U.S. dollar also lowered margins in foreign business units due to the increased cost of U.S. dollar sourced products in advance of offsetting price increases. Additionally, higher promotional activity in the U.S. contributed to the decline in operating income and operating margins.

Operating Income-Fueling Systems

Fueling Systems operating income after non-GAAP adjustments was a record $9.8 million in the first quarter of 2015 compared to $9.2 million after non-GAAP adjustments in the first quarter of 2014, an increase of about 7 percent. The first quarter operating income margin after non-GAAP adjustments was 21.1 percent, an increase of 140 basis points from the 19.7 percent of net sales in the first quarter of 2014. The increase was driven by a positive product sales mix.

Operating Income-Other

23

Operating income-other is composed primarily of unallocated general and administrative expenses.  

Interest Expense

Interest expense for the first quarters of 2015 and 2014 was $2.7 million and $2.8 million, respectively.

Other Income or Expense

Other income or expense was income of $3.0 million in the first quarter of 2015 and income of $0.3 million in the first quarter of 2014.  Included in other income in the first quarter of 2015 was interest income of $0.2 million, primarily derived from the investment of cash balances in short-term securities. The Company also realized a gain on the settlement of the share purchase liability related to Pioneer Pump in the first quarter of this year of about $2.7 million. Included in other income in the first quarter of 2014 was interest income of $0.4 million, primarily derived from the investment of cash balances in short-term securities.

Foreign Exchange

Foreign currency-based transactions produced a gain of $0.4 million for the first quarter of 2015, primarily due to the euro.  Foreign currency-based transactions produced a loss of $0.4 million for the first quarter of 2014, primarily due to the Canadian dollar.  

Income Taxes

The provision for income taxes in the first quarters of 2015 and 2014 was a credit of $(3.4) million and expense of $5.7 million, respectively. The effective tax rate for the first quarter of 2015 was about negative 20 percent and, before the impact of discrete events, was about 27 percent. Discrete adjustments during the first quarter of 2015 were the reversal of a deferred tax liability created in 2012 when the Company acquired the controlling interest in the Pioneer subsidiary and realized a gain on the then equity investment in Pioneer. This first quarter tax benefit of about $4.8 million was treated as a non-GAAP adjustment. Because in 2012, the gain was treated as a non-GAAP adjustment, the Company is now consistently treating the reversal of the tax liability related to that gain as a non-GAAP adjustment and reducing reported Earnings per Share in the first quarter of 2015 by $0.10 cents. The Company also realized a gain on the settlement of the share purchase liability in the first quarter of this year of about $2.7 million which is included in ‘Other income’. The transaction to acquire the remaining minority shares of Pioneer Pump also resulted in other tax benefits of about $2.5 million, which were expensed through the Company’s earnings in prior years as well as a current period tax benefit of about $1.0 million related to the 2015 gain. The Company’s tax rate as a percentage of pre-tax earnings for the second quarter of 2015 is projected to be about 27 percent, flat to the second quarter of 2014 tax rate, before discrete adjustments. The projected tax rate is lower than the statutory rate of 35 percent primarily due to the indefinite reinvestment of foreign earnings and reduced taxes on foreign and repatriated earnings after the restructuring of certain foreign entities. The Company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its other operations, current cash on hand, and available credit.

Net Income

Net income for the first quarter of 2015 was $20.0 million compared to the prior year first quarter net income of $17.4 million.  Net income attributable to Franklin Electric Co., Inc. for the first quarter of 2015 was $19.8 million, or $0.41 per diluted share, compared to the prior year first quarter net income attributable to Franklin Electric Co., Inc. of $17.0 million or $0.35 per diluted share. Earnings after non-GAAP adjustments for the first quarter of 2015 were $15.2 million, or $0.32 per diluted share, compared to the prior year first quarter earnings after non-GAAP adjustments of $16.9 million or $0.35 per diluted share.

There were specific items in the first quarters of 2015 and 2014 that impacted net income attributable to Franklin Electric Co., Inc. that were not operational in nature.  The Company refers to these items as “non-GAAP adjustments” for purposes of presenting the non-GAAP financial measures of earnings after non-GAAP adjustments and adjusted EPS.  The Company believes this information helps investors understand underlying trends in the Company's business more easily.  The differences between these non-GAAP financial measures and the most comparable GAAP measures are reconciled in the following tables:

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Earnings Before and After Non-GAAP Adjustments	For the First Quarter Ended
(In millions)	2015			2014			Change
Net Income attributable to Franklin Electric Co., Inc. Reported	$	19.8		$	17.0		16	%
Allocated Undistributed Earnings	$	(0.3	)	$	(0.3	)
Adjusted Earnings for EPS Calculations	$	19.5		$	16.7		17	%
Non-GAAP adjustments, before tax:
Restructuring	$	0.5		$	0.1
Non-GAAP items	$	0.3		$	0.1
Pioneer tax benefits on equity gain	$	(4.8	)	$	—
Non-GAAP adjustments, net of tax:
Restructuring	$	0.3		$	0.1
Non-GAAP items	$	0.2		$	0.1
Pioneer tax benefits on equity gain	$	(4.8	)	$	—
Net Income attributable to Franklin Electric Co., Inc. after Non-GAAP Adjustments (Adjusted Net Income)	$	15.2		$	16.9		(10	)%

Earnings Per Share Before and After Non-GAAP Adjustments	For the First Quarter Ended
(In millions, except per share data)	2015			2014		Change
Average Fully Diluted Shares Outstanding	48.1			$	48.3	—	%
Fully Diluted Earnings Per Share ("EPS") Reported	$	0.41		$	0.35	17	%
Restructuring per Share, net of tax	$	0.01		$	—
Non-GAAP items	$	—		$	—
Pioneer tax benefits on equity gain	$	(0.10	)
Fully Diluted EPS after Non-GAAP Adjustments (Adjusted EPS)	$	0.32		$	0.35	(9	)%

CAPITAL RESOURCES AND LIQUIDITY

The Company's primary sources of liquidity are cash on hand, cash from operations, revolving credit agreement, and long-term debt funds available.

On December 31, 2012, the Company, Allen County, Indiana and certain institutional investors entered into a Bond Purchase and Loan Agreement. Under the agreement, Allen County, Indiana issued a series of Project Bonds entitled “Taxable Economic Development Bonds, Series 2012 (Franklin Electric Co., Inc. Project).” The aggregate principal amount of the Project Bonds that were issued and authenticated was limited to $25.0 million. Interest and principal balance of the Project Bonds are due and payable by the Company directly to the institutional investors in aggregate semi-annual installments commencing on July 10, 2013, and concluding on January 10, 2033.

The Company also has an amended and restated uncommitted note purchase and private shelf agreement (the “Prudential Agreement”) in the amount of $200.0 million, with $150.0 million of notes issued thereunder. The Company has scheduled principal payments under the Prudential Agreement beginning in 2015 at which time it amortizes for 5 years at an amount of $30.0 million per year. As of April 4, 2015, the Company had $50.0 million borrowing capacity under the Prudential Agreement.

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In addition, the Company has a committed, unsecured, revolving credit agreement maturing on December 14, 2016 (the “Credit Agreement”) in the amount of $150.0 million. As of April 4, 2015, the Company had $75.1 million borrowing capacity under the Credit Agreement as $5.0 million in letters of commercial and standby letters of credit were outstanding and undrawn and $69.9 million of revolver borrowing was drawn and outstanding at the end of the quarter. There were no other outstanding borrowings as of April 4, 2015 on the Credit Agreement.

The Credit Agreement, the Prudential Agreement, and the Project Bonds contain customary affirmative and negative covenants. The affirmative covenants relate to financial statements, notices of material events, conduct of business, inspection of property, maintenance of insurance, compliance with laws and most favored lender obligations. The negative covenants include limitations on loans, advances and investments, and the granting of liens by the Company or its subsidiaries, as well as prohibitions on certain consolidations, mergers, sales and transfers of assets. The covenants also include financial requirements including a maximum leverage ratio of 3.50 to 1.00 and a minimum interest coverage ratio of 3.00 to 1.00. Cross default is applicable with the Credit Agreement, the Prudential Agreement, and the Project Bonds, but only if the Company is defaulting on an obligation exceeding $10.0 million. On May 5, 2015, the Company executed the following agreements:  Amendment No. 6 to the Prudential Agreement; Amendment No. 3 to the Credit Agreement; and Amendment No. 1 to the Bond  Purchase and Loan Agreement. Each of those agreements provides for debt repayment guarantees from certain Company subsidiaries and waives certain non-financial covenants related to subsidiary guarantees. The Company expects that ongoing requirements for operations, capital expenditures, pension obligations, dividends, and debt service will be adequately funded from cash on hand, operations, and existing credit agreements.

At April 4, 2015, the Company had $69.6 million of cash on hand at various locations worldwide. Approximately 29 percent of the cash and equivalents was in the U.S. and readily accessible. Approximately 39 percent was in Europe, and the remaining 32 percent was in South America, Asia Pacific, and other locations combined. On a regular basis the Company reviews international cash balances and, if appropriate based on forecasted expenditures and considerations for the post-tax economic efficiency, will reposition cash among its global entities. Cash investments worldwide are invested according to a written policy, and are generally in bank demand accounts and bank time deposits with the preservation of principal as the highest priority.

Net cash used by operating activities was $21.8 million for the first quarter ended April 4, 2015 compared to $35.4 million for the first quarter ended March 29, 2014. The reduction in cash used by operations during the first quarter of 2015 was primarily due to higher collections of outstanding receivables during the first quarter of 2015 compared to the first quarter of 2014. During the first quarter of 2015, the mandatory share purchase liability of $22.9 million for PPH was settled, resulting in a non-cash gain and reversal of certain deferred tax liabilities, also non-cash, both of which were adjustments to net income.

Net cash used in investing activities was $7.8 million for the first quarter ended April 4, 2015, compared to $9.0 million for the first quarter ended March 29, 2014. The decrease in cash used can be primarily attributed to decreased capital expenditures during the first quarter of 2015 compared to the first quarter of 2014.

Net cash provided by financing activities was $43.4 million for the first quarter ended April 4, 2015, compared to $11.4 million for the first quarter ended March 29, 2014. The increase in cash provided by financing activities in the first quarter of 2015 was primarily due to increased borrowings against the Credit Agreement to fund operating requirements and the payment for the PPH mandatory share purchase liability.

FACTORS THAT MAY AFFECT FUTURE RESULTS

This quarterly report on Form 10-Q contains certain forward-looking information, such as statements about the Company’s financial goals, acquisition strategies, financial expectations including anticipated revenue or expense levels, business prospects, market positioning, product development, manufacturing re-alignment, capital expenditures, tax benefits and expenses, and the effect of contingencies or changes in accounting policies. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may fluctuate,” “plan,” “goal,” “target,” “strategy,” and similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” While the Company believes that the assumptions underlying such forward-looking statements are reasonable based on present conditions, forward-looking statements made by the Company involve risks and uncertainties and are not guarantees of future performance. Actual results may differ materially from those forward-looking statements as a result of various factors, including regional or general economic and currency conditions, various conditions specific to the Company’s business and industry, new housing starts, weather conditions, market demand, competitive factors, changes in distribution channels, supply constraints, effect of price increases, raw material costs and availability, technology factors, integration of acquisitions, litigation, government and regulatory actions, the Company’s accounting policies, and other risks, all as described in the Company's Securities and Exchange Commission filings, included in Part I, Item 1A of the Company's Annual Report on

26

Form 10-K for the fiscal year ended January 3, 2015, and in Exhibit 99.1 thereto. Any forward-looking statements included in this Form 10-Q are based upon information presently available. The Company does not assume any obligation to update any forward-looking information, except as required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in the Company's exposure to market risk during the first quarter ended April 4, 2015. For additional information, refer to Part II, Item 7A of the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2015.

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 pursuant to Exchange Act Rule 13a-15. 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 were effective.

There have been no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 under the Exchange Act during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting.

27

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In August 2010, the California Air Resources Board (“CARB”) and South Coast Air Quality Management District (“SCAQMD”) filed civil complaints in the Los Angeles Superior Court against the Company and Franklin Fueling Systems, Inc.  The complaints related to a third-party-supplied component part of the Company's Healy 900 Series nozzle, which is part of the Company's Enhanced Vapor Recovery (“EVR”) Systems installed in California gasoline filling stations.  This part, a diaphragm, was the subject of a retrofit during the first half of 2008.  As the Company previously reported, in October 2008 CARB issued a Notice of Violation to the Company alleging that the circumstances leading to the retrofit program violated California statutes and regulations.

The claims in the complaints mirrored those that CARB presented to the Company in the Notice of Violation, and included claims that the Company negligently and intentionally sold nozzles with a modified diaphragm without required CARB certification. Those complaints were consolidated into one case in the Superior Court of California, County of Los Angeles (People of the State of California vs. Franklin Fueling Systems, Inc. et al.) which was tried in the later part of December 2012 and early part of January 2013 (“CARB Case”).

On July 25, 2013, the Court issued a Final Statement of Decision (“Decision”) in the CARB Case.  In its Decision, the Court found on behalf of the Company and issued a complete defense verdict.  Judgment was entered on August 27, 2013.  An Amended Judgment awarding the Company $0.1 million in costs was entered by the Court on January 22, 2014. On July 16, 2014, CARB appealed and filed its brief in support of the appeal. The Company filed its response brief on December 23, 2014 and CARB filed its Reply brief on February 2, 2015. The case is now with the California Court of Appeals to either make a ruling on those briefs or schedule an oral agreement. The Company has not been notified regarding the status of this matter at this time.

Neither of these suits has had any effect on CARB's certification of the Company's EVR System or any other products of the Company or its subsidiaries, and did not interfere with continuing sales.  CARB has never decertified the Company's EVR System and has never proposed to do so.

ITEM 1A. RISK FACTORS

Additional Risks to the Company Additional risk factors are set forth in Part 1, Item 1A, in the Company’s annual report on Form 10-K for the fiscal year ended January 3, 2015. Additional risks and uncertainties, not presently known to the Company or currently deemed immaterial, could negatively impact the Company’s results of operations or financial condition in the future.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Issuer Repurchases of Equity Securities

In April 2007, the Company’s Board of Directors unanimously approved a plan to increase the number of shares remaining for

repurchase from 628,692 to 2,300,000 shares. There is no expiration date for this plan. The Company repurchased 50,500

shares for approximately $1.7 million under this plan during the first quarter of 2015. The maximum number of shares that may still be purchased under this plan as of April 4, 2015, is 819,193.

Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Number of Shares that may yet be Repurchased
January 4 - February 7	50,500	$	34.30	50,500	819,193
February 8 - March 7	—	$	—	—	819,193
March 8 -April 4	—	$	—	—	819,193
Total	50,500	$	34.30	50,500	819,193

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ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 6. EXHIBITS

Exhibits are set forth in the Exhibit Index located on page 32.

29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FRANKLIN ELECTRIC CO., INC.
		Registrant
Date: May 6, 2015	By	/s/ Gregg C. Sengstack
		Gregg C. Sengstack, President and Chief Executive Officer
		(Principal Executive Officer)
Date: May 6, 2015	By	/s/ John J. Haines
		John J. Haines
		Vice President and Chief Financial Officer and Secretary
		(Principal Financial and Accounting Officer)

30

FRANKLIN ELECTRIC CO., INC.

EXHIBIT INDEX TO THE QUARTERLY REPORT ON FORM 10-Q

FOR THE FIRST QUARTER ENDED APRIL 4, 2015

Number Description

3.1	Amended and Restated Articles of Incorporation of Franklin Electric Co., Inc. (incorporated by reference to the Company's Form 8-K filed on May 3, 2007)
3.2	Amended and Restated Bylaws of Franklin Electric Co., Inc. (incorporated by reference to the Company's Form 8-K filed on January 16, 2015)
10.1	Amendment No. 6 to the Second Amended and Restated Note Purchase and Private Shelf Agreement and Waiver, dated May 5, 2015, by and among the Company, The Prudential Insurance Company, Prudential Investment Management, Inc. and others identified therein (filed herewith)
10.2	$150,000,000 Second Amended and Restated Credit Agreement, dated December 14, 2011, between the Company, Franklin Electric B.V., JP Morgan Chase, N.A., as Administrative Agent, and the lenders identified therein (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K filed on December 15, 2011)
10.3	Amendment No. 2 to the Second Amended and Restated Credit Agreement, dated February 27, 2015, by and among the Company, Franklin Electric B.V., JPMorgan Chase, N.A., as Administrative Agent, and the lenders identified therein (incorporated by reference to Exhibit 10.42 of the Company's Form 10-K for the year ended January 3, 2015)
10.4	Amendment No. 3 to the Second Amended and Restated Credit Agreement, dated May 5, 2015, by and among the Company, Franklin Electric B.V., JPMorgan Chase, N.A., as Administrative Agent and the lenders identified therein (filed herewith)
10.5	Amendment No. 1 to Bond Purchase and Loan Agreement and Waiver, dated May 5, 2015, among the Company, The Board of Commissioners of the County of Allen, and the Bondholders referred to therein (filed herewith)
10.6	Stock Redemption Agreement, dated April 15, 2015, between the Company and Ms. Patricia Schaefer and Ms. Diane Humphrey (incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on April 20, 2015)
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
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase

31

EX-10.1

EXHIBIT 10.1

May 5, 2015

Franklin Electric Co., Inc.

9255 Coverdale Road

Fort Wayne, Indiana 46809

Re: Amendment No. 6 to Second Amended and Restated Note Purchase and Private Shelf Agreement and Waiver

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Note Purchase and Private Shelf Agreement dated as of September 9, 2004 (as amended from time to time prior to the date hereof, the “Note Agreement”), between Franklin Electric Co., Inc., an Indiana corporation (the “Company”), and Prudential Investment Management, Inc. and The Prudential Life Insurance Company (collectively, “Prudential”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Note Agreement, as amended hereby.

The Company has advised Prudential that an Event of Default exists under paragraph 7A(v) of the Note Agreement as a result of certain of the Company’s domestic Subsidiaries (namely, Franklin Control Systems, Inc., an Oregon corporation, Pioneer Pump Holdings, Inc., a Delaware corporation, Pioneer Pump, Inc., a Texas corporation, Franklin Electric Ventures, LLC, an Indiana limited liability company, Franklin Electric International, Inc., a Delaware corporation, Franklin Fueling Systems, Inc., an Indiana corporation, and Intelligent Controls, Inc., a Maine corporation (collectively, the “Bank Guarantors”)), granting guarantees to the lenders under the Second Amended and Restated Credit Agreement, dated as of December 14, 2011, among the Company, as U.S. Borrower, Franklin Electric B.V., as Dutch Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America and Wells Fargo Bank, National Association, as Co-Syndication Agents, and the Lender parties party thereto (the “Credit Agreement”) in violation of paragraphs 6B(1) and 6B(2) of the Note Agreement. In addition, the Company has advised Prudential that an Event of Default exists under paragraph 7A(iii) with respect to (x) the defaults under the Credit Agreement and the Bond Purchase and Loan Agreement (as defined below) solely resulting from the violation of paragraphs 6B(1) and 6B(2) of the Note Agreement, and (y) the default under the Bond Purchase and Loan Agreement (as defined below) solely resulting from the violation of Section 5.1 (which incorporates into such agreement paragraphs 6B(1) and 6B(2) (among others) of the Note Agreement and which violations relate to such provisions) of the Bond Purchase and Loan Agreement (such Events of Default, the “Existing Events of Default”). The Company has requested that Prudential waive the Existing Events of Default. As a condition to such waiver, Prudential has requested that the Bank Guarantors become guarantors of the Company’s obligations under the Note Agreement (in such capacity the “Subsidiary Guarantors”). For purposes of this letter, “Bond Purchase and Loan Agreement” means that certain Bond Purchase and Loan Agreement, dated December 31, 2012 among The Board of Commissioners of the County of Allen, acting for and on behalf of Allen County, Indiana, a county and political subdivision of the State of Indiana, the Company, and each of the Bondholders referred to therein and from time to time a party thereto, under which the Company has issued Project Bonds referred to therein in an aggregate principal amount $25,000,000.

Accordingly, and in accordance with the provisions of paragraph 11C of the Note Agreement, the parties hereto agree as follows:

SECTION 1. Waiver of Existing Events of Default. Effective on the Effective Date, Prudential waives the Existing Events of Default arising prior to the date hereof. The foregoing waiver shall be limited precisely as written and shall relate solely to the Note Agreement in the manner and to the extent described herein, and nothing in this letter agreement shall be deemed to (a) constitute a consent to or waiver of any Defaults or Events of Defaults existing under the Note Agreement or the Notes (other than the Existing Events of Default) nor of compliance by the Company or any Subsidiary with respect to or any modification of any other term, provision or condition of the Note Agreement or the Notes, or (b) prejudice any right or remedy that any holder of any Note may now have (after giving effect to the foregoing wavier) or may have in the future under or in connection with the Note Agreement or any Note.

SECTION 2.Amendments to Note Agreement.

2.1.    Amended Definition. Effective on the Effective Date, the following definitions are amended and restated or inserted, as applicable, in paragraph 10 to read as follows:

“‘Amendment No. 6’ shall mean that certain Amendment No. 6 to Second Amended and Restated Note Purchase and Private Shelf Agreement and Waiver, dated May 5, 2015, among the Company, Prudential and the holders of the Notes.”

“‘Principal Credit Facilities’ or ‘Principal Credit Facility’ shall mean collectively or individually, (i) the Second Amended and Restated Credit Agreement, dated as of December 14, 2011, among the Company, as U.S. Borrower, Franklin Electric B.V., as Dutch Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America and Wells Fargo Bank, National Association, as Co-Syndication Agents, and the Lender parties party thereto (including any renewals, extensions, amendments, supplements, restatements, replacements or refinancings thereof, the ‘Bank Credit Facility’), (ii) the Bond Purchase and Loan Agreement, dated December 31, 2012, among The Board of Commissioners of the County of Allen, as ‘Issuer’, Franklin Electric Co., Inc., an Indiana corporation, as ‘Borrower’, and the Bondholders referred to therein (including any renewals, extensions, amendments, supplements, restatements, replacements or refinancings thereof, the ‘Bond Facility’), and (iii) any other private placement issuance of Indebtedness.”

“‘Priority Debt’ shall mean the sum of (i) Indebtedness of the Company which is secured by a Lien under paragraph 6B(1)(viii) and (ii) Indebtedness of any Subsidiary (other than a Subsidiary Guarantor) (including, but not limited to, any Indebtedness of a Subsidiary which consists of a Guarantee of Indebtedness of the Company), excluding however Indebtedness of Subsidiaries owing to the Company or any other Subsidiary.”

2.2.    Amendment to Paragraph 6B(1)(viii). Paragraph 6B(1)(viii) of the Note Agreement is amended and restated in its entirety to read as follows:

“(viii)    Liens not otherwise permitted by the foregoing clauses provided that Priority Debt at no time exceeds twenty percent (20%) of Consolidated Net Worth (notwithstanding the foregoing, the basket in this subclause (viii) shall not be used to provide credit enhancements (in any form, including Liens and Guarantees) to the lender(s) under the Company’s Principal Credit Facilities).”

2.3.    Amendment to Paragraph 6B(2)(ii). Paragraph 6B(2)(ii) of the Note Agreement is amended and restated in its entirety to read as follows:

“(ii)    other Indebtedness of the Company or Subsidiaries, so long as Priority Debt at no time exceeds twenty percent (20%) of Consolidated Net Worth (notwithstanding the foregoing, the basket in this subclause (ii) shall not be used to provide credit enhancements (in any form, including Liens and Guarantees) to the lender(s) under the Company’s primary bank facility); provided that so long as the Company complies with paragraph 5H and would be in compliance with paragraphs 6B(9) and 6B(10) hereof (calculated as of the date of, and after giving effect to, the incurrence of such Indebtedness), Material Subsidiaries (as defined in the Bank Credit Facility) may enter into additional Guarantees of Indebtedness of the Company under any Principal Credit Facility on terms and conditions no more restrictive on the Company and the Subsidiaries taken as a whole than the terms and conditions of the Subsidiary Guaranties provided to the holders of the Notes hereunder, in each case solely to the extent such Guarantees shall be unsecured and either junior in right of payment to the Notes and other obligations hereunder or pari passu to the Notes and other obligations hereunder, provided that the Company shall promptly provide Prudential and the holders of the Notes with a copy of any documentation evidencing such Guarantees and any modification to such Guarantees.

2.4.    Amendment to Paragraph 5. Paragraph 5 of the Note Agreement is amended by inserting new paragraphs 5H and 5I at the end thereof to read as follows:

“5H. Subsidiary Guarantors.

If any Subsidiary becomes a borrower, co-borrower, guarantor, obligor or co-obligor under any Principal Credit Facility, such Subsidiary shall concurrently therewith provide a guarantee agreement substantially in the form of Exhibit A to Amendment No. 6 (a ‘Subsidiary Guaranty’) or a joinder thereto. Each such Subsidiary Guaranty or joinder thereto shall be accompanied by a certificate of the Secretary or Assistant Secretary of such Subsidiary certifying its charter and bylaws (or comparable governing documents), resolutions of the board of directors (or comparable governing body) of such Subsidiary authorizing the execution and delivery of such Subsidiary Guaranty or joinder and incumbency and specimen signatures of the officers of such Subsidiary executing such documents, and by such other certificates, documents and legal opinions in connection therewith

as may be reasonably requested by the Required Holders, each in form and substance reasonably satisfactory to the Required Holders.

5I. Post Amendment No. 6 Covenants. Within 10 days of the date of Amendment No. 6, the Company shall deliver executed opinions of its local counsel with respect to the Subsidiary Guarantees delivered in connection with Amendment No. 6 covering matters with respect to the laws of Maine, Oregon and Texas, each in form and substance reasonably satisfactory to the Required Holders.”

SECTION 3. Conditions Precedent. The waiver in Section 1 and the amendment in Section 2 of this letter shall become effective as of the date (the “Effective Date”) upon which each of the following conditions is satisfied:

3.1     Documents. Prudential shall have received original counterparts or, if satisfactory to Prudential, certified or other copies of this letter and the Subsidiary Guaranty Agreement (in the form of Exhibit A hereto), duly executed by the Company, in the case of this letter, and the Subsidiary Guarantors, in the case of the Subsidiary Guaranty Agreement delivered by the party or parties thereto, in form and substance satisfactory to Prudential, dated the date hereof unless otherwise indicated, and on such date in full force and effect. Each such Subsidiary Guaranty shall be accompanied by a certificate of the Secretary or Assistant Secretary of such Subsidiary Guarantor certifying its charter and bylaws (or comparable governing documents), resolutions of the board of directors (or comparable governing body) of such Subsidiary Guarantor authorizing the execution and delivery of such Subsidiary Guaranty Agreement and incumbency and specimen signatures of the officers of such Subsidiary Guarantor executing such documents, and by such other certificates, documents and legal opinions in connection therewith as may be reasonably requested by Prudential, each in form and substance reasonably satisfactory to Prudential.

3.2    Amendment to Credit Agreement. Prudential shall have received a copy of the fully executed amendment to the Credit Agreement, which amendment shall be in full force and effect, and in form and substance reasonably satisfactory to Prudential.

3.3    Amendment to Bond Purchase and Loan Agreement. Prudential shall have received a copy of the fully executed amendment to the Bond Purchase and Loan Agreement, which amendment shall be in full force and effect.

3.4.     Fees and Expenses. The Company shall have paid the fees and expenses of special counsel to the holders of the Notes that have been presented to the Company as of the Effective Date.

3.5     Representations and Warranties. The representations and warranties of the Company in Section 4 hereof shall be true and correct on the Effective Date.

3.6     Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to Prudential and its counsel, and Prudential shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request.

SECTION 4. Representations and Warranties. To induce Prudential to execute and deliver this letter, the Company hereby represents, warrants and covenants that (1) the execution and delivery of this letter has been duly authorized by all necessary corporate action on behalf of the Company and this letter has been executed and delivered by a duly authorized officer of the Company, and all necessary or required consents to this letter have been obtained and are in full force and effect, (2) the representations and warranties contained in paragraph 8 of the Note Agreement are true on and as of the Effective Date, and (3) there shall not exist on the Effective Date any Event of Default or Default (other than the Existing Events of Default).

SECTION 5. Reference to and Effect on Note Agreement. Upon the effectiveness of the amendments and waiver in this letter, each reference to the Note Agreement in any other document, instrument or agreement shall mean and be a reference to the Note Agreement, as modified by this letter. Except as specifically set forth in Sections 1 and 2 of this letter, the Note Agreement shall remain in full force and effect and each is hereby ratified and confirmed in all respects. Except as specifically set forth in Sections 1,2 and 3 of this letter, the execution, delivery and effectiveness of this letter shall not (a) amend the Note Agreement or any Note, (b) operate as a waiver of any right, power or remedy of the holder of any Note, or (c) constitute a waiver of, or consent to any departure from, any provision of the Note Agreement or any Note at any time. The Company acknowledges and agrees that no holder of any Notes is under any duty or obligation of any kind or nature whatsoever to grant the Company any additional waivers or consents of any type, whether or not under similar circumstances, and no course of dealing or course of performance shall be deemed to have occurred as a result of the wavier and consent herein.

SECTION 6. Expenses. The Company hereby confirms its obligations under the Note Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request by Prudential, all reasonable out-of-pocket costs and expenses, including attorneys’ fees and expenses, incurred by Prudential in connection with this letter agreement or the transactions contemplated hereby, in enforcing any rights under this letter, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this letter or the transactions contemplated hereby. The obligations of the Company under this Section 6 shall survive transfer by Prudential of any Note and payment of any Note.

SECTION 7. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES OR IN CONNECTION WITH ANY CLAIMS OR DISPUTES ARISING OUT OF OR RELATING TO THIS LETTER (WHETHER SOUNDING IN CONTRACT OR TORT) SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER JURISDICTION).

SECTION 8. Counterparts; Facsimile Signature Pages; Section Titles. This letter may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this letter by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this letter. The section titles contained in this letter are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

[signature page follows]

Very truly yours,

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

By:    _______________________________    

Vice President

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:    __________________________

Vice President

MUTUAL OF OMAHA INSURANCE COMPANY

UNITED OF OMAHA LIFE INSURANCE COMPANY

By: Prudential Private Placement Investors, L.P. (as Investment Advisor)

By: Prudential Private Placement Investors, Inc. (as General Partner)

By:    __________________________

Vice President

Agreed and accepted:

FRANKLIN ELECTRIC, CO., INC.

By:

Name:

Title:

EXHIBIT A

SUBSIDIARY GUARANTY AGREEMENT

This Subsidiary Guaranty Agreement, dated as of ____, ____ (this “Guaranty Agreement”), is made by each of the undersigned (each a “Guarantor” and, together with each of the other signatories hereto and any other entities from time to time parties hereto pursuant to Section 13.1 hereof, the “Guarantors”) in favor of the Purchasers (as defined below) and the other holders from time to time of the Notes (as defined below). The Purchasers and such other holders are herein collectively called the “holders” and individually a “holder.”

Preliminary Statements:

I.    Franklin Electric Co., Inc., an Indiana corporation (the “Company”), entered into a Second Amended and Restated Note Purchase and Private Shelf Agreement, dated as of September 9, 2004 (as amended, modified, supplemented or restated from time to time, the “Shelf Agreement”), with Prudential Investment Management, Inc. and each other Prudential Affiliate which becomes bound by the Shelf Agreement as provided therein (each, a “Purchaser” and collectively, the “Purchasers”). Capitalized terms used herein have the meanings specified in the Shelf Agreement unless otherwise defined herein.

II.    Pursuant to the Shelf Agreement, the Company has issued $110,000,000 of Series B-1 Notes due April 30, 2019 and $40,000,000 of Series B-2 Notes due April 30, 2019 (collectively, the “Series B Notes”) and proposes to issue and sell additional senior notes (the “Shelf Notes”). The Series B Notes outstanding and any Shelf Notes that may from time to time be issued pursuant to the Shelf Agreement (including any notes issued in substitution for any of the Notes) are herein collectively called the “Notes” and individually a “Note”.

III.    It is a condition to the effectiveness of that certain Amendment No. 6 to Second Amended and Restated Note Purchase and Private Shelf Agreement and Waiver, dated May 5, 2015, among the Company, Prudential and the holders of the Notes that this Guaranty Agreement shall have been executed and delivered by each Guarantor and shall be in full force and effect.

IV.    Each Guarantor will receive direct and indirect benefits from the financing arrangements contemplated by the Shelf Agreement. The board of directors (or an authorized committee thereof), general partner or board of managers, as applicable, of each Guarantor has determined that the incurrence of such obligations is in the best interests of such Guarantor.

Now Therefore, in order to induce, and in consideration of, the execution of Amendment No. 6 and the receipt of the benefits set forth in Amendment No. 6 and the Shelf Agreement, each Guarantor hereby covenants and agrees with, and represents and warrants to each of the holders as follows:

Section 1.Guaranty.

Each Guarantor hereby irrevocably, unconditionally and jointly and severally with the other Guarantors guarantees to each holder, the due and punctual payment in full of (a) the principal of, Yield Maintenance Amount, if any, and interest on (including, without limitation, interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), and any other amounts due under, the Notes when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by acceleration or otherwise) and (b) any other sums which may become due under the terms and provisions of the Notes, the Shelf Agreement or any other instrument referred to therein, (all such obligations described in clauses (a) and (b) above are herein called the “Guaranteed Obligations”). The guaranty in the preceding sentence is an absolute, present and continuing guaranty of payment and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Company or any other guarantor of the Notes (including, without limitation, any other Guarantor hereunder) or upon any other action, occurrence or circumstance whatsoever. In the event that the Company shall fail so to pay any of such Guaranteed Obligations, each Guarantor agrees to pay the same when due to the holders entitled thereto, without demand, presentment, protest or notice of any kind, in lawful money of the United States of America, pursuant to the requirements for payment specified in the Notes and the Shelf Agreement. Each default in payment of any of the Guaranteed Obligations shall give rise to a separate cause of action hereunder and separate suits may be brought hereunder as each cause of action arises. Each Guarantor agrees that the Notes issued in connection with the Shelf Agreement may (but need not) make reference to this Guaranty Agreement.

Each Guarantor agrees to pay and to indemnify and save each holder harmless from and against any damage, loss, cost or expense (including attorneys’ fees) which such holder may incur or be subject to as a consequence, direct or indirect, of (x) any breach by such Guarantor, by any other Guarantor or by the Company of any warranty, covenant, term or condition in, or the

occurrence of any default under, this Guaranty Agreement, the Notes, the Shelf Agreement or any other instrument referred to therein, together with all expenses resulting from the compromise or defense of any claims or liabilities arising as a result of any such breach or default, (y) any legal action commenced to challenge the validity or enforceability of this Guaranty Agreement, the Notes, the Shelf Agreement or any other instrument referred to therein and (z) enforcing or defending (or determining whether or how to enforce or defend) the provisions of this Guaranty Agreement.

Each Guarantor hereby acknowledges and agrees that such Guarantor’s liability hereunder is joint and several with the other Guarantors and any other Person(s) who may guarantee the obligations and Indebtedness under and in respect of the Notes and the Shelf Agreement.

Notwithstanding the foregoing provisions or any other provision of this Guaranty Agreement, the Purchasers (on behalf of themselves and their successors and assigns) and each Guarantor hereby agree that if at any time the Guaranteed Obligations exceed the Maximum Guaranteed Amount determined as of such time with regard to such Guarantor, then this Guaranty Agreement shall be automatically amended to reduce the Guaranteed Obligations to the Maximum Guaranteed Amount. Such amendment shall not require the written consent of any Guarantor or any holder and shall be deemed to have been automatically consented to by each Guarantor and each holder. Each Guarantor agrees that the Guaranteed Obligations may at any time exceed the Maximum Guaranteed Amount without affecting or impairing the obligation of such Guarantor. “Maximum Guaranteed Amount” means as of the date of determination with respect to a Guarantor, the lesser of (a) the amount of the Guaranteed Obligations outstanding on such date and (b) the maximum amount that would not render such Guarantor’s liability under this Guaranty Agreement subject to avoidance under Section 548 of the United States Bankruptcy Code (or any successor provision) or any comparable provision of applicable state law.

Section 2.Obligations Absolute.

The obligations of each Guarantor hereunder shall be primary, absolute, irrevocable and unconditional, irrespective of the validity or enforceability of the Notes, the Shelf Agreement or any other instrument referred to therein, shall not be subject to any counterclaim, setoff, deduction or defense based upon any claim such Guarantor may have against the Company or any holder or otherwise, and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever (whether or not such Guarantor shall have any knowledge or notice thereof), including, without limitation: (a) any amendment to, modification of, supplement to or restatement of the Notes, the Shelf Agreement or any other instrument referred to therein (it being agreed that the obligations of each Guarantor hereunder shall apply to the Notes, the Shelf Agreement or any such other instrument as so amended, modified, supplemented or restated) or any assignment or transfer of any thereof or of any interest therein, or any furnishing, acceptance or release of any security for the Notes or the addition, substitution or release of any other Guarantor or any other entity or other Person primarily or secondarily liable in respect of the Guaranteed Obligations; (b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of the Notes, the Shelf Agreement or any other instrument referred to therein; (c) any bankruptcy, insolvency, arrangement, reorganization, readjustment, composition, liquidation or similar proceeding with respect to the Company or its property; (d) any merger, amalgamation or consolidation of any Guarantor or of the Company into or with any other Person or any sale, lease or transfer of any or all of the assets of any Guarantor or of the Company to any Person; (e) any failure on the part of the Company for any reason to comply with or perform any of the terms of any other agreement with any Guarantor; (f) any failure on the part of any holder to obtain, maintain, register or otherwise perfect any security; or (g) any other event or circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (whether or not similar to the foregoing), and in any event however material or prejudicial it may be to any Guarantor or to any subrogation, contribution or reimbursement rights any Guarantor may otherwise have. Each Guarantor covenants that its obligations hereunder will not be discharged except by indefeasible payment in full in cash of all of the Guaranteed Obligations and all other obligations hereunder.

Section 3.Waiver.

Each Guarantor unconditionally waives to the fullest extent permitted by law, (a) notice of acceptance hereof, of any action taken or omitted in reliance hereon and of any default by the Company in the payment of any amounts due under the Notes, the Shelf Agreement or any other instrument referred to therein, and of any of the matters referred to in Section 2 hereof, (b) all notices which may be required by statute, rule of law or otherwise to preserve any of the rights of any holder against such Guarantor, including, without limitation, presentment to or demand for payment from the Company or any Guarantor with respect to any Note, notice to the Company or to any Guarantor of default or protest for nonpayment or dishonor and the filing of claims with a court in the event of the bankruptcy of the Company, (c) any right to require any holder to enforce, assert or exercise any right, power or remedy including, without limitation, any right, power or remedy conferred in the Shelf Agreement or the Notes, (d) any requirement for diligence on the part of any holder and (e) any other act or omission or thing or delay in doing any other act or

thing which might in any manner or to any extent vary the risk of such Guarantor or otherwise operate as a discharge of such Guarantor or in any manner lessen the obligations of such Guarantor hereunder.

Section 4.Obligations Unimpaired.

Each Guarantor authorizes the holders, without notice or demand to such Guarantor or any other Guarantor and without affecting its obligations hereunder, from time to time: (a) to renew, compromise, extend, accelerate or otherwise change the time for payment of, all or any part of the Notes, the Shelf Agreement or any other instrument referred to therein; (b) to change any of the representations, covenants, events of default or any other terms or conditions of or pertaining to the Notes, the Shelf Agreement or any other instrument referred to therein, including, without limitation, decreases or increases in amounts of principal, rates of interest, the Yield Maintenance Amount or any other obligation; (c) to take and hold security for the payment of the Notes, the Shelf Agreement or any other instrument referred to therein, for the performance of this Guaranty Agreement or otherwise for the Indebtedness guaranteed hereby and to exchange, enforce, waive, subordinate and release any such security; (d) to apply any such security and to direct the order or manner of sale thereof as the holders in their sole discretion may determine; (e) to obtain additional or substitute endorsers or guarantors or release any other Guarantor or any other Person or entity primarily or secondarily liable in respect of the Guaranteed Obligations; (f) to exercise or refrain from exercising any rights against the Company, any Guarantor or any other Person; and (g) to apply any sums, by whomsoever paid or however realized, to the payment of the Guaranteed Obligations and all other obligations owed hereunder. The holders shall have no obligation to proceed against any additional or substitute endorsers or guarantors or to pursue or exhaust any security provided by the Company, such Guarantor or any other Guarantor or any other Person or to pursue any other remedy available to the holders.

If an event permitting the acceleration of the maturity of the principal amount of any Notes shall exist and such acceleration shall at such time be prevented or the right of any holder to receive any payment on account of the Guaranteed Obligations shall at such time be delayed or otherwise affected by reason of the pendency against the Company, any Guarantor or any other guarantors of a case or proceeding under a bankruptcy or insolvency law, such Guarantor agrees that, for purposes of this Guaranty Agreement and its obligations hereunder, the maturity of such principal amount shall be deemed to have been accelerated with the same effect as if the holder thereof had accelerated the same in accordance with the terms of the Shelf Agreement, and such Guarantor shall forthwith pay such accelerated Guaranteed Obligations.

Section 5.Subrogation and Subordination.

(a)    Each Guarantor will not exercise any rights which it may have acquired by way of subrogation under this Guaranty Agreement, by any payment made hereunder or otherwise, or accept any payment on account of such subrogation rights, or any rights of reimbursement, contribution or indemnity or any rights or recourse to any security for the Notes or this Guaranty Agreement unless and until all of the Guaranteed Obligations shall have been indefeasibly paid in full in cash.

(b)    Each Guarantor hereby subordinates the payment of all Indebtedness and other obligations of the Company or any other guarantor of the Guaranteed Obligations owing to such Guarantor, whether now existing or hereafter arising, including, without limitation, all rights and claims described in clause (a) of this Section 5, to the indefeasible payment in full in cash of all of the Guaranteed Obligations. If the Required Holders so request, any such Indebtedness or other obligations shall be enforced and performance received by such Guarantor as trustee for the holders and the proceeds thereof shall be paid over to the holders promptly, in the form received (together with any necessary endorsements) to be applied to the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Required Holders, but without reducing or affecting in any manner the liability of any Guarantor under this Guaranty Agreement.

(c)    If any amount or other payment is made to or accepted by any Guarantor in violation of any of the preceding clauses (a) and (b) of this Section 5, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the holders and shall be paid over to the holders promptly, in the form received (together with any necessary endorsements) to be applied to the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Required Holders, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty Agreement.

(d)    Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Shelf Agreement and that its agreements set forth in this Guaranty Agreement (including this Section 5) are knowingly made in contemplation of such benefits.

(e)    Each Guarantor hereby agrees that, to the extent that a Guarantor shall have paid an amount hereunder to any holder that is greater than the net value of the benefits received, directly or indirectly, by such paying Guarantor as a result of the issuance and sale of the Notes (such net value, its “Proportionate Share”), such paying Guarantor shall, subject to Section 5(a)

and 5(b), be entitled to contribution from any Guarantor that has not paid its Proportionate Share of the Guaranteed Obligations. Any amount payable as a contribution under this Section 5(e) shall be determined as of the date on which the related payment is made by such Guarantor seeking contribution and each Guarantor acknowledges that the right to contribution hereunder shall constitute an asset of such Guarantor to which such contribution is owed. Notwithstanding the foregoing, the provisions of this Section 5(e) shall in no respect limit the obligations and liabilities of any Guarantor to the holders of the Notes hereunder or under the Notes, the Shelf Agreement or any other document, instrument or agreement executed in connection therewith, and each Guarantor shall remain jointly and severally liable for the full payment and performance of the Guaranteed Obligations.

Section 6.Reinstatement of Guaranty. This Guaranty Agreement shall continue to be effective, or be reinstated, as the case may be, if and to the extent at any time payment, in whole or in part, of any of the sums due to any holder on account of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by a holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any other guarantors, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or any other guarantors or any part of its or their property, or otherwise, all as though such payments had not been made.

Section 7.Rank of Guaranty. Each Guarantor will ensure that its payment obligations under this Guaranty Agreement will at all times rank at least pari passu, without preference or priority, with all other unsecured and unsubordinated Indebtedness of such Guarantor now or hereafter existing.

Section 8.Representations and Warranties of Each Guarantor. Each Guarantor represents and warrants to each holder as follows:

Section 8.1.Organization; Power and Authority. Such Guarantor is validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation, limited liability company or limited partnership and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, operations or condition (financial or otherwise) of the Guarantor and its subsidiaries taken as a whole. Such Guarantor has the corporate, limited liability company or partnership power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Guaranty Agreement and to perform the provisions hereof.

Section 8.2.Authorization, Etc. This Guaranty Agreement has been duly authorized by all necessary corporate, limited liability company or partnership action on the part of such Guarantor, and this Guaranty Agreement constitutes a legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 8.3.Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by such Guarantor of this Guaranty Agreement will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Guarantor or any of its Subsidiaries under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, organizational documents, or any other agreement or instrument to which such Guarantor or any of its Subsidiaries is bound or by which such Guarantor or any of its Subsidiaries or any of their respective properties may be bound or affected, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Guarantor or any of its Subsidiaries or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Guarantor or any of its Subsidiaries.

Section 8.4.Governmental Authorizations, Etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by such Guarantor of this Guaranty Agreement.

Section 8.5.Information Regarding the Company. Such Guarantor now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Company. No holder shall have any duty or responsibility to provide such Guarantor with any credit or other information concerning the affairs, financial condition or business of the Company which may come into possession of the holders. Such Guarantor has executed and delivered this Guaranty Agreement without reliance upon any representation by the holders including, without limitation, with respect to (a) the due execution, validity, effectiveness or enforceability of any instrument, document or agreement evidencing or relating to any of the Guaranteed Obligations or any loan or other financial accommodation made or granted to the Company, (b) the validity,

genuineness, enforceability, existence, value or sufficiency of any property (if any) securing any of the Shelf Notes or the creation, perfection or priority of any lien or security interest (if any) or (c) the existence, number, financial condition or creditworthiness of other guarantors or sureties, if any, with respect to any of the Guaranteed Obligations.

Section 8.6.Solvency. Upon the execution and delivery hereof, such Guarantor will be solvent, will be able to pay its debts as they mature, and will have capital sufficient to carry on its business.

Section 9.Term of Guaranty Agreement. This Guaranty Agreement and all guarantees, covenants and agreements of the Guarantors contained herein shall continue in full force and effect and shall not be discharged until such time as the Issuance Period shall have terminated and all of the Guaranteed Obligations and all other obligations hereunder shall be indefeasibly paid in full in cash and shall be subject to reinstatement pursuant to Section 6.

Section 10.Survival of Representations and Warranties; Entire Agreement. All representations and warranties contained herein shall survive the execution and delivery of this Guaranty Agreement and may be relied upon by any subsequent holder, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder. All statements contained in any certificate or other instrument delivered by or on behalf of a Guarantor pursuant to this Guaranty Agreement shall be deemed representations and warranties of such Guarantor under this Guaranty Agreement. Subject to the preceding sentence, this Guaranty Agreement embodies the entire agreement and understanding between each holder and the Guarantors and supersedes all prior agreements and understandings relating to the subject matter hereof.

Section 11.Amendment and Waiver.

Section 11.1.Requirements. Except as otherwise provided in the fourth paragraph of Section 1 of this Guaranty Agreement, this Guaranty Agreement may be amended, and the observance of any term hereof may be waived (either retroactively or prospectively), with (and only with) the written consent of each Guarantor and the Required Holders, except that no amendment or waiver (a) of any of the first three paragraphs of Section 1 or any of the provisions of Section 2, 3, 4, 5, 6, 7, 9, or 11 hereof, or any defined term (as it is used therein), or (b) which results in the limitation of the liability of any Guarantor hereunder (except to the extent provided in the fourth paragraph of Section 1 of this Guaranty Agreement) will be effective as to any holder unless consented to by such holder in writing.

Section 11.2.Solicitation of Holders of Notes.

(a)    Solicitation. Each Guarantor will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof. Each Guarantor will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 11.2 to each holder promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

(b)    Payment. The Guarantors will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder as consideration for or as an inducement to the entering into by any holder of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder even if such holder did not consent to such waiver or amendment.

Section 11.3.Binding Effect. Any amendment or waiver consented to as provided in this Section 11 applies equally to all holders and is binding upon them and upon each future holder and upon each Guarantor without regard to whether any Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant or agreement not expressly amended or waived or impair any right consequent thereon. No course of dealing between a Guarantor and the holder nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder. As used herein, the term “this Guaranty Agreement” and references thereto shall mean this Guaranty Agreement as it may be amended, modified, supplemented or restated from time to time.

Section 11.4.Notes Held By Company, Etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Guaranty Agreement, or have directed the taking of any action provided herein to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by any Guarantor, the Company or any of their respective Affiliates shall be deemed not to be outstanding.

Section 12.Notices. All notices and communications provided for hereunder shall be in writing and sent (a) by

telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

(a)    if to any Guarantor, to the address of the Company specified in the Shelf Agreement, or such other address as such Guarantor shall have specified to the holders in writing, or

(b)    if to any holder, to such holder at the address specified for such communications as specified by such Purchaser in its Confirmation of Acceptance, or such other address as such holder shall have specified to the Guarantors in writing.

Notice under this Section 12 will be deemed given only when actually received.

Section 13.Miscellaneous.

Section 13.1.Successors and Assigns; Joinder. All covenants and other agreements

contained in this Guaranty Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns whether so expressed or not. It is agreed and understood that any Person may become a Guarantor hereunder by executing a Guarantor Supplement substantially in the form of Exhibit A attached hereto and delivering the same to the Holders. Any such Person shall thereafter be a “Guarantor” for all purposes under this Guaranty Agreement.

Section 13.2.Severability. Any provision of this Guaranty Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law), not invalidate or render unenforceable such provision in any other jurisdiction.

Section 13.3.Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

The section and subsection headings in this Guaranty Agreement are for convenience of reference only and shall neither be deemed to be a part of this Guaranty Agreement nor modify, define, expand or limit any of the terms or provisions hereof. All references herein to numbered sections, unless otherwise indicated, are to sections of this Guaranty Agreement. Words and definitions in the singular shall be read and construed as though in the plural and vice versa, and words in the masculine, neuter or feminine gender shall be read and construed as though in either of the other genders where the context so requires.

Section 13.4.Further Assurances. Each Guarantor agrees to execute and deliver all such instruments and take all such action as the Required Holders may from time to time reasonably request in order to effectuate fully the purposes of this Guaranty Agreement.

Section 13.5.Governing Law. This Guaranty Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois, excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

Section 13.6.Jurisdiction and Process; Waiver of Jury Trial.

(a)    Each Guarantor irrevocably submits to the non-exclusive jurisdiction of any Illinois State or federal court sitting in the Northern District of Illinois, over any suit, action or proceeding arising out of or relating to this Guaranty Agreement. To the fullest extent permitted by applicable law, each Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b)    Each Guarantor consents to process being served by or on behalf of any holder in any suit, action or proceeding of the nature referred to in Section 13.6(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 12 or at such other address of which such holder shall then have been notified pursuant to Section 12. Each Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest

extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c)    Nothing in this Section 13.6 shall affect the right of any holder to serve process in any manner permitted by law, or limit any right that the holders may have to bring proceedings against any Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d)    THE GUARANTORS AND THE HOLDERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS GUARANTY AGREEMENT OR OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH.

Section 13.7.Payment Currency. Paragraph 11O of the Shelf Agreement is hereby incorporated by reference, mutatis mutandis.

Section 13.8.Reproduction of Documents; Execution. This Guaranty Agreement may be reproduced by any holder by any photographic, photostatic, electronic, digital, or other similar process and such holder may destroy any original document so reproduced. Each Guarantor agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such holder in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 13.7 shall not prohibit any Guarantor or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. A facsimile or electronic transmission of the signature page of a Guarantor shall be as effective as delivery of a manually executed counterpart hereof and shall be admissible into evidence for all purposes.

[SIGNATURE PAGE FOLLOWS]

In Witness Whereof, each Guarantor has caused this Guaranty Agreement to be duly executed and delivered as of the date and year first above written.

Franklin Control Systems, Inc. By:_______________________________ Name: Title:	Pioneer Pump Holdings, Inc. By:_______________________________ Name: Title:
Franklin Electric Ventures LLC By: Franklin Electric Co., Inc. Its: Sole Member and Manager By:_______________________________ Name: Title:	Pioneer Pump, Inc. By:_______________________________ Name: Title:
Franklin Electric International, Inc. By:_______________________________ Name: Title:	Franklin Fueling Systems, Inc. By:_______________________________ Name: Title:
Intelligent Controls, Inc. By:_______________________________ Name: Title:

EXHIBIT A

Guarantor Supplement

THIS GUARANTOR SUPPLEMENT (this “Guarantor Supplement”), dated as of [_______________, 20__] is made by [_______________], a [_______________](the “Additional Guarantor”), in favor of the holders from time to time of the Notes issued pursuant to the Shelf Agreement described below.

Preliminary Statements:

I.    Pursuant to the Second Amended and Restated Note Purchase and Private Shelf Agreement dated as of September 9, 2004 (as amended, modified, supplemented or restated from time to time, the “Shelf Agreement”), by and among Franklin Electric Co. Inc., an Indiana corporation (the “Company”), Prudential Investment Management, Inc., and each other Prudential Affiliate which has become or shall become bound by the Shelf Agreement as provided therein (each, a “Purchaser” and collectively, the “Purchasers”), the Company have issued and sold $____________- aggregate principal amount of their ___% Senior Notes, Series __, due ______ __, 20__, [of which $_________ aggregate principal amount remain outstanding,] [describe any issued and outstanding Shelf Notes] ([collectively,] the “Outstanding Notes”). The Outstanding Notes and any other Notes that may from time to time be issued pursuant to the Shelf Agreement (including any notes issued in substitution for any of the Notes) are herein collectively called the “Notes” and individually a “Note”.

II.    The Company is required pursuant to the Shelf Agreement to cause the Additional Guarantor to deliver this Guarantor Supplement in order to cause the Additional Guarantor to become a Guarantor under the Guaranty Agreement dated as of ___, ____, executed by ____________________ (together with each entity that from time to time has become or shall become a party thereto by executing a Guarantor Supplement pursuant to Section 13.1 thereof, collectively, the “Guarantors”) in favor of each holder from time to time of any of the Notes (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty Agreement”).

III.    The Additional Guarantor has received and will receive substantial direct and indirect benefits from the Company’ compliance with the terms and conditions of the Shelf Agreement and the Notes issued thereunder.

IV.    Capitalized terms used and not otherwise defined herein have the definitions set forth in the Shelf Agreement.

Now Therefore, in consideration of the funds advanced to the Company by the Purchasers under the Shelf Agreement and to enable the Company to comply with the terms of the Shelf Agreement, the Additional Guarantor hereby covenants, represents and warrants to the holders as follows:

The Additional Guarantor hereby becomes a Guarantor (as defined in the Guaranty Agreement) for all purposes of the Guaranty Agreement. Without limiting the foregoing, the Additional Guarantor hereby (a) jointly and severally with the other Guarantors under the Guaranty Agreement, guarantees to the holders from time to time of the Notes the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and the full and prompt performance and observance of all Guaranteed Obligations (as defined in Section 1 of the Guaranty Agreement) in the same manner and to the same extent as is provided in the Guaranty Agreement, (b) accepts and agrees to perform and observe all of the covenants set forth therein, (c) waives the rights set forth in Section 3 of the Guaranty Agreement, (d) makes the representations and warranties set forth in Section 8 of the Guaranty Agreement and (e) waives the rights, submits to jurisdiction, and waives service of process as described in Section 13.6 of the Guaranty Agreement.

Notice of acceptance of this Guarantor Supplement and of the Guaranty Agreement, as supplemented hereby, is hereby waived by the Additional Guarantor.

The address for notices and other communications to be delivered to the Additional Guarantor pursuant to Section 12 of the Guaranty Agreement is set forth below.

In Witness Whereof, the Additional Guarantor has caused this Guarantor Supplement to be duly executed and delivered as of the date and year first above written.

[Name of Guarantor]

By:

Name:

Title:

Notice Address for such Guarantor

EX-10.4

EXHIBIT 10.4

AMENDMENT NO. 3

Dated as of May 5, 2015

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of December 14, 2011

THIS AMENDMENT NO. 3 (this “Amendment”) is made as of May 5, 2015 by and among (i) Franklin Electric Co., Inc., an Indiana corporation (the “US Borrower”), Franklin Electric B.V., a Netherlands private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) (the “Dutch Borrower” and, together with the US Borrower, the “Borrowers”), (ii) the financial institutions listed on the signature pages hereof and (iii) JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), under that certain Second Amended and Restated Credit Agreement dated as of December 14, 2011 by and among the Borrowers, the Lenders and the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.

WHEREAS, the Borrowers have requested that the requisite Lenders and the Administrative Agent agree to make certain amendments to the Credit Agreement; and

WHEREAS, the Borrowers, the Lenders party hereto and the Administrative Agent have so agreed on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the Lenders party hereto and the Administrative Agent hereby agree to enter into this Amendment.

1.Amendments to the Credit Agreement. Effective as of the Amendment No. 3 Effective Date (as defined below), the parties hereto agree that the Credit Agreement is hereby amended as follows:

(a)Section 1.01 of the Credit Agreement is amended to add the following definitions thereto in the appropriate alphabetical order:

“Bond Purchase and Loan Agreement” means that certain Bond Purchase and Loan Agreement, dated December 31, 2012 among The Board of Commissioners of the County of Allen, acting for and on behalf of Allen County, Indiana, a county and political subdivision of the State of Indiana, the US Borrower, and each of the Bondholders referred to therein and from time to time a party thereto, under which the US Borrower has issued Project Bonds referred to therein in an aggregate principal amount $25,000,000.

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

“Notes and BPLA Guarantees” has the meaning set forth in Section 6.12(a)(ii).

“2004 Note Purchase Agreement” means that certain Second Amended and Restated Note Purchase and Private Shelf Agreement, dated as of September 9, 2004, among the US Borrower and the “Purchasers” referred to therein, as amended by that certain letter agreement dated as of April 9, 2007, that certain Amendment No. 2 dated as of February 26, 2008, that certain Amendment No. 3 dated as of July 22, 2010, that certain Amendment No. 4 dated as of December 14, 2011 and that certain Amendment No. 5 dated as of December 31, 2012, under which the US Borrower has issued senior unsecured notes in an original aggregate principal amount of $150,000,000 (the “2004 Senior Notes”), which shall be pari passu with the Loans and other obligations hereunder, as such 2004 Senior Notes and such 2004 Note Purchase Agreement may be amended, restated, supplemented, modified, extended, or refinanced or replaced (to the extent such refinancing or replacement is with the proceeds of another private placement issuance), from time to time in a manner that is not materially adverse to the interests of the Lenders.

“2004 Senior Notes” is defined in the definition of “2004 Note Purchase Agreement” above.

(b)The definition of “Priority Debt” contained in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follows:

“Priority Debt” shall mean the sum of (i) Debt of the Company or any Guarantor which is secured by a Lien under Section 6.03(vii) and (ii) Debt of any Subsidiary (other than a Guarantor) (including, but not limited to, any Debt of a Subsidiary which consists of a Guarantee of Debt of the Company), excluding, however, Debt of Subsidiaries owing to the Company and Debt of any Subsidiary (other than a Significant Subsidiary) to any other Subsidiary.

(c)Section 5.12 of the Credit Agreement is amended to insert immediately after the phrase “a Domestic Subsidiary” now appearing therein, the following: “(other than any Domestic Subsidiary in respect of which all of the Equity Interests thereof shall be owned, directly or indirectly, by any Foreign Subsidiary)”.

(d)Section 6.03(vii) of the Credit Agreement is amended and restated in its entirety to read as follows:

(vii)    Liens not otherwise permitted by the foregoing clauses of this Section securing Debt (other than the Loans) provided that Priority Debt at no time exceeds twenty percent (20%) of Consolidated Net Worth (notwithstanding the foregoing, the basket in this subclause (vii) shall not be used to provide credit enhancements (in any form, including Liens and Guarantees) to the purchasers under the 2004 Note Purchase Agreement or any other private placement issuance of Debt or to the purchasers under the Bond Purchase and Loan Agreement); and

(e)Section 6.12 of the Credit Agreement is amended and restated in its entirety to read as follows:

SECTION 6.12. Limitation on Debt. The Borrowers shall not:

(a) permit any Significant Subsidiary to create, incur, assume or suffer to exist any Debt, except:

(i) Debt owing by any Significant Subsidiary to the Borrowers; and

(ii) so long as the Borrowers would be in compliance with Sections 5.08 and 5.09 hereof (calculated as of the date of, and after giving effect to, the incurrence of such Debt), Guarantees of the 2004 Senior Notes and the Bond Purchase and Loan Agreement (collectively, the “Notes and BPLA Guarantees”), and additional Guarantees of Debt of the US Borrower on terms and conditions no more restrictive on the Borrowers and their Subsidiaries taken as a whole than the terms and conditions of the Notes and PBLA Guarantees, in each case solely to the extent such Guarantees shall be unsecured and either junior in right of payment to the Loans and other obligations hereunder or pari passu to the Loans and other obligations hereunder, provided that the Borrowers shall promptly provide the Administrative Agent with a copy of any documentation evidencing such Guarantees and any modification to such Guarantees; or

(b)     create, incur, assume, permit or suffer to exist any other Debt, except:

(i) Debt of any Borrower or any Subsidiary (other than a Significant Subsidiary) owing to any Borrower or any Subsidiary;

(ii) other Debt of any Borrower or Subsidiaries (other than Significant Subsidiaries), so long as Priority Debt at no time exceeds twenty percent (20%) of Consolidated Net Worth; provided that (x) so long as the Borrowers would be in compliance with Sections 5.08 and 5.09 hereof (calculated as of the date of, and after giving effect to, the incurrence of such Debt), Material Subsidiaries may enter into Notes and BPLA Guarantees, and additional Guarantees of Debt of the US Borrower on terms and conditions no more restrictive on the Borrowers and their Subsidiaries taken as a whole than the terms and conditions of the Notes and BPLA Guarantees, in each case solely to the extent such Guarantees shall be unsecured and either junior in right of payment to the Loans and other obligations hereunder or pari passu to the Loans and other obligations hereunder, provided that the Borrowers shall promptly provide the Administrative Agent with a copy of any documentation evidencing such Guarantees and any modification to such Guarantees and (y) except as provided in clause (x), the basket in this subclause (ii) shall not be used to provide credit enhancements (in any form, including Liens and Guarantees) to the purchasers under

the 2004 Note Purchase Agreement or any other private placement issuance of Debt or to the purchasers under the Bond Purchase and Loan Agreement; and

(iii) Receivables Transaction Attributed Debt and/or Debt incurred pursuant to Qualified Receivables Transactions in an aggregate amount not to exceed $30,000,000 at any time.

(f)The Administrative Agent and the Lenders party hereto hereby waive any Events of Default resulting from any noncompliance prior to the date hereof with Sections 3.07, 4.02, 5.02(a) and 5.12 of the Credit Agreement solely as a result of the failure to cause each of Franklin Control Systems, Inc., Franklin Electric Ventures LLC, Pioneer Pump Holdings, Inc. and Pioneer Pump, Inc., each being Significant Subsidiaries of the US Borrower, to become a Guarantor in accordance with the requirements of Section 5.12 of the Credit Agreement.

(g)The Administrative Agent and the Lenders party hereto hereby waive any (i) Events of Default resulting from any noncompliance prior to the date hereof with Sections 3.03, 3.07, 4.02 and 5.02(a) of the Credit Agreement solely as a result of any noncompliance with the terms of the 2004 Note Purchase Agreement and the Bond Purchase and Loan Agreement as a result of each of Franklin Electric International, Inc., Franklin Fueling Systems, Inc. and Intelligent Controls, Inc. being Guarantors and (ii) waive any Event of Default arising prior to the date hereof under Section 7.01(g) resulting therefrom.

(h)For purposes of Section 9.01(a)(i) of the Credit Agreement, the US Borrower’s address at 400 E. Spring Street, Bluffton, IN 46714 shall be updated to be 9255 Coverdale Road, Fort Wayne, Indiana 46809.

2.Conditions of Effectiveness. The effectiveness of this Amendment (the “Amendment No. 3 Effective Date”) is subject to the receipt by the Administrative Agent of (a) counterparts of (ii) this Amendment duly executed by the Borrowers, the Required Lenders and the Administrative Agent and (ii) the Consent and Reaffirmation attached hereto duly executed by the Guarantors and (b) each of the other documents and certificates described on Annex I attached hereto.

3.Representations and Warranties of the Borrowers. Each Borrower hereby represents and warrants as follows:

(a)This Amendment and the other Loan Documents to which such Borrower is a party (any such Loan Document as modified hereby) constitute legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b)As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default has occurred and is continuing and (ii) the representations and warranties of the Borrowers set forth in the Credit Agreement (as amended hereby) are true and correct in all material respects, except (1) to the extent any such representation or warranty is stated to relate to an earlier date and (2) for changes in the Schedules to the Credit Agreement reflecting transactions after the Effective Date permitted by the Credit Agreement.

4.Reference to and Effect on the Credit Agreement.

(a)Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.

(b)The Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

(c)Except with respect to the subject matter hereof, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith. Furthermore, this Amendment and the subject matter hereof shall not constitute a course of dealing or a consent to any departure by any Borrower from any other term or requirement of the Credit Agreement or any other Loan Document or create any implication that the Administrative Agent or the Lenders would be willing under any circumstances in the future to provide the Borrowers with any additional waivers, amendments or other accommodations.

(d)This Amendment is a Loan Document.

5.Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of Illinois.

6.Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

7.Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Signatures delivered by electronic transmission shall have the same force and effect as manual signatures delivered in person.

[Signature Pages Follow]

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

FRANKLIN ELECTRIC CO., INC.,

as a Borrower

By:/s/ John J. Haines

Name: John J. Haines

Title: Chief Financial Officer

FRANKLIN ELECTRIC B.V.,

as a Borrower

By:/s/ Lars van Marrelo

Name: Lars van Marrelo

Title: Director A

By:/s/ John Jay Haines

Name: John Jay Haines

Title: Director B

JPMORGAN CHASE BANK, N.A.,

individually as a Lender and as Administrative Agent

By:/s/ Morgan K. Boudler

Name: Morgan K. Boudler

Title: Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Lender

By:/s/ Matthew Schmaling

Name: Matthew Schmaling

Title: Vice President

BANK OF AMERICA, N.A.,

as a Lender

By:/s/ Jesse Mullins

Name: Jesse Mullins

Title: Assistant Vice President

HSBC BANK USA, N.A.,

as a Lender

By:/s/ Graeme Robertson

Name: Graeme Robertson

Title: Senior Vice President

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Lender

By:/s/ Ming K. Chu

Name: Ming K. Chu

Title: Vice President

By:/s/ Heidi Sandquist

Name: Heidi Sandquist

Title: Director

CONSENT AND REAFFIRMATION

Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 3 to the Second Amended and Restated Credit Agreement dated as of December 14, 2011 (as amended, restated, supplemented or otherwise modified, the “Credit Agreement”) by and among Franklin Electric Co., Inc., Franklin Electric B.V., the financial institutions from time to time party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), which Amendment No. 3 is dated as of May 5, 2015 (the “Amendment”). Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by the Administrative Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Credit Agreement and any other Loan Document executed by it and acknowledges and agrees that such Credit Agreement and each and every such Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. All references to the Credit Agreement contained in the above‑referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment.

Dated: May 5, 2015

FRANKLIN CONTROL SYSTEMS, INC.

FRANKLIN ELECTRIC INTERNATIONAL, INC.

FRANKLIN ELECTRIC VENTURES LLC FRANKLIN FUELING SYSTEMS, INC.

INTELLIGENT CONTROLS, INC.

PIONEER PUMP HOLDINGS, INC.

PIONEER PUMP, INC.

each as a Guarantor

By: /s/ Jeffrey T. Frappier

Name: Jeffrey T. Frappier

Title: Treasurer

ANNEX I

AMENDMENT NO. 3 TO

FRANKLIN ELECTRIC CO., INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

May 5, 2015

LIST OF CLOSING DOCUMENTS Each capitalized term used herein and not defined herein shall have the meaning assigned to such term in the above-defined Credit Agreement. Items appearing in bold and italics shall be prepared and/or provided by the Borrower and/or Borrower’s counsel.

A.    LOAN DOCUMENTS

1. Amendment No. 3 (the “Amendment”) to Second Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) by and among Franklin Electric Co., Inc., an Indiana corporation (the “US Borrower”), Franklin Electric B.V., a Netherlands corporation (the “Dutch Borrower”, and together with the US Borrower, the “Borrowers”), the institutions from time to time parties thereto as Lenders (the “Lenders”) and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for itself and the other Lenders (the “Administrative Agent”).

2. Supplemental Guaranty for Franklin Control Systems, Inc., an Oregon corporation, Franklin Electric Ventures LLC, an Indiana limited liability company, Pioneer Pump Holdings, Inc., a Delaware corporation, and Pioneer Pump, Inc., a Texas corporation, (collectively, the “New Guarantors”) with respect to that certain Subsidiary Guaranty, dated as of December 14, 2011, executed by the New Guarantors in favor of JPMorgan Chase Bank, N.A., as Administrative Agent.

B.    CORPORATE DOCUMENTS

3. Certificate of an officer of each New Guarantor certifying (i) that there have been no changes in the Certificate of Incorporation or other charter document of such New Guarantor, as attached thereto and as certified as of a recent date by the Secretary of State (or analogous governmental entity) of the jurisdiction of its organization, since the date of the certification thereof by such governmental entity, (ii) the bylaws or other applicable organizational document, as attached thereto, of such New Guarantor as in effect on the date of such certification, (iii) resolutions of the Board of Directors or other governing body of such New Guarantor authorizing the execution, delivery and performance of each Loan Document to which it is a party, and (iv) the names and true signatures of the incumbent officers of each New Guarantor authorized to sign the Loan Documents to which it is a party, and (in the case of the Borrower) authorized to request a Borrowing or the issuance of a Letter of Credit under the Credit Agreement.

4. Good Standing Certificate (or analogous documentation, if applicable) for each New Guarantor from the Secretary of State (or analogous governmental entity) of the jurisdiction of its organization.

5. W-9’s with respect to each of the New Guarantors.

C.    OPINIONS

6. Opinion of the New Guarantors’ counsel, Schiff Hardin LLP, in form and substance acceptable to the Administrative Agent and its counsel.

EX-10.5

EXHIBIT 10.5

May 5, 2015

Franklin Electric Co., Inc.

9255 Coverdale Road

Fort Wayne, Indiana 46809

Re: Confirmation and Amendment No. 1 to Bond Purchase and Loan Agreement and Waiver

Ladies and Gentlemen:

Reference is made to that certain Bond Purchase and Loan Agreement, dated December 31, 2012, among The Board of Commissioners of the County of Allen, as “Issuer”, Franklin Electric Co., Inc., an Indiana corporation, as “Borrower”, and the Bondholders referred to therein (as amended from time to time prior to the date hereof, the “Loan Agreement”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement, as amended hereby.

The Borrower has advised the Required Holders that an Event of Default exists under Section 9.1(e) of the Loan Agreement as a result of certain of the Borrower’s domestic Subsidiaries (namely, Franklin Control Systems, Inc., an Oregon corporation, Pioneer Pump Holdings, Inc., a Delaware corporation, Pioneer Pump, Inc., a Texas corporation, Franklin Electric Ventures LLC, an Indiana limited liability company, Franklin Electric International, Inc., a Delaware corporation, Franklin Fueling Systems, Inc., an Indiana corporation, and Intelligent Controls, Inc., a Maine corporation, (collectively, the “Bank Guarantors”)) granting guarantees to the lenders under the Second Amended and Restated Credit Agreement, dated as of December 14, 2011, among the Borrower, as U.S. Borrower, Franklin Electric B.V., as Dutch Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America and Wells Fargo Bank, National Association, as Co-Syndication Agents, and the Lender parties party thereto (the “Credit Agreement”) in violation of Section 5.1 of the Loan Agreement (which incorporates into such agreement paragraphs 6B(1) and 6B(2) (among others) of the Note Purchase Agreement and which violations relate to paragraphs 6B(1) and 6B(2) of the Note Purchase Agreement). In addition, the Borrower has advised the Required Holders that an Event of Default exists under Section 9.1(c) with respect to (x) the defaults under the Credit Agreement and the Note Purchase Agreement solely resulting from the violation of Section 5.1 of the Loan Agreement (as a result of the violations of paragraphs 6B(1) and 6B(2) of the Note Purchase Agreement), and (y) as a result of the violations of paragraphs 6B(1) and 6B(2) of the Note Purchase Agreement (such Events of Default, the “Existing Events of Default”). The Borrower has requested that the Required Holders waive the Existing Events of Default. As a condition to such waiver, the Required Holders have requested that the Bank Guarantors become guarantors of the Borrower’s obligations under the Loan Agreement (in such capacity the “Subsidiary Guarantors”).

Accordingly, and in accordance with the provisions of Section 11.14 of the Loan Agreement, the parties hereto agree as follows:

SECTION 1. Waiver of Existing Events of Default. Effective on the Effective Date (as defined herein), the Required Holders waive the Existing Events of Default arising prior to the date hereof. The foregoing waiver shall be limited precisely as written and shall relate solely to the Loan Agreement in the manner and to the extent described herein, and nothing in this letter agreement shall be deemed to (a) constitute a consent to or waiver of any Defaults or Events of Defaults existing under the Loan Agreement or the Project Notes (other than the Existing Events of Default) nor of compliance by the Borrower or any Subsidiary with respect to or any modification of any other term, provision or condition of the Loan Agreement or the Project Notes, or (b) prejudice any right or remedy that any holder of any Project Note may now have (after giving effect to the foregoing wavier) or may have in the future under or in connection with the Loan Agreement or any Project Note.

SECTION 2.Amendments to Loan Agreement.

2.1.    New Definitions. Effective on the Effective Date (as defined herein), the following

definitions are inserted in Section 1.1 of the Loan Agreement, as applicable, to read as follows:

“Amendment No. 1’ shall mean that certain Confirmation and Amendment No. 1 to Bond Purchase and Loan Agreement dated December 31, 2012, among The Board of Commissioners of the County of Allen, as ‘Issuer’, the Borrower and the Bondholders referred to therein, which amendment is dated May 5, 2015.”

“‘Principal Credit Facilities’ or ‘Principal Credit Facility’ shall mean collectively or individually, (i) the Second Amended and Restated Credit Agreement, dated as of December 14, 2011, among the Company, as U.S. Borrower, Franklin Electric B.V., as Dutch Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America and Wells Fargo Bank, National Association, as Co-Syndication Agents, and the Lender parties party thereto (including any renewals, extensions, amendments, supplements, restatements, replacements or refinancings thereof, the ‘Bank Credit Facility’), (ii) the Note Purchase Agreement, and (iii) any other private placement issuance of Indebtedness.”

2.2.    Amended Definition. Effective on the Effective Date, the Borrower and

the Required Holders confirm and acknowledge the amendment of Section 1.1 of the Loan Agreement by the amendment of the definition “Priority Debt” contained in paragraph 10B of the Note Purchase Agreement and that such amendment shall be deemed effective for purposes of the Loan Agreement.

2.3    Amendment to Negative Covenants. Effective on the Effective Date,

the Borrower and the Required Holders confirm and acknowledge the amendments of certain negative covenants, namely paragraphs 6B(1)(viii) and 6B(2)(ii), of the Note Purchase Agreement and that such amendments shall be deemed effective for purposes of the Loan Agreement; provided, however that when construed in connection with the Loan Agreement, the terms “Principal Credit Facilities” or “Principal Credit Facility” as used in paragraph 6B of the Note Purchase Agreement, shall mean “Principal Credit Facilities” or “Principal Credit Facility”, as applicable, in either case as defined in the Loan Agreement.

2.4    Amendment to Affirmative Covenants. Effective on the Effective Date,

the Borrower and the Required Holders confirm and acknowledge the amendments of certain affirmative covenants, namely paragraphs 5H and 5I of the Note Purchase Agreement and that such amendments shall be deemed effective for purposes of the Loan Agreement; provided, however, that when construed in connection with the Loan Agreement, the phrase “Amendment No. 6” as used in paragraphs 5H and 5I of the Note Purchase Agreement shall mean “Amendment No. 1”.

SECTION 3. Conditions Precedent. The waiver in Section 1 and the amendment in Section 2 of this letter shall become effective as of the date (the “Effective Date”) upon which each of the following conditions is satisfied:

3.1     Documents. The Required Holders shall have received original counterparts or, if satisfactory to the Required Holders, certified or other copies of this letter and the Subsidiary Guaranty Agreement (in the form of Exhibit A hereto), duly executed by the Borrower and the Issuer, in the case of this letter (except that the Issuer may execute this letter within thirty days of the date hereof, which delay in execution, if applicable, shall not impact the deemed effectiveness of this letter), and the Subsidiary Guarantors, in the case of the Subsidiary Guaranty Agreement delivered by the party or parties thereto, in form and substance satisfactory to the Required Holders, dated the date hereof unless otherwise indicated (with the approval of the Required Holders), and on such date in full force and effect. Each such Subsidiary Guaranty Agreement shall be accompanied by a certificate of the Secretary or Assistant Secretary of such Subsidiary Guarantor certifying its charter and bylaws (or comparable governing documents), resolutions of the board of directors (or comparable governing body) of such Subsidiary Guarantor authorizing the execution and delivery of such Subsidiary Guaranty Agreement and incumbency and specimen signatures of the officers of such Subsidiary Guarantor executing such documents, and by such other certificates, documents and legal opinions in connection therewith as may be reasonably requested by Prudential, each in form and substance reasonably satisfactory to the Required Holders.

3.2    Amendment to Credit Agreement. The Required Holders shall have received a copy of the fully executed amendment to the Credit Agreement, which amendment shall be in full force and effect, and in form and substance reasonably satisfactory to the Required Holders.

3.3    Amendment to Note Purchase Agreement. The Required Holders shall have received a copy of the fully executed amendment to the Note Purchase Agreement, which amendment shall be in full force and effect.

3.4.     Fees and Expenses. The Borrower shall have paid the fees and expenses of special counsel to the holders of the Project Notes and corresponding Project Bonds that have been presented to the Borrower as of the Effective Date.

3.5     Representations and Warranties. The representations and warranties of the Borrower in Section 4 hereof shall be true and correct on the Effective Date.

3.6     Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to the Required Holders and

its counsel, and the Required Holders shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

SECTION 4. Representations and Warranties. To induce the Required Holders to execute and deliver this letter, the Borrower hereby represents, warrants and covenants that (1) the execution and delivery of this letter has been duly authorized by all necessary corporate action on behalf of the Borrower and this letter has been executed and delivered by a duly authorized officer of the Borrower, and all necessary or required consents to this letter have been obtained and are in full force and effect, (2) the representations and warranties contained in Article IV of the Loan Agreement are true on and as of the Effective Date, and (3) there shall not exist on the Effective Date any Event of Default or Default (other than the Existing Events of Default).

SECTION 5. Reference to and Effect on Loan Agreement. Upon the effectiveness of the amendments and waiver in this letter, each reference to the Loan Agreement in any other document, instrument or agreement shall mean and be a reference to the Loan Agreement, as modified by this letter. Except as specifically set forth in Sections 1 and 2 of this letter, the Loan Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. Except as specifically set forth in Sections 1, 2 and 3 of this letter, the execution, delivery and effectiveness of this letter shall not (a) amend the Loan Agreement or any Project Note or Project Bond, (b) operate as a waiver of any right, power or remedy of the holder of any Project Note or Project Bond, or (c) constitute a waiver of, or consent to any departure from, any provision of the Loan Agreement or any Project Note or Project Bond at any time. The Borrower acknowledges and agrees that no holder of any Project Notes or Project Bonds is under any duty or obligation of any kind or nature whatsoever to grant the Borrower any additional waivers or consents of any type, whether or not under similar circumstances, and no course of dealing or course of performance shall be deemed to have occurred as a result of the wavier and consent herein.

SECTION 6. Expenses. The Borrower hereby confirms its obligations under the Loan Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request by the Required Holders, all reasonable out-of-pocket costs and expenses, including attorneys’ fees and expenses, incurred by the Required Holders in connection with this letter agreement or the transactions contemplated hereby, in enforcing any rights under this letter, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this letter or the transactions contemplated hereby. The obligations of the Borrower under this Section 6 shall survive transfer by any holder of any Project Bond or Project Note and payment of any Project Bond or Project Note.

SECTION 7. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES OR IN CONNECTION WITH ANY CLAIMS OR DISPUTES ARISING OUT OF OR RELATING TO THIS LETTER (WHETHER SOUNDING IN CONTRACT OR TORT) SHALL BE GOVERNED BY, THE LAW OF THE STATE OF INDIANA (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER JURISDICTION).

SECTION 8. Counterparts; Facsimile Signature Pages; Section Titles. This letter may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this letter by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this letter. The section titles contained in this letter are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

[signature page follows]

Very truly yours,

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

By:    _______________________________    

Vice President

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:    __________________________

Vice President

AMERICAN INCOME LIFE INSURANCE COMPANY

GLOBAL LIFE AND ACCIDENT INSURANCE COMPANY

By: Prudential Private Placement Investors, L.P. (as Investment Advisor)

By: Prudential Private Placement Investors, Inc. (as General Partner)

By:    __________________________

Vice President

Agreed and accepted:

FRANKLIN ELECTRIC, CO., INC.

By:

Name:

Title:

Agreed and accepted:

THE BOARD OF COMMISSIONERS OF ALLEN COUNTY, INDIANA

acting for and on behalf of ALLEN COUNTY, INDIANA,

a county and political subdivision of the State of Indiana

By:

Nelson Peters, Commissioner

By:

Linda K. Bloom, Commissioner

By:

Therese Brown, Commissioner

(Seal)

Attest:

_________________________

Tera K. Klutz, CPA, Auditor

Allen County, Indiana

EXHIBIT A

SUBSIDIARY GUARANTY AGREEMENT

This Subsidiary Guaranty Agreement, dated as of ____, ____ (this “Guaranty Agreement”), is made by each of the undersigned (each a “Guarantor” and, together with each of the other signatories hereto and any other entities from time to time parties hereto pursuant to Section 13.1 hereof, the “Guarantors”) in favor of the holders of the Project Notes (as defined below) and corresponding Project Bonds (as defined below) under the Bond Purchase and Loan Agreement, dated December 31, 2012, among the Issuer, Franklin Electric Co., Inc., an Indiana corporation, as borrower (the “Borrower”), and the Bondholders or “Holders” referred to therein (as amended from time to time prior to the date hereof, the “Loan Agreement”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.

Preliminary Statements:

I.    Pursuant to the Loan Agreement, the Issuer has issued $25,000,000 of Project Bonds to the Holders, the proceeds of which were loaned to the Borrower to finance the costs of the acquisition, construction, installation and equipping of the Project. The Borrower has evidenced such loan by the issuance of $25,000,000 of Project Notes to the Issuer, which Project Notes were assigned to the Holders.

II.    Pursuant to the Loan Agreement, payments due under the Project Bonds are payable by the Borrower and such payments are secured by the Trust Estate and the Pledged Revenues, including payments under the Project Notes, which have been transferred to the Holders to satisfy the obligations under the Project Bonds.

III.    It is a condition to the effectiveness of Amendment No. 1 that this Guaranty Agreement shall have been executed and delivered by each Guarantor and shall be in full force and effect.

IV.    Each Guarantor will receive direct and indirect benefits from the waiver under Amendment No. 1 and the financing arrangements contemplated by the Loan Agreement as modified by Amendment No. 1. The board of directors (or an authorized committee thereof), general partner or board of managers, as applicable, of each Guarantor has determined that the incurrence of such obligations is in the best interests of such Guarantor.

Now Therefore, in order to induce, and in consideration of, the execution of Amendment No. 1 and the receipt of the benefits set forth in Amendment No. 1 and the Loan Agreement, each Guarantor hereby covenants and agrees with, and represents and warrants to each of the Holders as follows:

Section 1.Guaranty.

Each Guarantor hereby irrevocably, unconditionally and jointly and severally with the other Guarantors guarantees to each Holder, the due and punctual payment in full of (a) the principal of, Yield Maintenance Amount, if any, and interest on (including, without limitation, interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), and any other amounts due under, the Project Notes when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by acceleration or otherwise) and (b) any other sums which may become due under the terms and provisions of the Project Notes, the Loan Agreement or any other instrument referred to therein, (all such obligations described in clauses (a) and (b) above are herein called the “Guaranteed Obligations”). The guaranty in the preceding sentence is an absolute, present and continuing guaranty of payment and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Borrower or any other guarantor of the Project Notes (including, without limitation, any other Guarantor hereunder) or upon any other action, occurrence or circumstance whatsoever. In the event that the Borrower shall fail so to pay any of such Guaranteed Obligations, each Guarantor agrees to pay the same when due to the Holders entitled thereto, without demand, presentment, protest or notice of any kind, in lawful money of the United States of America, pursuant to the requirements for payment specified in the Project Notes and the Loan Agreement. Each default in payment of any of the Guaranteed Obligations shall give rise to a separate cause of action hereunder and separate suits may be brought hereunder as each cause of action arises. Each Guarantor agrees that the Project Notes issued in connection with the Loan Agreement may (but need not) make reference to this Guaranty Agreement.

Each Guarantor agrees to pay and to indemnify and save each Holder harmless from and against any damage, loss, cost or expense (including attorneys’ fees) which such Holder may incur or be subject to as a consequence, direct or indirect, of (x) any breach by such Guarantor, by any other Guarantor or by the Borrower of any warranty, covenant, term or condition in, or the

occurrence of any default under, this Guaranty Agreement, the Project Notes, the Loan Agreement or any other instrument referred to therein, together with all expenses resulting from the compromise or defense of any claims or liabilities arising as a result of any such breach or default, (y) any legal action commenced to challenge the validity or enforceability of this Guaranty Agreement, the Project Notes, the Loan Agreement or any other instrument referred to therein and (z) enforcing or defending (or determining whether or how to enforce or defend) the provisions of this Guaranty Agreement.

Each Guarantor hereby acknowledges and agrees that such Guarantor’s liability hereunder is joint and several with the other Guarantors and any other Person(s) who may guarantee the obligations and Indebtedness under and in respect of the Project Notes and the Loan Agreement.

Notwithstanding the foregoing provisions or any other provision of this Guaranty Agreement, the Holders (on behalf of themselves and their successors and assigns) and each Guarantor hereby agree that if at any time the Guaranteed Obligations exceed the Maximum Guaranteed Amount determined as of such time with regard to such Guarantor, then this Guaranty Agreement shall be automatically amended to reduce the Guaranteed Obligations to the Maximum Guaranteed Amount. Such amendment shall not require the written consent of any Guarantor or any Holder and shall be deemed to have been automatically consented to by each Guarantor and each Holder. Each Guarantor agrees that the Guaranteed Obligations may at any time exceed the Maximum Guaranteed Amount without affecting or impairing the obligation of such Guarantor. “Maximum Guaranteed Amount” means as of the date of determination with respect to a Guarantor, the lesser of (a) the amount of the Guaranteed Obligations outstanding on such date and (b) the maximum amount that would not render such Guarantor’s liability under this Guaranty Agreement subject to avoidance under Section 548 of the United States Bankruptcy Code (or any successor provision) or any comparable provision of applicable state law.

Section 2.Obligations Absolute.

The obligations of each Guarantor hereunder shall be primary, absolute, irrevocable and unconditional, irrespective of the validity or enforceability of the Project Notes, the Loan Agreement or any other instrument referred to therein, shall not be subject to any counterclaim, setoff, deduction or defense based upon any claim such Guarantor may have against the Borrower or any Holder or otherwise, and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever (whether or not such Guarantor shall have any knowledge or notice thereof), including, without limitation: (a) any amendment to, modification of, supplement to or restatement of the Project Notes, the Loan Agreement or any other instrument referred to therein (it being agreed that the obligations of each Guarantor hereunder shall apply to the Project Notes, the Loan Agreement or any such other instrument as so amended, modified, supplemented or restated) or any assignment or transfer of any thereof or of any interest therein, or any furnishing, acceptance or release of any security for the Project Notes or the addition, substitution or release of any other Guarantor or any other entity or other Person primarily or secondarily liable in respect of the Guaranteed Obligations; (b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of the Project Notes, the Loan Agreement or any other instrument referred to therein; (c) any bankruptcy, insolvency, arrangement, reorganization, readjustment, composition, liquidation or similar proceeding with respect to the Borrower or its property; (d) any merger, amalgamation or consolidation of any Guarantor or of the Borrower into or with any other Person or any sale, lease or transfer of any or all of the assets of any Guarantor or of the Borrower to any Person; (e) any failure on the part of the Borrower for any reason to comply with or perform any of the terms of any other agreement with any Guarantor; (f) any failure on the part of any Holder to obtain, maintain, register or otherwise perfect any security; or (g) any other event or circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (whether or not similar to the foregoing), and in any event however material or prejudicial it may be to any Guarantor or to any subrogation, contribution or reimbursement rights any Guarantor may otherwise have. Each Guarantor covenants that its obligations hereunder will not be discharged except by indefeasible payment in full in cash of all of the Guaranteed Obligations and all other obligations hereunder.

Section 3.Waiver.

Each Guarantor unconditionally waives to the fullest extent permitted by law, (a) notice of acceptance hereof, of any action taken or omitted in reliance hereon and of any default by the Borrower in the payment of any amounts due under the Project Notes, the Loan Agreement or any other instrument referred to therein, and of any of the matters referred to in Section 2 hereof, (b) all notices which may be required by statute, rule of law or otherwise to preserve any of the rights of any Holder against such Guarantor, including, without limitation, presentment to or demand for payment from the Borrower or any Guarantor with respect to any Project Bond, notice to the Borrower or to any Guarantor of default or protest for nonpayment or dishonor and the filing of claims with a court in the event of the bankruptcy of the Borrower, (c) any right to require any Holder to enforce, assert or exercise any right, power or remedy including, without limitation, any right, power or remedy conferred in the Loan Agreement

or the Project Notes (d) any requirement for diligence on the part of any Holder and (e) any other act or omission or thing or delay in doing any other act or thing which might in any manner or to any extent vary the risk of such Guarantor or otherwise operate as a discharge of such Guarantor or in any manner lessen the obligations of such Guarantor hereunder.

Section 4.Obligations Unimpaired.

Each Guarantor authorizes the Holders, without notice or demand to such Guarantor or any other Guarantor and without affecting its obligations hereunder, from time to time: (a) to renew, compromise, extend, accelerate or otherwise change the time for payment of, all or any part of the Project Notes, the Loan Agreement or any other instrument referred to therein; (b) to change any of the representations, covenants, events of default or any other terms or conditions of or pertaining to the Project Notes, the Loan Agreement or any other instrument referred to therein, including, without limitation, decreases or increases in amounts of principal, rates of interest, the Yield Maintenance Amount or any other obligation; (c) to take and hold security for the payment of the Project Notes, the Loan Agreement or any other instrument referred to therein, for the performance of this Guaranty Agreement or otherwise for the Indebtedness guaranteed hereby and to exchange, enforce, waive, subordinate and release any such security; (d) to apply any such security and to direct the order or manner of sale thereof as the Holders in their sole discretion may determine; (e) to obtain additional or substitute endorsers or guarantors or release any other Guarantor or any other Person or entity primarily or secondarily liable in respect of the Guaranteed Obligations; (f) to exercise or refrain from exercising any rights against the Borrower, any Guarantor or any other Person; and (g) to apply any sums, by whomsoever paid or however realized, to the payment of the Guaranteed Obligations and all other obligations owed hereunder. The Holders shall have no obligation to proceed against any additional or substitute endorsers or guarantors or to pursue or exhaust any security provided by the Borrower, such Guarantor or any other Guarantor or any other Person or to pursue any other remedy available to the Holders.

If an event permitting the acceleration of the maturity of the principal amount of any Project Notes shall exist and such acceleration shall at such time be prevented or the right of any Holder to receive any payment on account of the Guaranteed Obligations shall at such time be delayed or otherwise affected by reason of the pendency against the Borrower, any Guarantor or any other guarantors of a case or proceeding under a bankruptcy or insolvency law, such Guarantor agrees that, for purposes of this Guaranty Agreement and its obligations hereunder, the maturity of such principal amount shall be deemed to have been accelerated with the same effect as if the Holder thereof had accelerated the same in accordance with the terms of the Loan Agreement, and such Guarantor shall forthwith pay such accelerated Guaranteed Obligations.

Section 5.Subrogation and Subordination.

(a)    Each Guarantor will not exercise any rights which it may have acquired by way of subrogation under this Guaranty Agreement, by any payment made hereunder or otherwise, or accept any payment on account of such subrogation rights, or any rights of reimbursement, contribution or indemnity or any rights or recourse to any security for the Project Notes or this Guaranty Agreement unless and until all of the Guaranteed Obligations shall have been indefeasibly paid in full in cash.

(b)    Each Guarantor hereby subordinates the payment of all Indebtedness and other obligations of the Borrower or any other guarantor of the Guaranteed Obligations owing to such Guarantor, whether now existing or hereafter arising, including, without limitation, all rights and claims described in clause (a) of this Section 5, to the indefeasible payment in full in cash of all of the Guaranteed Obligations. If the Required Holders so request, any such Indebtedness or other obligations shall be enforced and performance received by such Guarantor as trustee for the Holders and the proceeds thereof shall be paid over to the Holders promptly, in the form received (together with any necessary endorsements) to be applied to the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Required Holders, but without reducing or affecting in any manner the liability of any Guarantor under this Guaranty Agreement.

(c)    If any amount or other payment is made to or accepted by any Guarantor in violation of any of the preceding clauses (a) and (b) of this Section 5, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders and shall be paid over to the Holders promptly, in the form received (together with any necessary endorsements) to be applied to the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Required Holders, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty Agreement.

(d)    Each Guarantor acknowledges that it will receive direct and indirect benefits from Amendment No. 1 and certain financing arrangements that the Borrower has entered into and which are referred to in Amendment No. 1 and that its agreements set forth in this Guaranty Agreement (including this Section 5) are knowingly made in contemplation of such benefits.

(e)    Each Guarantor hereby agrees that, to the extent that a Guarantor shall have paid an amount hereunder to any Holder that is greater than the net value of the benefits received, directly or indirectly, by such paying Guarantor as a result of the

issuance and sale of the Project Notes (such net value, its “Proportionate Share”), such paying Guarantor shall, subject to Section 5(a) and 5(b), be entitled to contribution from any Guarantor that has not paid its Proportionate Share of the Guaranteed Obligations. Any amount payable as a contribution under this Section 5(e) shall be determined as of the date on which the related payment is made by such Guarantor seeking contribution and each Guarantor acknowledges that the right to contribution hereunder shall constitute an asset of such Guarantor to which such contribution is owed. Notwithstanding the foregoing, the provisions of this Section 5(e) shall in no respect limit the obligations and liabilities of any Guarantor to the Holders of the Project Notes, the Loan Agreement or any other document, instrument or agreement executed in connection therewith, and each Guarantor shall remain jointly and severally liable for the full payment and performance of the Guaranteed Obligations.

Section 6.Reinstatement of Guaranty. This Guaranty Agreement shall continue to be effective, or be reinstated, as the case may be, if and to the extent at any time payment, in whole or in part, of any of the sums due to any Holder on account of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by a Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any other guarantors, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Borrower or any other guarantors or any part of its or their property, or otherwise, all as though such payments had not been made.

Section 7.Rank of Guaranty. Each Guarantor will ensure that its payment obligations under this Guaranty Agreement will at all times rank at least pari passu, without preference or priority, with all other unsecured and unsubordinated Indebtedness of such Guarantor now or hereafter existing.

Section 8.Representations and Warranties of Each Guarantor. Each Guarantor represents and warrants to each Holder as follows:

Section 8.1.Organization; Power and Authority. Such Guarantor is validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation, limited liability company or limited partnership and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, operations or condition (financial or otherwise) of the Guarantor and its subsidiaries taken as a whole. Such Guarantor has the corporate, limited liability company or partnership power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Guaranty Agreement and to perform the provisions hereof.

Section 8.2.Authorization, Etc. This Guaranty Agreement has been duly authorized by all necessary corporate, limited liability company or partnership action on the part of such Guarantor, and this Guaranty Agreement constitutes a legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 8.3.Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by such Guarantor of this Guaranty Agreement will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Guarantor or any of its Subsidiaries under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, organizational documents, or any other agreement or instrument to which such Guarantor or any of its Subsidiaries is bound or by which such Guarantor or any of its Subsidiaries or any of their respective properties may be bound or affected, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Guarantor or any of its Subsidiaries or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Guarantor or any of its Subsidiaries.

Section 8.4.Governmental Authorizations, Etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by such Guarantor of this Guaranty Agreement.

Section 8.5.Information Regarding the Borrower. Such Guarantor now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Borrower. No Holder shall have any duty or responsibility to provide such Guarantor with any credit or other information concerning the affairs, financial condition or business of the Borrower which may come into possession of the Holders. Such Guarantor has executed and delivered this Guaranty Agreement without reliance upon any representation by the Holders including, without limitation, with respect to (a) the due execution, validity, effectiveness or enforceability of any instrument, document or agreement evidencing or relating to

any of the Guaranteed Obligations or any loan or other financial accommodation made or granted to the Borrower, (b) the validity, genuineness, enforceability, existence, value or sufficiency of any property (if any) securing any of the Shelf Notes or the creation, perfection or priority of any lien or security interest (if any) or (c) the existence, number, financial condition or creditworthiness of other guarantors or sureties, if any, with respect to any of the Guaranteed Obligations.

Section 8.6.Solvency. Upon the execution and delivery hereof, such Guarantor will be solvent, will be able to pay its debts as they mature, and will have capital sufficient to carry on its business.

Section 9.Term of Guaranty Agreement. This Guaranty Agreement and all guarantees, covenants and agreements of the Guarantors contained herein shall continue in full force and effect and shall not be discharged until such time as the Issuance Period shall have terminated and all of the Guaranteed Obligations and all other obligations hereunder shall be indefeasibly paid in full in cash and shall be subject to reinstatement pursuant to Section 6.

Section 10.Survival of Representations and Warranties; Entire Agreement. All representations and warranties contained herein shall survive the execution and delivery of this Guaranty Agreement and may be relied upon by any subsequent Holder, regardless of any investigation made at any time by or on behalf of any Holder or any other Holder. All statements contained in any certificate or other instrument delivered by or on behalf of a Guarantor pursuant to this Guaranty Agreement shall be deemed representations and warranties of such Guarantor under this Guaranty Agreement. Subject to the preceding sentence, this Guaranty Agreement embodies the entire agreement and understanding between each Holder and the Guarantors and supersedes all prior agreements and understandings relating to the subject matter hereof.

Section 11.Amendment and Waiver.

Section 11.1.Requirements. Except as otherwise provided in the fourth paragraph of Section 1 of this Guaranty Agreement, this Guaranty Agreement may be amended, and the observance of any term hereof may be waived (either retroactively or prospectively), with (and only with) the written consent of each Guarantor and the Required Holders, except that no amendment or waiver (a) of any of the first three paragraphs of Section 1 or any of the provisions of Section 2, 3, 4, 5, 6, 7, 9, or 11 hereof, or any defined term (as it is used therein), or (b) which results in the limitation of the liability of any Guarantor hereunder (except to the extent provided in the fourth paragraph of Section 1 of this Guaranty Agreement) will be effective as to any Holder unless consented to by such Holder in writing.

Section 11.2.Solicitation of Holders of Project Bonds.

(a)    Solicitation. Each Guarantor will provide each Holder of the Project Bonds (and corresponding Project Notes) (irrespective of the amount of Project Bonds (and Project Notes) then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such Holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof. Each Guarantor will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 11.2 to each Holder promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite Holders of Project Bonds (and Project Notes).

(b)    Payment. The Guarantors will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any Holder as consideration for or as an inducement to the entering into by any Holder of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each Holder even if such Holder did not consent to such waiver or amendment.

Section 11.3.Binding Effect. Any amendment or waiver consented to as provided in this Section 11 applies equally to all Holders and is binding upon them and upon each future Holder and upon each Guarantor without regard to whether any Project Note (or Project Bond) has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant or agreement not expressly amended or waived or impair any right consequent thereon. No course of dealing between a Guarantor and the Holder nor any delay in exercising any rights hereunder or under any Project Bond or Project Note shall operate as a waiver of any rights of any Holder. As used herein, the term “this Guaranty Agreement” and references thereto shall mean this Guaranty Agreement as it may be amended, modified, supplemented or restated from time to time.

Section 11.4.Notes Held By Company, Etc. Solely for the purpose of determining whether the Holders of the requisite percentage of the aggregate principal amount of Project Bonds then outstanding approved or consented to any amendment,

waiver or consent to be given under this Guaranty Agreement, or have directed the taking of any action provided herein to be taken upon the direction of the Holders of a specified percentage of the aggregate principal amount of Project Bonds then outstanding, Project Bonds directly or indirectly owned by any Guarantor, the Borrower or any of their respective Affiliates shall be deemed not to be outstanding.

Section 12.Notices. All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

(a)    if to any Guarantor, to the address of the Borrower specified in the Loan Agreement, or such other address as such Guarantor shall have specified to the Holders in writing, or

(b)    if to any Holder, to such Holder at the address specified for in Schedule I to the Loan Agreement , or such other address as such Holder shall have specified to the Guarantors in writing.

Notice under this Section 12 will be deemed given only when actually received.

Section 13.Miscellaneous.

Section 13.1.Successors and Assigns; Joinder. All covenants and other agreements

contained in this Guaranty Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns whether so expressed or not. It is agreed and understood that any Person may become a Guarantor hereunder by executing a Guarantor Supplement substantially in the form of Exhibit A attached hereto and delivering the same to the Holders. Any such Person shall thereafter be a “Guarantor” for all purposes under this Guaranty Agreement.

Section 13.2.Severability. Any provision of this Guaranty Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law), not invalidate or render unenforceable such provision in any other jurisdiction.

Section 13.3.Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

The section and subsection headings in this Guaranty Agreement are for convenience of reference only and shall neither be deemed to be a part of this Guaranty Agreement nor modify, define, expand or limit any of the terms or provisions hereof. All references herein to numbered sections, unless otherwise indicated, are to sections of this Guaranty Agreement. Words and definitions in the singular shall be read and construed as though in the plural and vice versa, and words in the masculine, neuter or feminine gender shall be read and construed as though in either of the other genders where the context so requires.

Section 13.4.Further Assurances. Each Guarantor agrees to execute and deliver all such instruments and take all such action as the Required Holders may from time to time reasonably request in order to effectuate fully the purposes of this Guaranty Agreement.

Section 13.5.Governing Law. This Guaranty Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois, excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

Section 13.6.Jurisdiction and Process; Waiver of Jury Trial.

(a)    Each Guarantor irrevocably submits to the non-exclusive jurisdiction of any Illinois State or federal court sitting in the Northern District of Illinois, over any suit, action or proceeding arising out of or relating to this Guaranty Agreement. To the fullest extent permitted by applicable law, each Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b)    Each Guarantor consents to process being served by or on behalf of any Holder in any suit, action or proceeding of the nature referred to in Section 13.6(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 12 or at such other address of which such Holder shall then have been notified pursuant to Section 12. Each Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c)    Nothing in this Section 13.6 shall affect the right of any Holder to serve process in any manner permitted by law, or limit any right that the Holders may have to bring proceedings against any Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d)    THE GUARANTORS AND THE HOLDERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS GUARANTY AGREEMENT OR OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH.

Section 13.7.[Intentionally Omitted].

Section 13.8.Reproduction of Documents; Execution. This Guaranty Agreement may be reproduced by any Holder by any photographic, photostatic, electronic, digital, or other similar process and such Holder may destroy any original document so reproduced. Each Guarantor agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Holder in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 13.7 shall not prohibit any Guarantor or any other Holder from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. A facsimile or electronic transmission of the signature page of a Guarantor shall be as effective as delivery of a manually executed counterpart hereof and shall be admissible into evidence for all purposes.

[SIGNATURE PAGE FOLLOWS]

In Witness Whereof, each Guarantor has caused this Guaranty Agreement to be duly executed and delivered as of the date and year first above written.

Franklin Control Systems, Inc. By:_______________________________ Name: Title:	Pioneer Pump Holdings, Inc. By:_______________________________ Name: Title:
Franklin Electric Ventures LLC By: Franklin Electric Co., Inc. Its: Sole Member and Manager By:_______________________________ Name: Title:	Pioneer Pump, Inc. By:_______________________________ Name: Title:
Franklin Electric International, Inc. By:_______________________________ Name: Title:	Franklin Fueling Systems, Inc. By:_______________________________ Name: Title:
Intelligent Controls, Inc. By:_______________________________ Name: Title:

EXHIBIT A

Guarantor Supplement

THIS GUARANTOR SUPPLEMENT (this “Guarantor Supplement”), dated as of [_______________, 20__] is made by [_______________], a [_______________](the “Additional Guarantor”), in favor of the Holders from time to time of the Project Notes issued pursuant to the Loan Agreement described below.

Preliminary Statements:

I.    Pursuant to the Bond Purchase and Loan Agreement, dated December 31, 2012, among The Board of Commissioners of the County of Allen, as “Issuer”, Franklin Electric Co., Inc., an Indiana corporation, as borrower (the “Borrower”), and the Bondholders or “Holders” referred to therein (as amended from time to time prior to the date hereof, the “Loan Agreement”), the Borrower has issued $25,000,000 aggregate principal amount of Project Notes ([collectively,] the “Outstanding Notes”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.

II.    The Borrower is required pursuant to the Loan Agreement to cause the Additional Guarantor to deliver this Guarantor Supplement in order to cause the Additional Guarantor to become a Guarantor under the Guaranty Agreement dated as of ___, ____, executed by ____________________ (together with each entity that from time to time has become or shall become a party thereto by executing a Guarantor Supplement pursuant to Section 13.1 thereof, collectively, the “Guarantors”) in favor of each Holder from time to time of any of the Project Notes (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty Agreement”).

III.    The Additional Guarantor has received and will receive substantial direct and indirect benefits from the Borrower’ compliance with the terms and conditions of the Loan Agreement and the Project Notes issued thereunder.

IV.    Capitalized terms used and not otherwise defined herein have the definitions set forth in the Loan Agreement.

Now Therefore, in consideration of the funds advanced to the Borrower by the Holders under the Loan Agreement and to enable the Borrower to comply with the terms of the Loan Agreement, the Additional Guarantor hereby covenants, represents and warrants to the Holders as follows:

The Additional Guarantor hereby becomes a Guarantor (as defined in the Guaranty Agreement) for all purposes of the Guaranty Agreement. Without limiting the foregoing, the Additional Guarantor hereby (a) jointly and severally with the other Guarantors under the Guaranty Agreement, guarantees to the Holders from time to time of the Project Notes the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and the full and prompt performance and observance of all Guaranteed Obligations (as defined in Section 1 of the Guaranty Agreement) in the same manner and to the same extent as is provided in the Guaranty Agreement, (b) accepts and agrees to perform and observe all of the covenants set forth therein, (c) waives the rights set forth in Section 3 of the Guaranty Agreement, (d) makes the representations and warranties set forth in Section 8 of the Guaranty Agreement and (e) waives the rights, submits to jurisdiction, and waives service of process as described in Section 13.6 of the Guaranty Agreement.

Notice of acceptance of this Guarantor Supplement and of the Guaranty Agreement, as supplemented hereby, is hereby waived by the Additional Guarantor.

The address for notices and other communications to be delivered to the Additional Guarantor pursuant to Section 12 of the Guaranty Agreement is set forth below.

In Witness Whereof, the Additional Guarantor has caused this Guarantor Supplement to be duly executed and delivered as of the date and year first above written.

[Name of Guarantor]

By:

Name:

Title:

Notice Address for such Guarantor

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregg C. Sengstack, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric Co., Inc., for the first quarter ending April 4, 2015;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Franklin Electric Co., Inc. as of, and for, the periods presented in this report;

4. Franklin Electric Co., Inc.'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 Franklin Electric Co., Inc. and we have:

a. 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 Franklin Electric Co., Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. 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 Franklin Electric Co., Inc.'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 report based on such evaluation; and

d. Disclosed in this report any changes in Franklin Electric Co., Inc.'s internal control over financial reporting that occurred during Franklin Electric Co., Inc.'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. Franklin Electric Co., Inc.'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Franklin Electric Co., Inc.'s auditors and the audit committee of Franklin Electric Co., Inc.'s board of directors:

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 Franklin Electric Co., Inc.'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 Franklin Electric Co., Inc.'s internal control over financial reporting.

Date:	Date: May 6, 2015
	/s/ Gregg C. Sengstack
	Gregg C. Sengstack
	President and Chief Executive Officer
	Franklin Electric Co., Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John J. Haines, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric Co., Inc., for the first quarter ending April 4, 2015;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Franklin Electric Co., Inc. as of, and for, the periods presented in this report;

4. Franklin Electric Co., Inc.'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 Franklin Electric Co., Inc. and we have:

a. 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 Franklin Electric Co., Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. 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 Franklin Electric Co., Inc.'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 report based on such evaluation; and

d. Disclosed in this report any change in Franklin Electric Co., Inc.'s internal control over financial reporting that occurred during Franklin Electric Co., Inc.'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, Franklin Electric Co., Inc.'s internal control over financial reporting; and

5. Franklin Electric Co., Inc.'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Franklin Electric Co., Inc.'s auditors and the audit committee of Franklin Electric Co., Inc.'s board of directors:

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 Franklin Electric Co., Inc.'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 Franklin Electric Co., Inc.'s internal control over financial reporting.

Date:	Date: May 6, 2015
	/s/ John J. Haines
	John J. Haines
	Vice President and Chief Financial Officer and Secretary
	Franklin Electric Co., Inc.

EX-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 4, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregg C. Sengstack, President and Chief Executive Officer of the Company, certify to my knowledge, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), 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:	Date: May 6, 2015
	/s/ Gregg C. Sengstack
	Gregg C. Sengstack
	President and Chief Executive Officer
	Franklin Electric Co., Inc.

EX-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 4, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Haines, Vice President and Chief Financial Officer and Secretary of the Company, certify to my knowledge, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), 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:	Date: May 6, 2015
	/s/ John J. Haines
	John J. Haines
	Vice President and Chief Financial Officer and Secretary
	Franklin Electric Co., Inc.

XML

FINANCIAL INSTRUMENTS (Details) (Share Swap Transaction Agreement, Not Designated as Hedging Instrument, USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Derivative
Derivative, cancellable written notice term	30 days
Derivative notional amount (in shares)	147,750
Selling, General and Administrative Expenses
Derivative
Loss on derivative	$ 0.1	$ 0.2

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Details) (USD $)	3 Months Ended
	Apr. 04, 2015		Mar. 29, 2014
Accumulated Other Comprehensive Income/(Loss)
Beginning balance	$ (107,913,000)		$ (54,700,000)
Pre-tax income/(loss)	(27,800,000)		2,100,000
Income tax expense	0		0
Other comprehensive income/(loss) before reclassifications, net of income taxes	(27,800,000)		2,100,000
Pre-tax income	1,000,000		700,000
Income tax expense	(400,000)		(300,000)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	600,000		400,000
Net current period other comprehensive income/(loss), net of income taxes	(27,228,000)		2,666,000
Net current period other comprehensive income/(loss), net of income taxes			2,500,000
Other comprehensive income/(loss) attributable to noncontrolling interest	(300,000)		(300,000)
Ending balance	(134,790,000)		(51,900,000)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income/(Loss)
Beginning balance	(51,800,000)		(16,000,000)
Pre-tax income/(loss)	(27,800,000)		2,100,000
Income tax expense	0		0
Other comprehensive income/(loss) before reclassifications, net of income taxes	(27,800,000)		2,100,000
Pre-tax income	0		0
Income tax expense	0		0
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	0		0
Net current period other comprehensive income/(loss), net of income taxes	(27,800,000)		2,100,000
Other comprehensive income/(loss) attributable to noncontrolling interest	(300,000)		(300,000)
Ending balance	(79,300,000)		(13,600,000)
Pension and Postretirement Plan Benefit Adjustments
Accumulated Other Comprehensive Income/(Loss)
Beginning balance	(56,100,000)		(38,700,000)
Pre-tax income/(loss)	0		0
Income tax expense	0		0
Other comprehensive income/(loss) before reclassifications, net of income taxes	0		0
Pre-tax income	1,000,000	[1]	700,000	[1]
Income tax expense	(400,000)		(300,000)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	600,000		400,000
Net current period other comprehensive income/(loss), net of income taxes	600,000		400,000
Other comprehensive income/(loss) attributable to noncontrolling interest	0		0
Ending balance	$ (55,500,000)		$ (38,300,000)

[1] This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 9 for additional details) and is included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income.

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EARNINGS PER SHARE (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Numerator:
Net income attributable to Franklin Electric Co., Inc. (in dollars)	$ 19,795,000	$ 16,957,000
Less: Undistributed earnings allocated to participating securities (in dollars)	200,000	300,000
Undistributed earnings allocated to redeemable noncontrolling interest	81,000
Net income attributable to Franklin Electric Co., Inc. excluding undistributed earnings (in dollars)	19,500,000	16,700,000
Basic
Weighted average common shares (in shares)	47.6	47.7
Effect of dilutive securities:
Non-participating employee incentive stock options and performance awards (in shares)	0.5	0.6
Adjusted weighted average common shares (in shares)	48.1	48.3
Basic earnings per share (in dollars per share)	$ 0.41	$ 0.35
Diluted earnings per share (in dollars per share)	$ 0.41	$ 0.35
Stock Options
Effect of dilutive securities:
Anti-dilutive stock options (in shares)	0.2	0
Impo Motor Pompa Sanayi ve Ticaret A.S.
Numerator:
Undistributed earnings allocated to redeemable noncontrolling interest	$ 100,000	$ 0

XML

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Apr. 04, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Changes in the Carrying Amount of the Warranty Accrual

The changes in the carrying amount of the warranty accrual, as recorded in the "Accrued expenses and other current liabilities" line of the Company's condensed consolidated balance sheet for the first quarter ended April 4, 2015, are as follows:

(In millions)
Balance as of January 3, 2015	$	9.4
Accruals related to product warranties	1.4
Reductions for payments made	(2.1		)
Balance as of April 4, 2015	$	8.7

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Apr. 04, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets Measured on Recurring Basis

As of April 4, 2015 and January 3, 2015, the assets measured at fair value on a recurring basis were as set forth in the table below.

(In millions)	April 4, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	3.1	$	3.1	$	—	$	—
	January 3, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	5.4	$	5.4	$	—	$	—

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	0 Months Ended
	Apr. 04, 2015	Jan. 22, 2014
Commitments
Purchase obligations	$ 12.0
Product Warranties Disclosures
Standard warranty obligation term (in years)	2 years
Standard installation warranty obligation term (in years)	1 year
Extended warranty obligation term (in years)	5 years
Changes in the Carrying Amount of the Warranty Accrual
Beginning balance	9.4
Accruals related to product warranties	1.4
Reductions for payments made	(2.1)
Ending balance	8.7
California Air Resources Board
Loss Contingencies
Amended judgment, amount paid to the Company		$ 0.1

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EMPLOYEE BENEFIT PLANS (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Net Periodic Benefit Cost
Company contributions	$ 0.8
Pension Benefits
Net Periodic Benefit Cost
Service cost	0.3	0.3
Interest cost	1.8	2.0
Expected return on assets	(2.5)	(2.6)
Amortization of prior service cost	0	0
Amortization of loss	0.8	0.6
Net periodic benefit cost	0.4	0.3
Settlement cost	0.3	0.2
Total net periodic benefit cost	0.7	0.5
Domestic Pension Plans
Net Periodic Benefit Cost and Other Benefit Cost
Number of pension plans (in ones)	2
German Pension Plans
Net Periodic Benefit Cost and Other Benefit Cost
Number of pension plans (in ones)	3
Other Benefits
Net Periodic Benefit Cost
Service cost	0	0
Interest cost	0.1	0.1
Expected return on assets	0	0
Amortization of prior service cost	0.1	0.1
Amortization of loss	0.1	0
Net periodic benefit cost	0.3	0.2
Settlement cost	0	0
Total net periodic benefit cost	$ 0.3	$ 0.2

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REDEEMABLE NONCONTROLLING INTERESTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Apr. 28, 2014	May 02, 2011
Redeemable Noncontrolling Interest
Adjustment to Impo redemption value	$ 81
Impo Motor Pompa Sanayi ve Ticaret A.S.
Redeemable Noncontrolling Interest
Business combination percentage of voting interests acquired			10.00%	80.00%
Noncontrolling interest, ownership percentage by parent			90.00%
Adjustment to Impo redemption value	$ 100	$ 0

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RESTRUCTURING (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Jul. 01, 2014
Restructuring Cost and Reserve
Restructuring expense	$ 463,000	$ 136,000
Restructuring reserves	6,400,000	0
Employee severance
Restructuring Cost and Reserve
Restructuring expense	200,000
Equipment relocation
Restructuring Cost and Reserve
Restructuring expense	100,000
Other
Restructuring Cost and Reserve
Restructuring expense	200,000
Water Systems
Restructuring Cost and Reserve
Restructuring expense	300,000
Water Systems | Employee severance
Restructuring Cost and Reserve
Restructuring expense	0
Water Systems | Equipment relocation
Restructuring Cost and Reserve
Restructuring expense	100,000
Water Systems | Other
Restructuring Cost and Reserve
Restructuring expense	200,000
Fueling Systems
Restructuring Cost and Reserve
Restructuring expense	200,000
Fueling Systems | Employee severance
Restructuring Cost and Reserve
Restructuring expense	200,000
Fueling Systems | Equipment relocation
Restructuring Cost and Reserve
Restructuring expense	0
Fueling Systems | Other
Restructuring Cost and Reserve
Restructuring expense	0
Other
Restructuring Cost and Reserve
Restructuring expense	0
Other | Employee severance
Restructuring Cost and Reserve
Restructuring expense	0
Other | Equipment relocation
Restructuring Cost and Reserve
Restructuring expense	0
Other | Other
Restructuring Cost and Reserve
Restructuring expense	0
Wittlich Facility Closure
Restructuring Cost and Reserve
Restructuring and related cost			$ 19,400,000

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EQUITY ROLL FORWARD (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	$ 598,983
Net income	19,976	17,421
Equity, ending balance	588,996
Increase (Decrease) in Temporary Equity
Temporary equity, beginning balance	6,420
Net income	31
Adjustment to Impo redemption value	81
Currency translation adjustment	(197)
Temporary equity, ending balance	6,335
Common Stock
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	4,759
Common stock issued	5
Common stock repurchased or received for stock options exercised	(6)
Share-based compensation	5
Equity, ending balance	4,763
Additional Paid in Capital
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	207,446
Common stock issued	878
Share-based compensation	2,349
Tax benefit of stock options exercised	514
Equity, ending balance	211,187
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	492,548
Net income	19,795
Adjustment to Impo redemption value	(81)
Dividends on common stock	(4,283)
Common stock repurchased or received for stock options exercised	(2,282)
Equity, ending balance	505,697
Minimum Pension Liability
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	(56,124)
Pension liability, net of tax	654
Equity, ending balance	(55,470)
Cumulative Translation Adjustment
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	(51,789)
Currency translation adjustment	(27,531)
Equity, ending balance	(79,320)
Noncontrolling Interest
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	2,143
Net income	150
Currency translation adjustment	(154)
Equity, ending balance	2,139
Total Equity
Increase (Decrease) in Stockholders' Equity
Equity, beginning balance	598,983
Net income	19,945
Adjustment to Impo redemption value	(81)
Dividends on common stock	(4,283)
Common stock issued	883
Common stock repurchased or received for stock options exercised	(2,288)
Share-based compensation	2,354
Tax benefit of stock options exercised	514
Currency translation adjustment	(27,685)
Pension liability, net of tax	654
Equity, ending balance	$ 588,996

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ACQUISITIONS

3 Months Ended

Apr. 04, 2015

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

In 2012, the Company acquired a controlling interest in Pioneer Pump Holdings, Inc. ("PPH"). Pursuant to the terms of the 2012 stock purchase agreement, the remaining 29.5 percent noncontrolling interest was recorded at $22.9 million and accounted for as a share purchase liability. During the first quarter of 2015, the Company purchased the remaining 29.5 percent of outstanding shares of PPH for $20.2 million, increasing the Company's ownership in PPH to 100 percent. The purchase was considered the settlement of a financing obligation, and the resulting $2.7 million gain is recorded in the Company's condensed consolidated statements of income in the "Other income, net" line.

Transaction costs for all acquisition related activity were expensed as incurred under the guidance of FASB ASC Topic 805, Business Combinations. Transaction costs included in selling, general, and administrative expenses in the Company’s condensed consolidated statements of income were $0.1 million for the first quarters ended April 4, 2015 and March 29, 2014.

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INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015
Income Tax Contingency [Line Items]
Effective tax rate	35.00%
Pioneer Pump Holdings Inc
Income Tax Contingency [Line Items]
Other tax benefit	7.3
Current income tax benefit	1.0

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Apr. 04, 2015

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	First Quarter Ended
(In millions, except per share amounts)	April 4, 2015		March 29, 2014
Numerator:
Net income attributable to Franklin Electric Co., Inc.	$	19.8	$	17.0
Less: Undistributed earnings allocated to participating securities	0.2		0.3
Less: Undistributed earnings allocated to redeemable noncontrolling interest	0.1		—
	$	19.5	$	16.7
Denominator:
Basic
Weighted average common shares	47.6		47.7
Diluted
Effect of dilutive securities:
Non-participating employee incentive stock options and performance awards	0.5		0.6
Adjusted weighted average common shares	48.1		48.3
Basic earnings per share	$	0.41	$	0.35
Diluted earnings per share	$	0.41	$	0.35
Anti-dilutive stock options	0.2		—

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DEBT (Tables)

3 Months Ended

Apr. 04, 2015

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Debt consisted of the following:

(In millions)	April 4, 2015			January 3, 2015
Prudential Agreement - 5.79 percent	$	150.0		$	150.0
Tax increment financing debt	23.2			23.7
Revolver	69.9			—
Capital leases	0.6			0.6
Foreign subsidiary debt	2.7			3.5
	246.4			177.8
Less current maturities	(103.2		)	(34.1		)
Long-term debt	$	143.2		$	143.7

Schedule of Long-term Debt Payments

The following debt payments are expected to be paid in accordance with the following schedule:

(In millions)	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More Than 5 Years
Debt	$	245.8	$	102.9	$	31.1	$	31.1	$	31.4	$	31.1	$	18.2
Capital leases	0.6		0.3		0.1		0.1		0.1		—		—
	$	246.4	$	103.2	$	31.2	$	31.2	$	31.5	$	31.1	$	18.2

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DEBT (Details) (USD $)	Apr. 04, 2015	Jan. 03, 2015
Debt Instrument
Prudential Agreement - 5.79 percent	$ 150,000,000	$ 150,000,000
Tax increment financing debt	23,200,000	23,700,000
Revolver	69,900,000	0
Capital leases	600,000	600,000
Foreign subsidiary debt	2,700,000	3,500,000
Debt and capital lease obligations	246,400,000	177,800,000
Less current maturities	(103,237,000)	(34,092,000)
Long-term debt	$ 143,189,000	$ 143,695,000
Prudential Agreement
Debt Instrument
Prudential Agreement, fixed interest rate	5.79%

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EQUITY ROLL FORWARD (Tables)

3 Months Ended

Apr. 04, 2015

Equity [Abstract]

Schedule of Stockholders' Equity

The schedule below sets forth equity changes in the first quarter ended April 4, 2015:

(In thousands)	Common Stock			Additional Paid in Capital		Retained Earnings			Minimum Pension Liability			Cumulative Translation Adjustment			Noncontrolling Interest			Total Equity			Redeemable Noncontrolling Interest
Balance as of January 3, 2015	$	4,759		$	207,446	$	492,548		$	(56,124	)	$	(51,789	)	$	2,143		$	598,983		$	6,420
Net income						19,795									150			19,945			31
Adjustment to Impo redemption value						(81		)										(81		)	81
Dividends on common stock						(4,283		)										(4,283		)
Common stock issued	5			878														883
Common stock repurchased or received for stock options exercised	(6		)			(2,282		)										(2,288		)
Share-based compensation	5			2,349														2,354
Tax benefit of stock options exercised				514														514
Currency translation adjustment												(27,531		)	(154		)	(27,685		)	(197		)
Pension liability, net of tax									654									654
Balance as of April 4, 2015	$	4,763		$	211,187	$	505,697		$	(55,470	)	$	(79,320	)	$	2,139		$	588,996		$	6,335

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ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Tables)

3 Months Ended

Apr. 04, 2015

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Changes in accumulated other comprehensive income/(loss) by component for the first quarters ended April 4, 2015 and March 29, 2014, are summarized below:

(In millions)
For the first quarter ended April 4, 2015:	Foreign Currency Translation Adjustments			Pension and Post-Retirement Plan Benefit Adjustments				Total
Balance as of January 3, 2015	$	(51.8	)	$	(56.1	)		$	(107.9	)
Other comprehensive income/(loss) before reclassifications:
Pre-tax income/(loss)	(27.8		)	—				(27.8		)
Income tax expense	—			—				—
Other comprehensive income/(loss) before reclassifications, net of income taxes	(27.8		)	—				(27.8		)
Amounts reclassified from accumulated other comprehensive income/(loss):
Pre-tax income	—			1.0			(1)	1.0
Income tax expense	—			(0.4		)		(0.4		)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	—			0.6				0.6
Net current period other comprehensive income/(loss), net of income taxes	(27.8		)	0.6				(27.2		)
Other comprehensive income/(loss) attributable to noncontrolling interest	(0.3		)	—				(0.3		)
Balance as of April 4, 2015	$	(79.3	)	$	(55.5	)		$	(134.8	)
For the first quarter ended March 29, 2014:
Balance as of December 28, 2013	$	(16.0	)	$	(38.7	)		$	(54.7	)
Other comprehensive income/(loss) before reclassifications:
Pre-tax income/(loss)	2.1			—				2.1
Income tax expense	—			—				—
Other comprehensive income/(loss) before reclassifications, net of income taxes	2.1			—				2.1
Amounts reclassified from accumulated other comprehensive income/(loss):
Pre-tax income	—			0.7			(1)	0.7
Income tax expense	—			(0.3		)		(0.3		)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	—			0.4				0.4
Net current period other comprehensive income/(loss), net of income taxes	2.1			0.4				2.5
Other comprehensive income/(loss) attributable to noncontrolling interest	(0.3		)	—				(0.3		)
Balance as of March 29, 2014	$	(13.6	)	$	(38.3	)		$	(51.9	)

(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 9 for additional details) and is included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income.

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ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Apr. 04, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis. The amendments affect both the variable interest entity and voting interest entity consolidation models. The need to assess an entity under a different consolidation model may change previous consolidation conclusions. The standard is effective for both interim and annual reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company has adopted this standard with no impact on the Company's consolidated financial position, results of operations, or cash flows.

Accounting Standards Issued But Not Yet Adopted

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The standard will not change the amortization of debt issuance costs, which will continue to follow the existing accounting guidance. The ASU will be effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company is still in the process of analyzing the effect of this new standard to determine the impact on the Company's consolidated financial position, results of operations, and cash flows.

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. However, on April 1, 2015, the FASB voted to propose a one-year deferral to the effective date, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The proposal will be subject to the FASB's due process requirement, which includes a period for public comments. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt the new ASU. The Company is still in the process of analyzing the effect of this new standard to determine the impact on the Company's consolidated financial position, results of operations, and cash flows.

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SEGMENT INFORMATION (Tables)

3 Months Ended

Apr. 04, 2015

Segment Reporting [Abstract]

Schedule of Financial Information by Reportable Business Segment

Financial information by reportable business segment is included in the following summary:

	First Quarter Ended
(In millions)	April 4, 2015			March 29, 2014
	Net sales to external customers
Water Systems	$	179.2		$	184.6
Fueling Systems	46.5			46.8
Other	—			—
Consolidated	$	225.7		$	231.4
	First Quarter Ended
	April 4, 2015			March 29, 2014
	Operating income (loss)
Water Systems	$	19.4		$	29.2
Fueling Systems	9.6			9.1
Other	(13.1		)	(12.3		)
Consolidated	$	15.9		$	26.0
	April 4, 2015			January 3, 2015
	Total assets
Water Systems	$	761.6		$	757.5
Fueling Systems	251.6			252.7
Other	67.6			65.7
Consolidated	$	1,080.8		$	1,075.9

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GOODWILL AND OTHER INTANGIBLE ASSETS (Intangible Assets) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Jan. 03, 2015
Intangible Assets
Gross carrying amount, amortized intangibles	$ 160.2		$ 163.8
Accumulated amortization	(55.2)		(54.2)
Gross carrying amount, total intangibles	208.7		214.5
Amortization expense, intangible assets	2.2	2.0
Future Amortization Expense
2015	8.7
2016	8.7
2017	8.5
2018	8.5
2019	8.2
Patents
Intangible Assets
Gross carrying amount, amortized intangibles	7.5		7.6
Accumulated amortization	(6.1)		(6.1)
Supply Agreements
Intangible Assets
Gross carrying amount, amortized intangibles	4.4		4.4
Accumulated amortization	(4.4)		(4.4)
Technology
Intangible Assets
Gross carrying amount, amortized intangibles	7.5		7.5
Accumulated amortization	(4.4)		(4.3)
Customer Relationships
Intangible Assets
Gross carrying amount, amortized intangibles	137.1		140.2
Accumulated amortization	(37.6)		(36.5)
Software
Intangible Assets
Gross carrying amount, amortized intangibles	2.7		2.9
Accumulated amortization	(1.7)		(1.7)
Other
Intangible Assets
Gross carrying amount, amortized intangibles	1.0		1.2
Accumulated amortization	(1.0)		(1.2)
Trade Names
Intangible Assets
Gross carrying amount, unamortized intangibles	$ 48.5		$ 50.7

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Income Statement
Net sales	$ 225,728	$ 231,421
Cost of sales	154,238	153,310
Gross profit	71,490	78,111
Selling, general, and administrative expenses	55,160	52,015
Restructuring expense	463	136
Operating income	15,867	25,960
Interest expense	(2,708)	(2,784)
Other income, net	3,019	325
Foreign exchange income/(expense)	416	(420)
Income before income taxes	16,594	23,081
Income tax expense/(benefit)	(3,382)	5,660
Net income	19,976	17,421
Less: Net income attributable to noncontrolling interests	(181)	(464)
Net income attributable to Franklin Electric Co., Inc.	$ 19,795	$ 16,957
Income per share:
Basic (in dollars per share)	$ 0.41	$ 0.35
Diluted (in dollars per share)	$ 0.41	$ 0.35
Dividends per common share	$ 0.0900	$ 0.0775

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DEBT (Debt Payments Expected to be Paid) (Details) (USD $) In Millions, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015
Long-term Debt, by Maturity
Debt and capital lease obligations	$ 246.4	$ 177.8
Year 1	103.2
Year 2	31.2
Year 3	31.2
Year 4	31.5
Year 5	31.1
More than 5 years	18.2
Debt
Long-term Debt, by Maturity
Long-term debt	245.8	177.2
Year 1	102.9
Year 2	31.1
Year 3	31.1
Year 4	31.4
Year 5	31.1
More than 5 years	18.2
Capital leases
Long-term Debt, by Maturity
Long-term debt	0.6
Year 1	0.3
Year 2	0.1
Year 3	0.1
Year 4	0.1
Year 5	0
More than 5 years	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Cash flows from operating activities:
Net income	$ 19,976	$ 17,421
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	8,840	8,847
Share-based compensation	2,354	1,392
Deferred income taxes	(6,540)	(214)
Loss on disposals of plant and equipment	46	5
Realized gain on share purchase liability	(2,723)	0
Foreign exchange expense/(income)	(416)	420
Excess tax from share-based payment arrangements	(515)	(1,448)
Changes in assets and liabilities, net of acquisitions:
Receivables	(17,901)	(31,451)
Inventory	(7,360)	(31,408)
Accounts payable and accrued expenses	(18,081)	8,408
Income taxes	292	1,117
Employee benefit plans	(9)	(2,551)
Other, net	221	(5,918)
Net cash flows from operating activities	(21,816)	(35,380)
Cash flows from investing activities:
Additions to property, plant, and equipment	(4,205)	(8,172)
Proceeds from sale of property, plant, and equipment	8	1,592
Cash paid for acquisitions, net of cash acquired	(3,616)	0
Cash paid for minority equity investments	0	(2,449)
Net cash flows from investing activities	(7,813)	(9,029)
Cash flows from financing activities:
Proceeds from issuance of debt	77,918	21,191
Repayment of debt	(9,105)	(6,550)
Proceeds from issuance of common stock	883	635
Excess tax from share-based payment arrangements	515	1,448
Purchases of common stock	(2,288)	(1,581)
Dividends paid	(4,283)	(3,709)
Share purchase liability payment	(20,200)	0
Net cash flows from financing activities	43,440	11,434
Effect of exchange rate changes on cash	(3,359)	559
Net change in cash and equivalents	10,452	(32,416)
Cash and equivalents at beginning of period	59,141	134,553
Cash and equivalents at end of period	69,593	102,137
Cash paid for income taxes, net of refunds	3,210	7,905
Cash paid for interest	2,755	3,002
Additions to property, plant, and equipment, not yet paid	221	610
Bombas Leao S.A.
Cash flows from financing activities:
Payable to seller of Bombas Leao	$ 267	$ 0

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RESTRUCTURING (Tables)

3 Months Ended

Apr. 04, 2015

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Cost Incurred, Included in Restructuring Expense

Costs incurred in the first quarter ended April 4, 2015, included in the “Restructuring expense” line of the Company's condensed consolidated statements of income, are as follows:

	First Quarter Ended
	April 4, 2015
(In millions)	Water Systems		Fueling Systems		Other		Consolidated
Employee severance	$	—	$	0.2	$	—	$	0.2
Equipment relocation	0.1		—		—		0.1
Other	0.2		—		—		0.2
Total	$	0.3	$	0.2	$	—	$	0.5

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Apr. 04, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

In August 2010, the California Air Resources Board (“CARB”) and South Coast Air Quality Management District (“SCAQMD”) filed civil complaints in the Los Angeles Superior Court against the Company and Franklin Fueling Systems, Inc.  The complaints related to a third-party-supplied component part of the Company's Healy 900 Series nozzle, which is part of the Company's Enhanced Vapor Recovery (“EVR”) Systems installed in California gasoline filling stations.  This part, a diaphragm, was the subject of a retrofit during the first half of 2008.  As the Company previously reported, in October 2008 CARB issued a Notice of Violation to the Company alleging that the circumstances leading to the retrofit program violated California statutes and regulations.

The claims in the complaints mirrored those that CARB presented to the Company in the Notice of Violation, and included claims that the Company negligently and intentionally sold nozzles with a modified diaphragm without required CARB certification. Those complaints were consolidated into one case in the Superior Court of California, County of Los Angeles (People of the State of California vs. Franklin Fueling Systems, Inc. et al.) which was tried in the later part of December 2012 and early part of January 2013 (“CARB Case”).

On July 25, 2013, the Court issued a Final Statement of Decision (“Decision”) in the CARB Case.  In its Decision, the Court found on behalf of the Company and issued a complete defense verdict.  Judgment was entered on August 27, 2013.  An Amended Judgment awarding the Company $0.1 million in costs was entered by the Court on January 22, 2014. On July 16, 2014, CARB appealed and filed its brief in support of the appeal. The Company filed its response brief on December 23, 2014 and CARB filed its reply brief on February 2, 2015. The case is now with the California Court of Appeals to either make a ruling on these briefs or schedule an oral argument. The Company has not been notified regarding the status of this matter at this time.

Neither of these suits has had any effect on CARB's certification of the Company's EVR System or any other products of the Company or its subsidiaries, and did not interfere with continuing sales.  CARB has never decertified the Company's EVR System and has never proposed to do so.

The Company is defending various other claims and legal actions, including environmental matters, which have arisen in the

ordinary course of business. In the opinion of management, based on current knowledge of the facts and after discussion with

counsel, these claims and legal actions can be successfully defended or resolved without a material adverse effect on the

Company’s financial position, results of operations, and net cash flows.

At April 4, 2015, the Company had $12.0 million of commitments primarily for capital expenditures and purchase of raw materials to be used in production.

The Company provides warranties on most of its products. The warranty terms vary but are generally 2 years from date of manufacture or 1 year from date of installation. In 2007, the Company began offering an extended warranty program to certain Water Systems customers which provides warranty coverage up to 5 years from date of manufacture. 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 actions 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.

The changes in the carrying amount of the warranty accrual, as recorded in the "Accrued expenses and other current liabilities" line of the Company's condensed consolidated balance sheet for the first quarter ended April 4, 2015, are as follows:

(In millions)
Balance as of January 3, 2015	$	9.4
Accruals related to product warranties	1.4
Reductions for payments made	(2.1		)
Balance as of April 4, 2015	$	8.7

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ACQUISITIONS (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Mar. 07, 2012
Business Acquisition
Realized gain on share purchase liability	$ (2,723,000)	$ 0
Business combination, acquisition related costs	100,000	100,000
Pioneer Pump Holdings Inc
Business Acquisition
Ownership percentage by noncontrolling interest holders			29.50%
Business combination percentage of voting interests acquired	100.00%
Pioneer additional purchase price			22,900,000
Realized gain on share purchase liability	2,700,000
Business combination consideration transferred	$ 20,200,000

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RESTRUCTURING

3 Months Ended

Apr. 04, 2015

Restructuring and Related Activities [Abstract]

RESTRUCTURING

RESTRUCTURING

On July 1, 2014, the Company announced a plan to close its Wittlich, Germany manufacturing facility. As part of this action, the Company will transfer the existing Wittlich manufacturing activity to its Brno, Czech Republic facility. The Company will maintain its European Water Systems headquarters and distribution center in Wittlich, only the manufacturing operations will be relocating. The realignment began in the third quarter of 2014 and is estimated to conclude by the end of 2016. Charges for the realignment are expected to be approximately $19.4 million and will include severance expenses, professional service fees, asset write-offs, and temporarily leased facilities costs.

Costs incurred in the first quarter ended April 4, 2015, included in the “Restructuring expense” line of the Company's condensed consolidated statements of income, are as follows:

	First Quarter Ended
	April 4, 2015
(In millions)	Water Systems		Fueling Systems		Other		Consolidated
Employee severance	$	—	$	0.2	$	—	$	0.2
Equipment relocation	0.1		—		—		0.1
Other	0.2		—		—		0.2
Total	$	0.3	$	0.2	$	—	$	0.5

Restructuring expenses, relating primarily to severance for the first quarter ended March 29, 2014, were approximately $0.1 million.

As of April 4, 2015, there was $6.4 million in restructuring reserves primarily for severance. As of March 29, 2014, there were no restructuring reserves.

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 Months Ended

Apr. 04, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed consolidated balance sheet as of January 3, 2015, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of April 4, 2015, and for the first quarters ended April 4, 2015 and March 29, 2014, 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. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations.  In the opinion of management, all accounting entries and adjustments (including normal, recurring adjustments) considered necessary for a fair presentation of the financial position and the results of operations for the interim period have been made. Operating results for the first quarter ended April 4, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2016. For further information, including a description of the Company’s critical accounting policies, refer to the consolidated financial statements and notes thereto included in Franklin Electric Co., Inc.'s Annual Report on Form 10-K for the year ended January 3, 2015.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Net income	$ 19,976	$ 17,421
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	(27,882)	2,178
Employee benefit plan activity	987	745
Other comprehensive income/(loss)	(26,895)	2,923
Income tax related to items of other comprehensive income	(333)	(257)
Other comprehensive income/(loss), net of tax	(27,228)	2,666
Comprehensive income/(loss)	(7,252)	20,087
Comprehensive income/(loss) attributable to noncontrolling interest	(170)	326
Comprehensive income/(loss) attributable to Franklin Electric Co., Inc.	$ (7,082)	$ 19,761

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DEBT

3 Months Ended

Apr. 04, 2015

Debt Disclosure [Abstract]

DEBT

DEBT

Debt consisted of the following:

(In millions)	April 4, 2015			January 3, 2015
Prudential Agreement - 5.79 percent	$	150.0		$	150.0
Tax increment financing debt	23.2			23.7
Revolver	69.9			—
Capital leases	0.6			0.6
Foreign subsidiary debt	2.7			3.5
	246.4			177.8
Less current maturities	(103.2		)	(34.1		)
Long-term debt	$	143.2		$	143.7

During the first quarter ended April 4, 2015, a portion of the Revolver borrowing (the "Credit Agreement") was used for working capital needs.

On May 5, 2015, the Company executed the following agreements:  Amendment No. 6 to the Prudential Agreement; Amendment No. 3 to the Credit Agreement; and Amendment No. 1 to the Bond Purchase and Loan Agreement. Each of those agreements provides for debt repayment guarantees from certain Company subsidiaries and waives certain non-financial covenants related to subsidiary guarantees.

The following debt payments are expected to be paid in accordance with the following schedule:

(In millions)	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More Than 5 Years
Debt	$	245.8	$	102.9	$	31.1	$	31.1	$	31.4	$	31.1	$	18.2
Capital leases	0.6		0.3		0.1		0.1		0.1		—		—
	$	246.4	$	103.2	$	31.2	$	31.2	$	31.5	$	31.1	$	18.2

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DOCUMENT AND ENTITY INFORMATION	3 Months Ended
	Apr. 04, 2015	Apr. 27, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	FRANKLIN ELECTRIC CO INC
Entity Central Index Key	0000038725
Current Fiscal Year End Date	--01-02
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Apr. 04, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		47,627,476

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EARNINGS PER SHARE

3 Months Ended

Apr. 04, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company's participating securities consist of share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders.

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table sets forth the computation of basic and diluted earnings per share:

	First Quarter Ended
(In millions, except per share amounts)	April 4, 2015		March 29, 2014
Numerator:
Net income attributable to Franklin Electric Co., Inc.	$	19.8	$	17.0
Less: Undistributed earnings allocated to participating securities	0.2		0.3
Less: Undistributed earnings allocated to redeemable noncontrolling interest	0.1		—
	$	19.5	$	16.7
Denominator:
Basic
Weighted average common shares	47.6		47.7
Diluted
Effect of dilutive securities:
Non-participating employee incentive stock options and performance awards	0.5		0.6
Adjusted weighted average common shares	48.1		48.3
Basic earnings per share	$	0.41	$	0.35
Diluted earnings per share	$	0.41	$	0.35
Anti-dilutive stock options	0.2		—

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015
Current assets:
Cash and cash equivalents	$ 69,593	$ 59,141
Receivables, less allowances of $3,310 and $3,212, respectively	155,087	143,787
Inventories:
Raw material	94,767	88,961
Work-in-process	19,319	19,148
Finished goods	107,410	112,419
Total inventories	221,496	220,528
Deferred income taxes	15,055	8,364
Other current assets	38,387	37,719
Total current assets	499,618	469,539
Property, plant, and equipment, at cost:
Land and buildings	122,780	127,782
Machinery and equipment	229,542	234,617
Furniture and fixtures	38,485	39,001
Other	18,644	20,539
Property, plant, and equipment, gross	409,451	421,939
Less: Allowance for depreciation	(211,272)	(212,153)
Property, plant, and equipment, net	198,179	209,786
Asset held for sale	2,041	2,405
Deferred income tax	3,313	3,899
Intangible assets, net	153,533	160,314
Goodwill	204,108	208,828
Other assets	19,965	21,116
Total assets	1,080,757	1,075,887
Current liabilities:
Accounts payable	59,143	70,806
Deferred tax liability	637	637
Accrued expenses and other current liabilities	57,436	94,782
Income taxes	1,096	788
Current maturities of long-term debt and short-term borrowings	103,237	34,092
Total current liabilities	221,549	201,105
Long-term debt	143,189	143,695
Deferred income taxes	43,915	45,568
Employee benefit plans	55,989	58,709
Other long-term liabilities	20,784	21,407
Commitments and contingencies (see Note 16)	0	0
Redeemable noncontrolling interest	6,335	6,420
Shareowners' equity:
Common stock (65,000 shares authorized, $.10 par value) outstanding (47,627 and 47,594, respectively)	4,763	4,759
Additional capital	211,187	207,446
Retained earnings	505,697	492,548
Accumulated other comprehensive loss	(134,790)	(107,913)
Total shareowners' equity	586,857	596,840
Noncontrolling interest	2,139	2,143
Total equity	588,996	598,983
Total liabilities and equity	$ 1,080,757	$ 1,075,887

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FINANCIAL INSTRUMENTS

3 Months Ended

Apr. 04, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

The Company’s deferred compensation stock program is subject to variable plan accounting and, accordingly, is adjusted for changes in the Company’s stock price at the end of each reporting period. During February 2014, the Company entered into a share swap transaction agreement ("the swap") to mitigate the Company’s exposure to these fluctuations in the Company's stock price. The Company renewed the swap agreement in February 2015. The swap was not designated as a hedge for accounting purposes and is cancellable with 30 days written notice by either party. The swap has a notional value based on 147,750 shares. For the first quarters ended April 4, 2015 and March 29, 2014, the swap resulted in losses of $0.1 million and $0.2 million, respectively. All gains or losses and expenses related to the swap are recorded in the Company's condensed consolidated statements of income within the “Selling, general, and administrative expenses” line.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Apr. 04, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

FASB ASC Topic 820, Fair Value Measurements and Disclosures, provides guidance for defining, measuring, and disclosing fair value within an established framework and hierarchy. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs and to minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value within the hierarchy are as follows:

Level 1 – Quoted prices for identical assets and liabilities in active markets;

Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of April 4, 2015 and January 3, 2015, the assets measured at fair value on a recurring basis were as set forth in the table below.

(In millions)	April 4, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	3.1	$	3.1	$	—	$	—
	January 3, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	5.4	$	5.4	$	—	$	—

The Company's Level 1 assets consist of cash equivalents which are generally comprised of foreign bank guaranteed certificates of deposit.

Total debt, including current maturities, have carrying amounts of $245.8 million and $177.2 million and estimated fair values of $259.7 million and $191.1 million as of April 4, 2015 and January 3, 2015, respectively. The fair value assumed floating rate debt was valued at par. In the absence of quoted prices in active markets, considerable judgment is required in developing estimates of fair value. Estimates are not necessarily indicative of the amounts the Company could realize in a current market transaction. In determining the fair value of its debt, the Company uses estimates based on rates currently available to the Company for debt with similar terms and remaining maturities. Accordingly, the fair value of debt is classified as Level 2 within the valuation hierarchy.

As of April 4, 2015, the Company had $2.0 million of assets held for sale recorded at carrying value in the Water Systems segment relating to a facility in Brazil.

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SHARE-BASED COMPENSATION

3 Months Ended

Apr. 04, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

The Company maintains the Franklin Electric Co., Inc. 2012 Stock Plan (the "2012 Stock Plan"), which is a stock-based compensation plan that provides for discretionary grants of stock options, stock awards, and stock unit awards to key employees and non-employee directors.

The 2012 Stock Plan authorizes 2,400,000 shares for issuance as follows:

2012 Stock Plan	Authorized Shares
Stock Options	1,680,000
Stock/Stock Unit Awards	720,000

The Company also maintains the Amended and Restated Franklin Electric Co., Inc. Stock Plan (the "2009 Stock Plan") which, as amended in 2009, provided for discretionary grants of stock options and stock awards. The 2009 Stock Plan authorized 4,400,000 shares for issuance as follows:

2009 Stock Plan	Authorized Shares
Stock Options	3,200,000
Stock Awards	1,200,000

All options in the 2009 Stock Plan have been awarded.

The Company currently issues new shares from its common stock balance to satisfy option exercises and the settlement of stock awards and stock unit awards made under the 2009 Stock Plan and/or the 2012 Stock Plan.

Stock Options:

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model with a single approach and amortized using a straight-line attribution method over the option’s vesting period.

The assumptions used for the Black-Scholes model to determine the fair value of options granted during the first quarters ended April 4, 2015 and March 29, 2014, are as follows:

	April 4, 2015		March 29, 2014
Risk-free interest rate	1.59	%	1.68	%
Dividend yield	0.95	%	0.70	%
Volatility factor	0.379		0.387
Expected term	5.5 years		5.6 years
Forfeiture rate	3.67	%	3.81	%

There were 184,706 and 92,946 stock options granted during the first quarters ended April 4, 2015 and March 29, 2014.

A summary of the Company’s outstanding stock option activity and related information for the first quarters ended April 4, 2015 and March 29, 2014, is as follows:

(Shares in thousands)	April 4, 2015				March 29, 2014
Stock Options	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at beginning of period	1,397		$	21.17	1,476		$	19.01
Granted	185		36.67		93		43.27
Exercised	(46	)	19.36		(34	)	18.57
Forfeited	—		—		(2	)	26.95
Outstanding at end of period	1,536		$	23.09	1,533		$	20.48
Expected to vest after applying forfeiture rate	1,511		$	22.86	1,511		$	20.31
Vested and exercisable at end of period	1,124		$	18.75	1,070		$	16.34

A summary of the weighted-average remaining contractual term and aggregate intrinsic value for the first quarter ended April 4, 2015 is as follows:

	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Outstanding at end of period	5.87 years	$	23,421
Expected to vest after applying forfeiture rate	5.82 years	$	23,365
Vested and exercisable at end of period	4.77 years	$	21,781

The total intrinsic value of options exercised was $0.8 million during the first quarters ended April 4, 2015 and March 29, 2014.

As of April 4, 2015, there was $2.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to stock options granted under the 2012 Stock Plan and the 2009 Stock Plan. That cost is expected to be recognized over a weighted-average period of 3.03 years.

Stock/Stock Unit Awards:

A summary of the Company’s restricted stock/stock unit award activity and related information for the first quarters ended April 4, 2015 and March 29, 2014, is as follows:

(Shares in thousands)	April 4, 2015				March 29, 2014
Stock/Stock Unit Awards	Shares		Weighted-Average Grant- Date Fair Value		Shares		Weighted-Average Grant- Date Fair Value
Non-vested at beginning of period	554		$	32.72	551		$	24.75
Awarded	120		36.67		172		43.37
Vested	(74	)	25.01		(110	)	15.75
Forfeited	—		—		(56	)	27.81
Non-vested at end of period	600		$	34.47	557		$	31.96

As of April 4, 2015, there was $11.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to stock/stock unit awards granted under the 2012 Stock Plan and the 2009 Stock Plan.  That cost is expected to be recognized over a weighted-average period of 2.70 years.

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EQUITY ROLL FORWARD

3 Months Ended

Apr. 04, 2015

Equity [Abstract]

EQUITY ROLL FORWARD

EQUITY ROLL FORWARD

The schedule below sets forth equity changes in the first quarter ended April 4, 2015:

(In thousands)	Common Stock			Additional Paid in Capital		Retained Earnings			Minimum Pension Liability			Cumulative Translation Adjustment			Noncontrolling Interest			Total Equity			Redeemable Noncontrolling Interest
Balance as of January 3, 2015	$	4,759		$	207,446	$	492,548		$	(56,124	)	$	(51,789	)	$	2,143		$	598,983		$	6,420
Net income						19,795									150			19,945			31
Adjustment to Impo redemption value						(81		)										(81		)	81
Dividends on common stock						(4,283		)										(4,283		)
Common stock issued	5			878														883
Common stock repurchased or received for stock options exercised	(6		)			(2,282		)										(2,288		)
Share-based compensation	5			2,349														2,354
Tax benefit of stock options exercised				514														514
Currency translation adjustment												(27,531		)	(154		)	(27,685		)	(197		)
Pension liability, net of tax									654									654
Balance as of April 4, 2015	$	4,763		$	211,187	$	505,697		$	(55,470	)	$	(79,320	)	$	2,139		$	588,996		$	6,335

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EMPLOYEE BENEFIT PLANS

3 Months Ended

Apr. 04, 2015

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of April 4, 2015, the Company maintained two domestic pension plans and three German pension plans. The Company used a January 3, 2015 measurement date for these plans. One of the Company's domestic pension plans covers two management employees, while the other domestic plan covers all other eligible employees. The two domestic and three German plans collectively comprise the 'Pension Benefits' disclosure caption.

Other Benefits - The Company's other postretirement benefit plan provides health and life insurance to domestic employees hired prior to 1992.

The following table sets forth the aggregated net periodic benefit cost for all pension and postretirement plans for the first quarters ended April 4, 2015 and March 29, 2014, respectively:

(In millions)	Pension Benefits						Other Benefits
	First Quarter Ended						First Quarter Ended
	April 4, 2015			March 29, 2014			April 4, 2015		March 29, 2014
Service cost	$	0.3		$	0.3		$	—	$	—
Interest cost	1.8			2.0			0.1		0.1
Expected return on assets	(2.5		)	(2.6		)	—		—
Amortization of prior service cost	—			—			0.1		0.1
Amortization of loss	0.8			0.6			0.1		—
Net periodic benefit cost	$	0.4		$	0.3		$	0.3	$	0.2
Settlement cost	0.3			0.2			—		—
Total net periodic benefit cost	$	0.7		$	0.5		$	0.3	$	0.2

In the first quarter ended April 4, 2015, the Company made contributions of $0.8 million to the funded plans. The amount of contributions to be made to the plans during the calendar year 2015 will be finalized September 15, 2015, based upon the plan's year-end valuation at January 3, 2015, and the funding level required for the plan year ended January 3, 2015.

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OTHER ASSETS

3 Months Ended

Apr. 04, 2015

Equity Method Investments and Joint Ventures [Abstract]

OTHER ASSETS

OTHER ASSETS

The Company has equity interests in various companies for strategic purposes. The investments are accounted for under the equity method and are included in the “Other assets” line on the Company’s condensed consolidated balance sheet. The carrying amount of the investments are adjusted for the Company's proportionate share of earnings, losses, and dividends. The investments are not considered material to the Company’s financial position, neither individually nor in the aggregate. The Company’s proportionate share of earnings from its equity interests, included in the "Other income, net" line of the Company's condensed consolidated statements of income, was immaterial for the first quarters ended April 4, 2015 and March 29, 2014.

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GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Apr. 04, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying amounts of the Company’s intangible assets are as follows:

(In millions)	April 4, 2015					January 3, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangibles:
Patents	$	7.5	$	(6.1	)	$	7.6	$	(6.1	)
Supply agreements	4.4		(4.4		)	4.4		(4.4		)
Technology	7.5		(4.4		)	7.5		(4.3		)
Customer relationships	137.1		(37.6		)	140.2		(36.5		)
Software	2.7		(1.7		)	2.9		(1.7		)
Other	1.0		(1.0		)	1.2		(1.2		)
Total	$	160.2	$	(55.2	)	$	163.8	$	(54.2	)
Unamortized intangibles:
Trade names	48.5		—			50.7		—
Total intangibles	$	208.7	$	(55.2	)	$	214.5	$	(54.2	)

Changes in carrying values for intangible assets are primarily attributed to the impact of foreign exchange for the first quarter ended April 4, 2015.

Amortization expense related to intangible assets for the first quarters ended April 4, 2015 and March 29, 2014 was $2.2 million and $2.0 million, respectively.

Amortization expense for each of the five succeeding years is projected as follows:

(In millions)	2015		2016		2017		2018		2019
	$	8.7	$	8.7	$	8.5	$	8.5	$	8.2

The change in the carrying amount of goodwill by reporting segment for the first quarter ended April 4, 2015, is as follows:

(In millions)
	Water Systems			Fueling Systems			Consolidated
Balance as of January 3, 2015	$	145.3		$	63.5		$	208.8
Acquisitions	0.1			—			0.1
Foreign currency translation	(4.6		)	(0.2		)	(4.8		)
Balance as of April 4, 2015	$	140.8		$	63.3		$	204.1

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INCOME TAXES

3 Months Ended

Apr. 04, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective tax rate continues to be lower than the U.S. statutory rate of 35.0 percent primarily due to the indefinite reinvestment of foreign earnings taxed at rates below the U.S. statutory rate, recognition of U.S and foreign tax credits and discrete items in the quarter.  The Company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its operations as well as cash on hand and available credit. In addition, the Company redeemed the minority shareholdings of a subsidiary during the first quarter. This transaction resulted in the recording of tax benefits in the first quarter of $7.3 million from the reversal of related deferred tax liabilities along with an additional $1.0 million current benefit related to the gain of the mandatory share purchase liability included in the "Other income, net" line in the Company’s condensed consolidated statements of income.

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SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Apr. 04, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Authorized Number of Shares

The 2012 Stock Plan authorizes 2,400,000 shares for issuance as follows:

2012 Stock Plan	Authorized Shares
Stock Options	1,680,000
Stock/Stock Unit Awards	720,000

The Company also maintains the Amended and Restated Franklin Electric Co., Inc. Stock Plan (the "2009 Stock Plan") which, as amended in 2009, provided for discretionary grants of stock options and stock awards. The 2009 Stock Plan authorized 4,400,000 shares for issuance as follows:

2009 Stock Plan	Authorized Shares
Stock Options	3,200,000
Stock Awards	1,200,000

Schedule of Assumptions Used to Determine the Fair Value of Options Granted

The assumptions used for the Black-Scholes model to determine the fair value of options granted during the first quarters ended April 4, 2015 and March 29, 2014, are as follows:

	April 4, 2015		March 29, 2014
Risk-free interest rate	1.59	%	1.68	%
Dividend yield	0.95	%	0.70	%
Volatility factor	0.379		0.387
Expected term	5.5 years		5.6 years
Forfeiture rate	3.67	%	3.81	%

Schedule of Stock Option Plans Activity

A summary of the Company’s outstanding stock option activity and related information for the first quarters ended April 4, 2015 and March 29, 2014, is as follows:

(Shares in thousands)	April 4, 2015				March 29, 2014
Stock Options	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at beginning of period	1,397		$	21.17	1,476		$	19.01
Granted	185		36.67		93		43.27
Exercised	(46	)	19.36		(34	)	18.57
Forfeited	—		—		(2	)	26.95
Outstanding at end of period	1,536		$	23.09	1,533		$	20.48
Expected to vest after applying forfeiture rate	1,511		$	22.86	1,511		$	20.31
Vested and exercisable at end of period	1,124		$	18.75	1,070		$	16.34

Schedule of Stock Options, Contractual Term and Aggregate Intrinsic Value

A summary of the weighted-average remaining contractual term and aggregate intrinsic value for the first quarter ended April 4, 2015 is as follows:

	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Outstanding at end of period	5.87 years	$	23,421
Expected to vest after applying forfeiture rate	5.82 years	$	23,365
Vested and exercisable at end of period	4.77 years	$	21,781

Schedule of Restricted Stock/Stock Unit Award Activity

A summary of the Company’s restricted stock/stock unit award activity and related information for the first quarters ended April 4, 2015 and March 29, 2014, is as follows:

(Shares in thousands)	April 4, 2015				March 29, 2014
Stock/Stock Unit Awards	Shares		Weighted-Average Grant- Date Fair Value		Shares		Weighted-Average Grant- Date Fair Value
Non-vested at beginning of period	554		$	32.72	551		$	24.75
Awarded	120		36.67		172		43.37
Vested	(74	)	25.01		(110	)	15.75
Forfeited	—		—		(56	)	27.81
Non-vested at end of period	600		$	34.47	557		$	31.96

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SHARE-BASED COMPENSATION (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	May 04, 2012	Apr. 24, 2009
Fair Value Assumptions
Risk-free interest rate (as a percent)	1.59%	1.68%
Dividend yield (as a percent)	0.95%	0.70%
Volatility factor (as a percent)	37.90%	38.70%
Expected term (in years)	5 years 6 months	5 years 7 months 6 days
Forfeiture rate (as a percent)	3.67%	3.81%
Stock Option Plans Activity and Related Information
Outstanding beginning of period, shares	1,397,000	1,476,000
Outstanding beginning of period, weighted-average exercise price (in dollars per share)	$ 21.17	$ 19.01
Granted, shares	184,706	92,946
Granted, weighted-average exercise price (in dollars per share)	$ 36.67	$ 43.27
Exercised, shares	(46,000)	(34,000)
Exercised, weighted-average exercise price (in dollars per share)	$ 19.36	$ 18.57
Forfeited, shares	0	(2,000)
Forfeited, weighted-average exercise price (in dollars per share)	$ 0.00	$ 26.95
Outstanding end of period, shares	1,536,000	1,533,000
Outstanding end of period, weighted-average exercise price (in dollars per share)	$ 23.09	$ 20.48
Expected to vest after applying forfeiture rate, shares	1,511,000	1,511,000
Expected to vest after applying forfeiture rate, weighted-average exercise price (in dollars per share)	$ 22.86	$ 20.31
Vested and exercisable end of period, shares	1,124,000	1,070,000
Vested and exercisable end of period, weighted-average exercise price (in dollars per share)	$ 18.75	$ 16.34
Summary of Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value
Outstanding end of period, weighted-average remaining contractual term (in years)	5 years 10 months 13 days
Outstanding end of period, aggregate intrinsic value (in dollars)	$ 23,421,000
Expected to vest after applying forfeiture rate, weighted-average remaining contractual term (in years)	5 years 9 months 25 days
Expected to vest after applying forfeiture rate, aggregate intrinsic value (in dollars)	23,365,000
Vested and exercisable end of period, weighted-average remaining contractual term (in years)	4 years 9 months 7 days
Vested and exercisable end of period, aggregate intrinsic value (in dollars)	21,781,000
Intrinsic value of options exercised (in dollars)	800,000	800,000
Stock/Stock Unit Award Activity and Related Information
Non-vested at beginning of period, shares	554,000	551,000
Non-vested at beginning of period, weighted-average grant date fair value (in dollars per share)	$ 32.72	$ 24.75
Awarded, shares	120,000	172,000
Awarded, weighted-average grant date fair value (in dollars per share)	$ 36.67	$ 43.37
Vested, shares	(74,000)	(110,000)
Vested, weighted-average grant date fair value (in dollars per share)	$ 25.01	$ 15.75
Forfeited, shares	0	(56,000)
Forfeited, weighted-average grant date fair value (in dollars per share)	$ 0.00	$ 27.81
Non-vested at end of period, shares	600,000	557,000
Non-vested at the end of period, weighted-average grant date fair value (in dollars per share)	$ 34.47	$ 31.96
Options
Summary of Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value
Total unrecognized compensation cost related to nonvested share-based compensation (in dollars)	2,500,000
Total unrecognized compensation cost, recognized over a weighted-average period (in years)	3 years 0 months 10 days
Awards
Summary of Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value
Total unrecognized compensation cost related to nonvested share-based compensation (in dollars)	$ 11,700,000
Total unrecognized compensation cost, recognized over a weighted-average period (in years)	2 years 8 months 12 days
2012 Stock Plan
Share-based Compensation
Authorized shares			2,400,000
2012 Stock Plan | Options
Share-based Compensation
Authorized shares			1,680,000
2012 Stock Plan | Employee Stock/Stock Unit Award
Share-based Compensation
Authorized shares			720,000
2009 Stock Plan
Share-based Compensation
Authorized shares				4,400,000
2009 Stock Plan | Options
Share-based Compensation
Authorized shares				3,200,000
2009 Stock Plan | Awards
Share-based Compensation
Authorized shares				1,200,000

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SEGMENT INFORMATION

3 Months Ended

Apr. 04, 2015

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Financial information by reportable business segment is included in the following summary:

	First Quarter Ended
(In millions)	April 4, 2015			March 29, 2014
	Net sales to external customers
Water Systems	$	179.2		$	184.6
Fueling Systems	46.5			46.8
Other	—			—
Consolidated	$	225.7		$	231.4
	First Quarter Ended
	April 4, 2015			March 29, 2014
	Operating income (loss)
Water Systems	$	19.4		$	29.2
Fueling Systems	9.6			9.1
Other	(13.1		)	(12.3		)
Consolidated	$	15.9		$	26.0
	April 4, 2015			January 3, 2015
	Total assets
Water Systems	$	761.6		$	757.5
Fueling Systems	251.6			252.7
Other	67.6			65.7
Consolidated	$	1,080.8		$	1,075.9

Property, plant, and equipment is the major asset group in "Other" of total assets at April 4, 2015 and January 3, 2015.

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

3 Months Ended

Apr. 04, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Carrying Amounts of Intangible Assets

The carrying amounts of the Company’s intangible assets are as follows:

(In millions)	April 4, 2015					January 3, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangibles:
Patents	$	7.5	$	(6.1	)	$	7.6	$	(6.1	)
Supply agreements	4.4		(4.4		)	4.4		(4.4		)
Technology	7.5		(4.4		)	7.5		(4.3		)
Customer relationships	137.1		(37.6		)	140.2		(36.5		)
Software	2.7		(1.7		)	2.9		(1.7		)
Other	1.0		(1.0		)	1.2		(1.2		)
Total	$	160.2	$	(55.2	)	$	163.8	$	(54.2	)
Unamortized intangibles:
Trade names	48.5		—			50.7		—
Total intangibles	$	208.7	$	(55.2	)	$	214.5	$	(54.2	)

Schedule of Amortization Expense

Amortization expense for each of the five succeeding years is projected as follows:

(In millions)	2015		2016		2017		2018		2019
	$	8.7	$	8.7	$	8.5	$	8.5	$	8.2

Schedule of Change in the Carrying Amount of Goodwill by Reporting Segment

The change in the carrying amount of goodwill by reporting segment for the first quarter ended April 4, 2015, is as follows:

(In millions)
	Water Systems			Fueling Systems			Consolidated
Balance as of January 3, 2015	$	145.3		$	63.5		$	208.8
Acquisitions	0.1			—			0.1
Foreign currency translation	(4.6		)	(0.2		)	(4.8		)
Balance as of April 4, 2015	$	140.8		$	63.3		$	204.1

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SEGMENT INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014	Jan. 03, 2015
Segment Reporting Information
Net sales to external customers	$ 225,728	$ 231,421
Operating income (loss)	15,867	25,960
Total assets	1,080,757		1,075,887
Water Systems
Segment Reporting Information
Net sales to external customers	179,200	184,600
Operating income (loss)	19,400	29,200
Total assets	761,600		757,500
Fueling Systems
Segment Reporting Information
Net sales to external customers	46,500	46,800
Operating income (loss)	9,600	9,100
Total assets	251,600		252,700
Other
Segment Reporting Information
Net sales to external customers	0	0
Operating income (loss)	(13,100)	(12,300)
Total assets	$ 67,600		$ 65,700

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GOODWILL AND OTHER INTANGIBLE ASSETS (Goodwill) (Details) (USD $)	3 Months Ended
	Apr. 04, 2015
Change in the Carrying Amount of Goodwill by Reporting Segment
Goodwill, beginning balance	$ 208,828,000
Acquisitions	100,000
Foreign currency translation	(4,800,000)
Goodwill, ending balance	204,108,000
Water Systems
Change in the Carrying Amount of Goodwill by Reporting Segment
Goodwill, beginning balance	145,300,000
Acquisitions	100,000
Foreign currency translation	(4,600,000)
Goodwill, ending balance	140,800,000
Fueling Systems
Change in the Carrying Amount of Goodwill by Reporting Segment
Goodwill, beginning balance	63,500,000
Acquisitions	0
Foreign currency translation	(200,000)
Goodwill, ending balance	$ 63,300,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Apr. 04, 2015	Jan. 03, 2015
Current assets:
Allowance for doubtful accounts (in dollars)	$ 3,310	$ 3,212
Shareowners' equity:
Common shares, authorized (in shares)	65,000	65,000
Common shares, par value (in dollars per share)	$ 0.10	$ 0.10
Common shares, outstanding	47,627	47,594

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REDEEMABLE NONCONTROLLING INTERESTS

3 Months Ended

Apr. 04, 2015

Noncontrolling Interest [Abstract]

REDEEMABLE NONCONTROLLING INTERESTS

REDEEMABLE NONCONTROLLING INTERESTS

On May 2, 2011, the Company completed the acquisition of 80 percent of Impo. In 2014, the Company redeemed 10 percent of the noncontrolling interest of Impo, increasing the Company's ownership to 90 percent. The noncontrolling interest holders have the option, which is embedded in the noncontrolling interest, to require the Company to redeem their ownership interests. The combination of a noncontrolling interest and a redemption feature resulted in a redeemable noncontrolling interest.

The Company uses the interest method to accrete changes in the anticipated redemption value of the Impo redeemable noncontrolling interest over an amortization period to the earliest projected redemption date. Accretion adjustments for the first quarter ended April 4, 2015 were $0.1 million. No adjustments were necessary for the first quarter ended March 29, 2014. These adjustments were reflected in the computation of earnings per share using the two-class method.

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EMPLOYEE BENEFIT PLANS (Tables)

3 Months Ended

Apr. 04, 2015

Defined Benefit Plans and Other Postretirement Benefit Plans

Schedule of Aggregated Net Periodic Benefit Cost and Other Benefit Cost

The following table sets forth the aggregated net periodic benefit cost for all pension and postretirement plans for the first quarters ended April 4, 2015 and March 29, 2014, respectively:

(In millions)	Pension Benefits						Other Benefits
	First Quarter Ended						First Quarter Ended
	April 4, 2015			March 29, 2014			April 4, 2015		March 29, 2014
Service cost	$	0.3		$	0.3		$	—	$	—
Interest cost	1.8			2.0			0.1		0.1
Expected return on assets	(2.5		)	(2.6		)	—		—
Amortization of prior service cost	—			—			0.1		0.1
Amortization of loss	0.8			0.6			0.1		—
Net periodic benefit cost	$	0.4		$	0.3		$	0.3	$	0.2
Settlement cost	0.3			0.2			—		—
Total net periodic benefit cost	$	0.7		$	0.5		$	0.3	$	0.2

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Apr. 04, 2015	Jan. 03, 2015
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Asset held for sale	$ 2,041,000	$ 2,405,000
Long-term debt	143,189,000	143,695,000
Significant Other Observable Inputs (Level 2)
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Estimated fair value of long-term debt	259,700,000	191,100,000
Recurring Basis | Estimated Fair Value
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Cash equivalents	3,100,000	5,400,000
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Cash equivalents	3,100,000	5,400,000
Recurring Basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Cash equivalents	0	0
Recurring Basis | Significant Unobservable Inputs (Level 3)
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Cash equivalents	0	0
Debt
Fair Value, Assets Measured on Recurring and Nonrecurring Basis
Long-term Debt	$ 245,800,000	$ 177,200,000

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ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

3 Months Ended

Apr. 04, 2015

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Changes in accumulated other comprehensive income/(loss) by component for the first quarters ended April 4, 2015 and March 29, 2014, are summarized below:

(In millions)
For the first quarter ended April 4, 2015:	Foreign Currency Translation Adjustments			Pension and Post-Retirement Plan Benefit Adjustments				Total
Balance as of January 3, 2015	$	(51.8	)	$	(56.1	)		$	(107.9	)
Other comprehensive income/(loss) before reclassifications:
Pre-tax income/(loss)	(27.8		)	—				(27.8		)
Income tax expense	—			—				—
Other comprehensive income/(loss) before reclassifications, net of income taxes	(27.8		)	—				(27.8		)
Amounts reclassified from accumulated other comprehensive income/(loss):
Pre-tax income	—			1.0			(1)	1.0
Income tax expense	—			(0.4		)		(0.4		)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	—			0.6				0.6
Net current period other comprehensive income/(loss), net of income taxes	(27.8		)	0.6				(27.2		)
Other comprehensive income/(loss) attributable to noncontrolling interest	(0.3		)	—				(0.3		)
Balance as of April 4, 2015	$	(79.3	)	$	(55.5	)		$	(134.8	)
For the first quarter ended March 29, 2014:
Balance as of December 28, 2013	$	(16.0	)	$	(38.7	)		$	(54.7	)
Other comprehensive income/(loss) before reclassifications:
Pre-tax income/(loss)	2.1			—				2.1
Income tax expense	—			—				—
Other comprehensive income/(loss) before reclassifications, net of income taxes	2.1			—				2.1
Amounts reclassified from accumulated other comprehensive income/(loss):
Pre-tax income	—			0.7			(1)	0.7
Income tax expense	—			(0.3		)		(0.3		)
Amounts reclassified from accumulated other comprehensive income/(loss), net of income taxes	—			0.4				0.4
Net current period other comprehensive income/(loss), net of income taxes	2.1			0.4				2.5
Other comprehensive income/(loss) attributable to noncontrolling interest	(0.3		)	—				(0.3		)
Balance as of March 29, 2014	$	(13.6	)	$	(38.3	)		$	(51.9	)

(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 9 for additional details) and is included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income.