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) |
YES x | NO o |
YES x | NO o |
Large Accelerated Filer x | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company o |
YES o | NO x |
Outstanding at | ||
Class of Common Stock | May 2, 2016 | |
$.10 par value | 46,165,309 shares |
Page | |||
PART I. | FINANCIAL INFORMATION | Number | |
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. | OTHER INFORMATION | ||
Item 1A. | |||
Item 2. | |||
Item 6. | |||
First Quarter Ended | |||||||
(In thousands, except per share amounts) | April 2, 2016 | April 4, 2015 | |||||
Net sales | $ | 218,430 | $ | 225,728 | |||
Cost of sales | 144,194 | 154,238 | |||||
Gross profit | 74,236 | 71,490 | |||||
Selling, general, and administrative expenses | 52,345 | 55,160 | |||||
Restructuring expense | 820 | 463 | |||||
Operating income | 21,071 | 15,867 | |||||
Interest expense | (2,427 | ) | (2,708 | ) | |||
Other income/(expense), net | (32 | ) | 3,019 | ||||
Foreign exchange income/(expense) | (77 | ) | 416 | ||||
Income before income taxes | 18,535 | 16,594 | |||||
Income tax (benefit)/expense | 4,955 | (3,382 | ) | ||||
Net income | $ | 13,580 | $ | 19,976 | |||
Less: Net income attributable to noncontrolling interests | (123 | ) | (181 | ) | |||
Net income attributable to Franklin Electric Co., Inc. | $ | 13,457 | $ | 19,795 | |||
Income per share: | |||||||
Basic | $ | 0.28 | 0.41 | ||||
Diluted | $ | 0.28 | 0.41 | ||||
Dividends per common share | $ | 0.0975 | 0.0900 |
First Quarter Ended | |||||||
(In thousands) | April 2, 2016 | April 4, 2015 | |||||
Net income | $ | 13,580 | $ | 19,976 | |||
Other comprehensive income/(loss), before tax: | |||||||
Foreign currency translation adjustments | 13,025 | (27,882 | ) | ||||
Employee benefit plan activity | 742 | 987 | |||||
Other comprehensive income/(loss) | $ | 13,767 | $ | (26,895 | ) | ||
Income tax expense related to items of other comprehensive income/(loss) | (266 | ) | (333 | ) | |||
Other comprehensive income/(loss), net of tax | $ | 13,501 | $ | (27,228 | ) | ||
Comprehensive income/(loss) | $ | 27,081 | $ | (7,252 | ) | ||
Less: Comprehensive income/(loss) attributable to noncontrolling interests | 208 | (170 | ) | ||||
Comprehensive income/(loss) attributable to Franklin Electric Co., Inc. | $ | 26,873 | $ | (7,082 | ) |
(In thousands) | April 2, 2016 | January 2, 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 74,642 | $ | 81,561 | |||
Receivables, less allowances of $3,815 and $3,801, respectively | 151,173 | 127,251 | |||||
Inventories: | |||||||
Raw material | 87,817 | 82,223 | |||||
Work-in-process | 18,145 | 18,384 | |||||
Finished goods | 101,779 | 93,987 | |||||
Total inventories | 207,741 | 194,594 | |||||
Other current assets | 30,617 | 34,715 | |||||
Total current assets | 464,173 | 438,121 | |||||
Property, plant, and equipment, at cost: | |||||||
Land and buildings | 117,483 | 117,753 | |||||
Machinery and equipment | 238,567 | 233,834 | |||||
Furniture and fixtures | 38,823 | 39,639 | |||||
Other | 27,829 | 19,845 | |||||
Property, plant, and equipment, gross | 422,702 | 411,071 | |||||
Less: Allowance for depreciation | (227,946 | ) | (221,032 | ) | |||
Property, plant, and equipment, net | 194,756 | 190,039 | |||||
Assets held for sale | 3,782 | 1,613 | |||||
Deferred income taxes | 5,084 | 3,461 | |||||
Intangible assets, net | 141,490 | 141,357 | |||||
Goodwill | 201,580 | 199,847 | |||||
Other assets | 21,658 | 21,673 | |||||
Total assets | $ | 1,032,523 | $ | 996,111 |
April 2, 2016 | January 2, 2016 | ||||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 62,568 | $ | 57,822 | |||
Accrued expenses and other current liabilities | 46,594 | 52,109 | |||||
Income taxes | 2,628 | 1,794 | |||||
Current maturities of long-term debt and short-term borrowings | 45,337 | 32,946 | |||||
Total current liabilities | 157,127 | 144,671 | |||||
Long-term debt | 187,257 | 187,806 | |||||
Deferred income taxes | 36,025 | 33,404 | |||||
Employee benefit plans | 46,799 | 47,398 | |||||
Other long-term liabilities | 17,656 | 16,511 | |||||
Commitments and contingencies (see Note 14) | — | — | |||||
Redeemable noncontrolling interest | 7,329 | 6,856 | |||||
Shareowners' equity: | |||||||
Common stock (65,000 shares authorized, $.10 par value) outstanding (46,166 and 46,219, respectively) | 4,617 | 4,622 | |||||
Additional capital | 219,400 | 216,472 | |||||
Retained earnings | 502,512 | 498,214 | |||||
Accumulated other comprehensive loss | (148,192 | ) | (161,608 | ) | |||
Total shareowners' equity | 578,337 | 557,700 | |||||
Noncontrolling interest | 1,993 | 1,765 | |||||
Total equity | 580,330 | 559,465 | |||||
Total liabilities and equity | $ | 1,032,523 | $ | 996,111 |
First Quarter Ended | |||||||
(In thousands) | April 2, 2016 | April 4, 2015 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 13,580 | $ | 19,976 | |||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
Depreciation and amortization | 8,752 | 8,840 | |||||
Share-based compensation | 2,539 | 2,354 | |||||
Deferred income taxes | 270 | (6,540 | ) | ||||
Loss on disposals of plant and equipment and impairment of asset held for sale | 1,415 | 46 | |||||
Realized gain on share purchase liability | — | (2,723 | ) | ||||
Foreign exchange expense/(income) | 77 | (416 | ) | ||||
Excess tax from share-based payment arrangements | (53 | ) | (515 | ) | |||
Changes in assets and liabilities, net of acquisitions: | |||||||
Receivables | (20,609 | ) | (17,901 | ) | |||
Inventory | (8,884 | ) | (7,360 | ) | |||
Accounts payable and accrued expenses | (3,649 | ) | (18,081 | ) | |||
Income taxes | 1,633 | 292 | |||||
Employee benefit plans | (488 | ) | (9 | ) | |||
Other, net | 4,980 | 221 | |||||
Net cash flows from operating activities | (437 | ) | (21,816 | ) | |||
Cash flows from investing activities: | |||||||
Additions to property, plant, and equipment | (11,153 | ) | (4,205 | ) | |||
Proceeds from sale of property, plant, and equipment | 185 | 8 | |||||
Cash paid for acquisitions, net of cash acquired | — | (3,616 | ) | ||||
Net cash flows from investing activities | (10,968 | ) | (7,813 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of debt | 31,606 | 77,918 | |||||
Repayment of debt | (19,817 | ) | (9,105 | ) | |||
Proceeds from issuance of common stock | 411 | 883 | |||||
Excess tax from share-based payment arrangements | 53 | 515 | |||||
Purchases of common stock | (4,175 | ) | (2,288 | ) | |||
Dividends paid | (4,506 | ) | (4,283 | ) | |||
Share purchase liability payment | — | (20,200 | ) | ||||
Net cash flows from financing activities | 3,572 | 43,440 | |||||
Effect of exchange rate changes on cash | 914 | (3,359 | ) | ||||
Net change in cash and equivalents | (6,919 | ) | 10,452 | ||||
Cash and equivalents at beginning of period | 81,561 | 59,141 | |||||
Cash and equivalents at end of period | $ | 74,642 | $ | 69,593 |
First Quarter Ended | |||||||
April 2, 2016 | April 4, 2015 | ||||||
Cash paid for income taxes, net of refunds | $ | 2,542 | $ | 3,210 | |||
Cash paid for interest | $ | 2,644 | $ | 2,755 | |||
Non-cash items: | |||||||
Additions to property, plant, and equipment, not yet paid | $ | 289 | $ | 221 | |||
Payable to seller of Bombas Leao | $ | 24 | $ | 267 |
(In millions) | April 2, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||
Cash equivalents | $ | 3.8 | $ | 3.8 | $ | — | $ | — | ||||
January 2, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||
Cash equivalents | $ | 3.9 | $ | 3.9 | $ | — | $ | — |
(In millions) | April 2, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Recognized Loss | ||||||||||
Asset held for sale | $ | 2.0 | $ | — | $ | — | $ | 2.0 | $ | 0.4 |
(In millions) | April 2, 2016 | January 2, 2016 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||
Amortized intangibles: | ||||||||||||||||
Patents | $ | 7.5 | $ | (6.3 | ) | $ | 7.4 | $ | (6.2 | ) | ||||||
Technology | 7.5 | (4.9 | ) | 7.5 | (4.8 | ) | ||||||||||
Customer relationships | 134.5 | (44.7 | ) | 132.6 | (42.3 | ) | ||||||||||
Software | 2.5 | (1.7 | ) | 2.5 | (1.7 | ) | ||||||||||
Other | 0.3 | (0.3 | ) | 1.0 | (1.0 | ) | ||||||||||
Total | $ | 152.3 | $ | (57.9 | ) | $ | 151.0 | $ | (56.0 | ) | ||||||
Unamortized intangibles: | ||||||||||||||||
Trade names | 47.1 | — | 46.4 | — | ||||||||||||
Total intangibles | $ | 199.4 | $ | (57.9 | ) | $ | 197.4 | $ | (56.0 | ) |
(In millions) | 2016 | 2017 | 2018 | 2019 | 2020 | |||||||||||||||
$ | 8.6 | $ | 8.4 | $ | 8.4 | $ | 8.3 | $ | 8.2 |
(In millions) | ||||||||||||
Water Systems | Fueling Systems | Consolidated | ||||||||||
Balance as of January 2, 2016 | $ | 136.8 | $ | 63.0 | $ | 199.8 | ||||||
Foreign currency translation | 1.9 | (0.1 | ) | 1.8 | ||||||||
Balance as of April 2, 2016 | $ | 138.7 | $ | 62.9 | $ | 201.6 |
(In millions) | Pension Benefits | Other Benefits | |||||||||||||
First Quarter Ended | First Quarter Ended | ||||||||||||||
April 2, 2016 | April 4, 2015 | April 2, 2016 | April 4, 2015 | ||||||||||||
Service cost | $ | 0.2 | $ | 0.3 | $ | — | $ | — | |||||||
Interest cost | 1.5 | 1.8 | 0.1 | 0.1 | |||||||||||
Expected return on assets | (2.3 | ) | (2.5 | ) | — | — | |||||||||
Amortization of prior service cost | — | — | 0.1 | 0.1 | |||||||||||
Amortization of loss | 0.6 | 0.8 | — | 0.1 | |||||||||||
Net periodic benefit cost | $ | — | $ | 0.4 | $ | 0.2 | $ | 0.3 | |||||||
Settlement cost | 0.3 | 0.3 | — | — | |||||||||||
Total net periodic benefit cost | $ | 0.3 | $ | 0.7 | $ | 0.2 | $ | 0.3 | |||||||
(In millions) | April 2, 2016 | January 2, 2016 | ||||||
Prudential Agreement - 5.79 percent | $ | 120.0 | $ | 120.0 | ||||
Tax increment financing debt | 22.3 | 22.8 | ||||||
New York Life | 75.0 | 75.0 | ||||||
Revolver | 11.5 | — | ||||||
Capital leases | 0.1 | 0.1 | ||||||
Foreign subsidiary debt | 4.0 | 3.1 | ||||||
Less: unamortized debt issuance costs | (0.3 | ) | (0.3 | ) | ||||
$ | 232.6 | $ | 220.7 | |||||
Less: current maturities | (45.3 | ) | (32.9 | ) | ||||
Long-term debt | $ | 187.3 | $ | 187.8 |
(In millions) | Total | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | More Than 5 Years | |||||||||||||||||||||
Debt | $ | 232.8 | $ | 45.3 | $ | 31.1 | $ | 31.2 | $ | 31.3 | $ | 1.3 | $ | 92.6 | ||||||||||||||
Capital leases | 0.1 | — | 0.1 | — | — | — | — | |||||||||||||||||||||
$ | 232.9 | $ | 45.3 | $ | 31.2 | $ | 31.2 | $ | 31.3 | $ | 1.3 | $ | 92.6 |
First Quarter Ended | |||||||
(In millions, except per share amounts) | April 2, 2016 | April 4, 2015 | |||||
Numerator: | |||||||
Net income attributable to Franklin Electric Co., Inc. | $ | 13.5 | $ | 19.8 | |||
Less: Undistributed earnings allocated to participating securities | 0.1 | 0.2 | |||||
Less: Undistributed earnings allocated to redeemable noncontrolling interest | 0.5 | 0.1 | |||||
$ | 12.9 | $ | 19.5 | ||||
Denominator: | |||||||
Basic | |||||||
Weighted average common shares | 46.1 | 47.6 | |||||
Diluted | |||||||
Effect of dilutive securities: | |||||||
Non-participating employee stock options and performance awards | 0.3 | 0.5 | |||||
Adjusted weighted average common shares | 46.4 | 48.1 | |||||
Basic earnings per share | $ | 0.28 | $ | 0.41 | |||
Diluted earnings per share | $ | 0.28 | $ | 0.41 | |||
Anti-dilutive stock options | 0.6 | 0.2 |
(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 2, 2016 | $ | 4,622 | $ | 216,472 | $ | 498,214 | $ | (51,558 | ) | $ | (110,050 | ) | $ | 1,765 | $ | 559,465 | $ | 6,856 | |||||||||||||
Net income | 13,457 | 162 | 13,619 | (39 | ) | ||||||||||||||||||||||||||
Adjustment to Impo redemption value | (493 | ) | (493 | ) | 493 | ||||||||||||||||||||||||||
Dividends on common stock | (4,506 | ) | (4,506 | ) | |||||||||||||||||||||||||||
Common stock issued | 2 | 409 | 411 | ||||||||||||||||||||||||||||
Common stock repurchased | (15 | ) | (4,160 | ) | (4,175 | ) | |||||||||||||||||||||||||
Share-based compensation | 8 | 2,531 | 2,539 | ||||||||||||||||||||||||||||
Tax expense of stock options exercised | (12 | ) | (12 | ) | |||||||||||||||||||||||||||
Currency translation adjustment | 12,940 | 66 | 13,006 | 19 | |||||||||||||||||||||||||||
Pension liability, net of tax | 476 | 476 | |||||||||||||||||||||||||||||
Balance as of April 2, 2016 | $ | 4,617 | $ | 219,400 | $ | 502,512 | $ | (51,082 | ) | $ | (97,110 | ) | $ | 1,993 | $ | 580,330 | $ | 7,329 |
(In millions) | |||||||||||
For the first quarter ended April 2, 2016: | Foreign Currency Translation Adjustments | Pension and Post-Retirement Plan Benefit Adjustments | Total | ||||||||
Balance as of January 2, 2016 | $ | (110.1 | ) | $ | (51.5 | ) | $ | (161.6 | ) | ||
Other comprehensive income/(loss) before reclassifications: | |||||||||||
Pre-tax income/(loss) | 13.1 | — | 13.1 | ||||||||
Income tax (expense)/benefit | — | — | — | ||||||||
Other comprehensive income/(loss) before reclassifications, net of income taxes | 13.1 | — | 13.1 | ||||||||
Amounts reclassified from accumulated other comprehensive income/(loss): | |||||||||||
Pre-tax income/(loss) | — | 0.7 | (1) | 0.7 | |||||||
Income tax (expense)/benefit | — | (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 | 13.1 | 0.4 | 13.5 | ||||||||
Less: Other comprehensive income/(loss) attributable to noncontrolling interests | 0.1 | — | 0.1 | ||||||||
Balance as of April 2, 2016 | $ | (97.1 | ) | $ | (51.1 | ) | $ | (148.2 | ) | ||
For the first quarter ended April 4, 2015: | |||||||||||
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)/benefit | — | — | — | ||||||||
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/(loss) | — | 1.0 | (1) | 1.0 | |||||||
Income tax (expense)/benefit | — | (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 | ) | ||||||
Less: Other comprehensive income/(loss) attributable to noncontrolling interests | (0.3 | ) | — | (0.3 | ) | ||||||
Balance as of April 4, 2015 | $ | (79.3 | ) | $ | (55.5 | ) | $ | (134.8 | ) |
First Quarter Ended | ||||||||
(In millions) | April 2, 2016 | April 4, 2015 | ||||||
Net sales to external customers | ||||||||
Water Systems | $ | 168.8 | $ | 179.2 | ||||
Fueling Systems | 49.6 | 46.5 | ||||||
Other | — | — | ||||||
Consolidated | $ | 218.4 | $ | 225.7 | ||||
First Quarter Ended | ||||||||
April 2, 2016 | April 4, 2015 | |||||||
Operating income/(loss) | ||||||||
Water Systems | $ | 24.2 | $ | 19.4 | ||||
Fueling Systems | 10.2 | 9.6 | ||||||
Other | (13.3 | ) | (13.1 | ) | ||||
Consolidated | $ | 21.1 | $ | 15.9 | ||||
April 2, 2016 | January 2, 2016 | |||||||
Total assets | ||||||||
Water Systems | $ | 712.0 | $ | 677.6 | ||||
Fueling Systems | 249.4 | 248.5 | ||||||
Other | 71.1 | 70.0 | ||||||
Consolidated | $ | 1,032.5 | $ | 996.1 |
(In millions) | ||||
Balance as of January 2, 2016 | $ | 9.3 | ||
Accruals related to product warranties | 1.2 | |||
Reductions for payments made | (1.7 | ) | ||
Balance as of April 2, 2016 | $ | 8.8 |
2012 Stock Plan | Authorized Shares | |
Stock Options | 1,680,000 | |
Stock/Stock Unit Awards | 720,000 |
2009 Stock Plan | Authorized Shares |
Stock Options | 3,200,000 |
Stock Awards | 1,200,000 |
April 2, 2016 | April 4, 2015 | |||||
Risk-free interest rate | 1.21 | % | 1.59 | % | ||
Dividend yield | 1.32 | % | 0.95 | % | ||
Volatility factor | 0.377 | 0.379 | ||||
Expected term | 5.5 years | 5.5 years | ||||
Forfeiture rate | 3.77 | % | 3.67 | % |
(Shares in thousands) | April 2, 2016 | April 4, 2015 | ||||||||||||
Stock Options | Shares | Weighted-Average Exercise Price | Shares | Weighted-Average Exercise Price | ||||||||||
Outstanding at beginning of period | 1,472 | $ | 23.26 | 1,397 | $ | 21.17 | ||||||||
Granted | 265 | 29.08 | 185 | 36.67 | ||||||||||
Exercised | (21 | ) | 18.98 | (46 | ) | 19.36 | ||||||||
Outstanding at end of period | 1,716 | $ | 24.22 | 1,536 | $ | 23.09 | ||||||||
Expected to vest after applying forfeiture rate | 1,680 | $ | 24.05 | 1,511 | $ | 22.86 | ||||||||
Vested and exercisable at end of period | 1,183 | $ | 20.54 | 1,124 | $ | 18.75 |
Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (000's) | |||||
Outstanding at end of period | 5.82 years | $ | 15,402 | |||
Expected to vest after applying forfeiture rate | 5.74 years | $ | 15,338 | |||
Vested and exercisable at end of period | 4.39 years | $ | 14,348 |
(Shares in thousands) | April 2, 2016 | April 4, 2015 | ||||||||||||
Stock/Stock Unit Awards | Shares | Weighted-Average Grant- Date Fair Value | Shares | Weighted-Average Grant- Date Fair Value | ||||||||||
Non-vested at beginning of period | 510 | $ | 34.43 | 554 | $ | 32.72 | ||||||||
Awarded | 162 | 29.08 | 120 | 36.67 | ||||||||||
Vested | (31 | ) | 34.32 | (74 | ) | 25.01 | ||||||||
Forfeited | (11 | ) | 32.53 | — | — | |||||||||
Non-vested at end of period | 630 | $ | 33.10 | 600 | $ | 34.47 |
First Quarter Ended | ||||||||||||||||
April 2, 2016 | ||||||||||||||||
(In millions) | Water Systems | Fueling Systems | Other | Consolidated | ||||||||||||
Employee severance | $ | 0.1 | $ | — | $ | — | $ | 0.1 | ||||||||
Equipment relocation | — | — | — | — | ||||||||||||
Asset write-off | — | 0.4 | — | 0.4 | ||||||||||||
Other | 0.3 | — | — | 0.3 | ||||||||||||
Total | $ | 0.4 | $ | 0.4 | $ | — | $ | 0.8 |
Net Sales | |||||||||||
(In millions) | Q1 2016 | Q1 2015 | 2016 v 2015 | ||||||||
Water Systems | $ | 168.8 | $ | 179.2 | $ | (10.4 | ) | ||||
Fueling Systems | 49.6 | 46.5 | 3.1 | ||||||||
Consolidated | $ | 218.4 | $ | 225.7 | $ | (7.3 | ) |
Operating income (loss) | ||||||||||||
(In millions) | Q1 2016 | Q1 2015 | 2016 v 2015 | |||||||||
Water Systems | $ | 24.2 | $ | 19.4 | $ | 4.8 | ||||||
Fueling Systems | 10.2 | 9.6 | 0.6 | |||||||||
Other | (13.3 | ) | (13.1 | ) | (0.2 | ) | ||||||
Consolidated | $ | 21.1 | $ | 15.9 | $ | 5.2 |
Operating Income (Loss) and Margins | ||||||||||||
Before and After Non-GAAP Adjustments | ||||||||||||
(In millions) | For the First Quarter 2016 | |||||||||||
Water | Fueling | Other | Consolidated | |||||||||
Reported Operating Income (Loss) | $ | 24.2 | $ | 10.2 | $ | (13.3 | ) | $ | 21.1 | |||
% Operating Income To Net Sales | 14.3 | % | 20.6 | % | 9.7 | % | ||||||
Non-GAAP Adjustments: | ||||||||||||
Restructuring | $ | 0.4 | $ | 0.4 | $ | — | $ | 0.8 | ||||
Non-GAAP | $ | — | $ | — | $ | 0.3 | $ | 0.3 | ||||
Operating Income (Loss) after Non-GAAP Adjustments | $ | 24.6 | $ | 10.6 | $ | (13.0 | ) | $ | 22.2 | |||
% Operating Income to Net Sales after Non-GAAP Adjustments (Operating Income Margin after Non-GAAP Adjustments) | 14.6 | % | 21.4 | % | 10.2 | % | ||||||
For the First Quarter 2015 | ||||||||||||
Water | Fueling | Other | Consolidated | |||||||||
Reported Operating Income (Loss) | $ | 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 (Loss) 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 | % |
Earnings Before and After Non-GAAP Adjustments | For the First Quarter Ended | |||||||
(In millions) | 2016 | 2015 | Change | |||||
Net Income attributable to Franklin Electric Co., Inc. Reported | $ | 13.5 | $ | 19.8 | (32 | )% | ||
Allocated Undistributed Earnings | $ | (0.6 | ) | $ | (0.3 | ) | ||
Adjusted Earnings for EPS Calculations | $ | 12.9 | $ | 19.5 | (34 | )% | ||
Non-GAAP adjustments, before tax: | ||||||||
Restructuring | $ | 0.8 | $ | 0.5 | ||||
Non-GAAP items | $ | 0.3 | $ | 0.3 | ||||
Pioneer tax benefits on equity gain | $ | — | $ | (4.8 | ) | |||
Non-GAAP adjustments, net of tax: | ||||||||
Restructuring | $ | 0.5 | $ | 0.3 | ||||
Non-GAAP items | $ | 0.2 | $ | 0.2 | ||||
Pioneer tax benefits on equity gain | $ | — | $ | (4.8 | ) | |||
Net Income attributable to Franklin Electric Co., Inc. after Non-GAAP Adjustments (Adjusted Net Income) | $ | 13.6 | $ | 15.2 | (11 | )% |
Earnings Per Share Before and After Non-GAAP Adjustments | For the First Quarter Ended | |||||||
(In millions, except per share data) | 2016 | 2015 | Change | |||||
Average Fully Diluted Shares Outstanding | 46.4 | 48.1 | (4 | )% | ||||
Fully Diluted Earnings Per Share ("EPS") Reported | $ | 0.28 | $ | 0.41 | (32 | )% | ||
Restructuring per Share, net of tax | $ | 0.01 | $ | 0.01 | ||||
Non-GAAP items, net of tax | $ | — | $ | — | ||||
Pioneer tax benefits on equity gain | $ | — | $ | (0.10 | ) | |||
Fully Diluted EPS after Non-GAAP Adjustments (Adjusted EPS) | $ | 0.29 | $ | 0.32 | (9 | )% |
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 3 - February 6 | 125,000 | $ | 26.07 | 125,000 | 2,175,962 | ||||||||
February 7 - March 5 | 19,600 | $ | 28.83 | 19,600 | 2,156,362 | ||||||||
March 6 - April 2 | — | $ | — | — | 2,156,362 | ||||||||
Total | 144,600 | $ | 26.44 | 144,600 | 2,156,362 |
FRANKLIN ELECTRIC CO., INC. | |||
Registrant | |||
Date: May 10, 2016 | By | /s/ Gregg C. Sengstack | |
Gregg C. Sengstack, Chairman and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: May 10, 2016 | By | /s/ John J. Haines | |
John J. Haines | |||
Vice President and Chief Financial Officer and Secretary | |||
(Principal Financial and Accounting Officer) |
Number | Description |
3.1 | Amended and Restated Bylaws of Franklin Electric Co., Inc. (incorporated by reference to Exhibit 3.1 of the Company's Form 8-K filed on March 1, 2016) | |
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 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric Co., Inc., for the first quarter ending April 2, 2016; |
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: | May 10, 2016 | |
/s/ Gregg C. Sengstack | ||
Gregg C. Sengstack | ||
Chairman and Chief Executive Officer | ||
Franklin Electric Co., Inc. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric Co., Inc., for the first quarter ending April 2, 2016; |
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: | May 10, 2016 | |
/s/ John J. Haines | ||
John J. Haines | ||
Vice President and Chief Financial Officer and Secretary | ||
Franklin Electric Co., Inc. |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 10, 2016 | |
/s/ Gregg C. Sengstack | ||
Gregg C. Sengstack | ||
Chairman and Chief Executive Officer | ||
Franklin Electric Co., Inc. |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 10, 2016 | |
/s/ John J. Haines | ||
John J. Haines | ||
Vice President and Chief Financial Officer and Secretary | ||
Franklin Electric Co., Inc. |
DOCUMENT AND ENTITY INFORMATION - shares |
3 Months Ended | |
---|---|---|
Apr. 02, 2016 |
May. 02, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FRANKLIN ELECTRIC CO INC | |
Entity Central Index Key | 0000038725 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 02, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 46,165,309 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
|
Income Statement | ||
Net sales | $ 218,430 | $ 225,728 |
Cost of sales | 144,194 | 154,238 |
Gross profit | 74,236 | 71,490 |
Selling, general, and administrative expenses | 52,345 | 55,160 |
Restructuring expense | 820 | 463 |
Operating income | 21,071 | 15,867 |
Interest expense | (2,427) | (2,708) |
Other income/(expense), net | (32) | 3,019 |
Foreign exchange income/(expense) | (77) | 416 |
Income before income taxes | 18,535 | 16,594 |
Income tax (benefit)/expense | 4,955 | (3,382) |
Net income | 13,580 | 19,976 |
Less: Net income attributable to noncontrolling interests | (123) | (181) |
Net income attributable to Franklin Electric Co., Inc. | $ 13,457 | $ 19,795 |
Income per share: | ||
Basic (in dollars per share) | $ 0.28 | $ 0.41 |
Diluted (in dollars per share) | 0.28 | 0.41 |
Dividends per common share | $ 0.0975 | $ 0.0900 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
|
Net income | $ 13,580 | $ 19,976 |
Other comprehensive income/(loss), before tax: | ||
Foreign currency translation adjustments | 13,025 | (27,882) |
Employee benefit plan activity | 742 | 987 |
Other comprehensive income/(loss) | 13,767 | (26,895) |
Income tax expense related to items of other comprehensive income/(loss) | (266) | (333) |
Other comprehensive income/(loss), net of tax | 13,501 | (27,228) |
Comprehensive income/(loss) | 27,081 | (7,252) |
Less: Comprehensive income/(loss) attributable to noncontrolling interests | 208 | (170) |
Comprehensive income/(loss) attributable to Franklin Electric Co., Inc. | $ 26,873 | $ (7,082) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Apr. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Current assets: | ||
Allowance for doubtful accounts (in dollars) | $ 3,815 | $ 3,801 |
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 (in shares) | 46,166 | 46,219 |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
3 Months Ended |
---|---|
Apr. 02, 2016 | |
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 2, 2016, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of April 2, 2016, and for the first quarters ended April 2, 2016 and April 4, 2015 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 2, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016. For further information, including a description of the critical accounting policies of Franklin Electric Co., Inc. (the "Company"), refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended January 2, 2016. |
ACCOUNTING PRONOUNCEMENTS |
3 Months Ended |
---|---|
Apr. 02, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
ACCOUNTING PRONOUCEMENTS | ACCOUNTING PRONOUNCEMENTS Adoption of New Accounting Standards In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Interest - Imputation of Interest (Subtopic 835-30): 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 instead of a deferred asset. The standard does not change the amortization of debt issuance costs, which will continue to follow the existing accounting guidance. The Company adopted ASU 2015-03 during the first quarter ended April 2, 2016. The retrospective adoption of this ASU required a total of approximately $0.3 million of unamortized debt issuance costs as of year-end 2015 to be reclassified from "Other assets" and "Other current assets" to a direct deduction from "Long-term debt" in the Company's condensed consolidated balance sheet as of January 2, 2016. In addition, there were no impacts to the Company's results of operations, retained earnings, or cash flows in the current or previous interim and annual reporting periods. Accounting Standards Issued But Not Yet Adopted In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for employee share-based payment transactions including the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. The transition method is either prospective, retrospective or modified retrospective, depending on the area covered in this update. The Company is still in the process of analyzing the effects of this new standard to determine the impact on the Company's consolidated financial position, results of operations, cash flows, and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases found in Accounting Standards Codification ("ASC") Topic 840. This ASU requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative period in the financial statements and is effective for interim and annual periods beginning after December 15, 2018 with early adoption 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, cash flows, and related disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). 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. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. These ASU's are effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt these standards. The Company is still in the process of analyzing the effect of these new standards, including the transition method, to determine the impact on the Company's consolidated financial position, results of operations, cash flows, and related disclosures. |
FAIR VALUE MEASUREMENTS |
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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 2, 2016 and January 2, 2016, the assets measured at fair value on a recurring basis were as set forth in the table below:
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 $232.5 million and $220.6 million and estimated fair values of $237 million and $225 million as of April 2, 2016 and January 2, 2016, respectively. 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. The following table summarizes information regarding the Company's non-financial assets measured at fair value on a nonrecurring basis:
The Company's Level 3 asset consists of a held for sale facility. During the first quarter of 2016, the Company agreed upon the terms of a letter of intent to sell its Saco, Maine facility. As a result, the Company reduced the carrying amount of the held for sale asset to approximate the estimated sales price less costs to sell. As of April 2, 2016 and January 2, 2016, the Company also had $1.8 million and $1.6 million of assets held for sale, respectively, recorded at carrying value in the Water Systems segment relating to an idle facility in Brazil. |
FINANCIAL INSTRUMENTS |
3 Months Ended |
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Apr. 02, 2016 | |
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 swap was not designated as a hedge for accounting purposes and is cancellable with 30 days written notice by either party. As of April 2, 2016, the swap has a notional value based on 175,000 shares. For the first quarters ended April 2, 2016 and April 4, 2015, the swap resulted in a gain of $0.8 million and a loss of $0.1 million, respectively. Gains and losses on the swap were primarily offset by gains and losses on the fair value of the deferred compensation stock liability. 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. |
OTHER ASSETS |
3 Months Ended |
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Apr. 02, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
OTHER ASSETS | OTHER ASSETS The Company has equity interests in various companies for various strategic purposes. The investments are accounted for under the equity method and are included in “Other assets” on the Company’s condensed consolidated balance sheets. The carrying amount of the investments is 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/(expense), net" line of the Company's condensed consolidated statements of income, were immaterial for the first quarters ended April 2, 2016 and April 4, 2015. |
GOODWILL AND OTHER INTANGIBLE ASSETS |
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GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The carrying amounts of the Company’s intangible assets are as follows:
Amortization expense related to intangible assets for the first quarters ended April 2, 2016 and April 4, 2015 was $2.0 million and $2.2 million, respectively. Amortization expense for each of the five succeeding years is projected as follows:
The change in the carrying amount of goodwill by reporting segment for the first quarter ended April 2, 2016, is as follows:
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EMPLOYEE BENEFIT PLANS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Defined Benefit Plans - As of April 2, 2016, the Company maintained two domestic pension plans and three German pension plans. The Company used a January 2, 2016 measurement date for these plans. One of the Company's domestic pension plans covers two management employees (one active employee and one former employee), 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 2, 2016 and April 4, 2015, respectively:
In the first quarter ended April 2, 2016, the Company made contributions of $0.6 million to the funded plans. The amount of contributions to be made to the plans during the calendar year 2016 will be finalized by September 15, 2016, based upon the plans' year-end valuation at January 2, 2016, and the funding level required for the plans' year ended January 2, 2016. |
INCOME TAXES |
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Apr. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective tax rate from continuing operations for the three month period ended April 2, 2016 was 26.7% as compared to negative 20.4% for the three month period ended April 4, 2015. The effective tax rate continues to be lower than the U.S. statutory rate primarily due to the indefinite reinvestment of foreign earnings taxed at rates below the U.S. statutory rate as well as recognition of U.S. tax incentives and credits. The Company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its other operations as well as cash on hand and available credit. In addition during the three month period ended April 4, 2015, the Company settled the liability for the noncontrolling interest of a subsidiary during the first quarter. This transaction created additional accretive benefits for the Company from 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. The Company also realized a gain on the mandatorily redeemable noncontrolling interest liability. |
DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Debt consisted of the following:
During the first quarter ended April 2, 2016, a portion of the revolver borrowing was used for seasonal working capital needs. Debt outstanding, excluding unamortized debt issuance costs, at April 2, 2016 matures as follows:
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EARNINGS PER SHARE |
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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 allocable 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:
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EQUITY ROLL FORWARD |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY ROLL FORWARD | EQUITY ROLL FORWARD The schedule below sets forth equity changes in the first quarter ended April 2, 2016:
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ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) |
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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 2, 2016 and April 4, 2015, are summarized below:
(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details) and is included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION Financial information by reportable business segment is included in the following summary:
Property, plant, and equipment is the major asset group in "Other" of total assets as of April 2, 2016 and January 2, 2016. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | The Company is defending various claims and legal actions 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 effect on the Company’s financial position, results of operations, and net cash flows. At April 2, 2016, the Company had $18.8 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 2, 2016, are as follows:
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SHARE-BASED COMPENSATION |
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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 authorized 2,400,000 shares for issuance as follows:
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:
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 2, 2016 and April 4, 2015 are as follows:
There were 265,270 and 184,706 stock options granted during the first quarters ended April 2, 2016 and April 4, 2015, respectively. A summary of the Company’s outstanding stock option activity and related information for the first quarters ended April 2, 2016 and April 4, 2015 is as follows:
A summary of the weighted-average remaining contractual term and aggregate intrinsic value as of April 2, 2016 is as follows:
The total intrinsic value of options exercised during the first quarters ended April 2, 2016 and April 4, 2015 was $0.2 million and $0.8 million, respectively. As of April 2, 2016, there was $2.5 million of total unrecognized compensation cost related to non-vested 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 2.72 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 2, 2016 and April 4, 2015 is as follows:
As of April 2, 2016, there was $11.4 million of total unrecognized compensation cost related to non-vested 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 2.67 years. |
RESTRUCTURING |
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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 2, 2016, included in the “Restructuring expense” line of the Company's condensed consolidated statements of income, are as follows:
Restructuring expenses for the first quarter ended April 4, 2015 were approximately $0.5 million and primarily for the Water Systems realignment. As of April 2, 2016, there were $0.2 million of restructuring reserves. As of April 4, 2015, there were $6.4 million of restructuring reserves. The restructuring reserves were primarily for severance. |
FAIR VALUE MEASUREMENTS (Tables) |
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Apr. 02, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets Measured on Recurring Basis | As of April 2, 2016 and January 2, 2016, the assets measured at fair value on a recurring basis were as set forth in the table below:
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Schedule of Fair Value, Assets Measured on a Nonrecurring Basis | The following table summarizes information regarding the Company's non-financial assets measured at fair value on a nonrecurring basis:
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
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Apr. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Schedule of Amortization Expense | Amortization expense for each of the five succeeding years is projected as follows:
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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 2, 2016, is as follows:
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EMPLOYEE BENEFIT PLANS (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 2, 2016 and April 4, 2015, respectively:
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DEBT (Tables) |
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Apr. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Debt consisted of the following:
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Schedule of Long-term Debt Payments | Debt outstanding, excluding unamortized debt issuance costs, at April 2, 2016 matures as follows:
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EARNINGS PER SHARE (Tables) |
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Apr. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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EQUITY ROLL FORWARD (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders' Equity | The schedule below sets forth equity changes in the first quarter ended April 2, 2016:
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ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) | Changes in accumulated other comprehensive income/(loss) by component for the first quarters ended April 2, 2016 and April 4, 2015, are summarized below:
(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details) and is included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income. |
SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Information by Reportable Business Segment | Financial information by reportable business segment is included in the following summary:
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COMMITMENTS AND CONTINGENCIES (Tables) |
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Apr. 02, 2016 | ||||||||||||||||||||||||||||||||||||
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 2, 2016, are as follows:
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SHARE-BASED COMPENSATION (Tables) |
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Apr. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Authorized Number of Shares | The 2012 Stock Plan authorized 2,400,000 shares for issuance as follows:
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:
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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 2, 2016 and April 4, 2015 are as follows:
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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 2, 2016 and April 4, 2015 is as follows:
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Schedule of Stock Options, Contractual Term and Aggregate Intrinsic Value | A summary of the weighted-average remaining contractual term and aggregate intrinsic value as of April 2, 2016 is as follows:
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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 2, 2016 and April 4, 2015 is as follows:
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RESTRUCTURING (Tables) |
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Apr. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Cost Incurred, Included in Restructuring Expense | Costs incurred in the first quarter ended April 2, 2016, included in the “Restructuring expense” line of the Company's condensed consolidated statements of income, are as follows:
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ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions |
Apr. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ||
Unamortized debt issuance costs reclassified | $ 0.3 | $ 0.3 |
FINANCIAL INSTRUMENTS (Details) - Share swap transaction agreement - Not Designated as Hedging Instrument $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 02, 2016
USD ($)
shares
|
Apr. 04, 2015
USD ($)
|
|
Derivative | ||
Derivative cancellable written notice term | 30 days | |
Derivative notional amount (in shares) | shares | 175,000 | |
Selling, general, and administrative expenses | ||
Derivative | ||
Gain on derivative | $ 0.8 | |
Loss on derivative | $ 0.1 |
GOODWILL AND OTHER INTANGIBLE ASSETS (Goodwill) (Details) $ in Thousands |
3 Months Ended |
---|---|
Apr. 02, 2016
USD ($)
| |
Change in the Carrying Amount of Goodwill by Reporting Segment | |
Goodwill, beginning balance | $ 199,847 |
Foreign currency translation | 1,800 |
Goodwill, ending balance | 201,580 |
Water Systems | |
Change in the Carrying Amount of Goodwill by Reporting Segment | |
Goodwill, beginning balance | 136,800 |
Foreign currency translation | 1,900 |
Goodwill, ending balance | 138,700 |
Fueling Systems | |
Change in the Carrying Amount of Goodwill by Reporting Segment | |
Goodwill, beginning balance | 63,000 |
Foreign currency translation | (100) |
Goodwill, ending balance | $ 62,900 |
INCOME TAXES Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate from continuing operations | 26.70% | (20.40%) |
DEBT (Details) - USD ($) $ in Thousands |
Apr. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Debt Instrument | ||
Prudential Agreement - 5.79 percent | $ 120,000 | $ 120,000 |
Tax increment financing debt | 22,300 | 22,800 |
New York Life | 75,000 | 75,000 |
Revolver | 11,500 | 0 |
Capital leases | 100 | 100 |
Foreign subsidiary debt | 4,000 | 3,100 |
Less: unamortized debt issuance costs | (300) | (300) |
Debt and capital lease obligations | 232,600 | 220,700 |
Less: current maturities | (45,337) | (32,946) |
Long-term debt | $ 187,257 | $ 187,806 |
B-1 and B-2 Notes | ||
Debt Instrument | ||
Prudential interest rate | 5.79% |
DEBT (Debt Payments Expected to be Paid) (Details) $ in Millions |
Apr. 02, 2016
USD ($)
|
---|---|
Debt Instrument | |
Debt and capital lease obligations | $ 232.9 |
Long-term Debt, by Maturity | |
Year 1 | 45.3 |
Year 2 | 31.2 |
Year 3 | 31.2 |
Year 4 | 31.3 |
Year 5 | 1.3 |
More than 5 years | 92.6 |
Debt | |
Debt Instrument | |
Debt and capital lease obligations | 232.8 |
Long-term Debt, by Maturity | |
Year 1 | 45.3 |
Year 2 | 31.1 |
Year 3 | 31.2 |
Year 4 | 31.3 |
Year 5 | 1.3 |
More than 5 years | 92.6 |
Capital leases | |
Debt Instrument | |
Debt and capital lease obligations | 0.1 |
Long-term Debt, by Maturity | |
Year 1 | 0.0 |
Year 2 | 0.1 |
Year 3 | 0.0 |
Year 4 | 0.0 |
Year 5 | 0.0 |
More than 5 years | $ 0.0 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions |
3 Months Ended | |
---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
|
Numerator: | ||
Net income attributable to Franklin Electric Co., Inc. (in dollars) | $ 13,457 | $ 19,795 |
Less: Undistributed earnings allocated to participating securities (in dollars) | 100 | 200 |
Less: Undistributed earnings allocated to redeemable noncontrolling interest (in dollars) | 500 | 100 |
Net income attributable to Franklin Electric Co., Inc. excluding undistributed earnings (in dollars) | $ 12,900 | $ 19,500 |
Basic | ||
Weighted average common shares (in shares) | 46.1 | 47.6 |
Effect of dilutive securities: | ||
Non-participating employee stock options and performance awards (in shares) | 0.3 | 0.5 |
Adjusted weighted average common shares (in shares) | 46.4 | 48.1 |
Basic earnings per share (in dollars per share) | $ 0.28 | $ 0.41 |
Diluted earnings per share (in dollars per share) | $ 0.28 | $ 0.41 |
Stock Options | ||
Effect of dilutive securities: | ||
Anti-dilutive stock options (in shares) | 0.6 | 0.2 |
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
Jan. 02, 2016 |
|
Segment Reporting Information | |||
Net sales to external customers | $ 218,430 | $ 225,728 | |
Operating income/(loss) | 21,071 | 15,867 | |
Total assets | 1,032,523 | $ 996,111 | |
Water Systems | |||
Segment Reporting Information | |||
Net sales to external customers | 168,800 | 179,200 | |
Operating income/(loss) | 24,200 | 19,400 | |
Total assets | 712,000 | 677,600 | |
Fueling Systems | |||
Segment Reporting Information | |||
Net sales to external customers | 49,600 | 46,500 | |
Operating income/(loss) | 10,200 | 9,600 | |
Total assets | 249,400 | 248,500 | |
Other | |||
Segment Reporting Information | |||
Net sales to external customers | 0 | 0 | |
Operating income/(loss) | (13,300) | $ (13,100) | |
Total assets | $ 71,100 | $ 70,000 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions |
3 Months Ended |
---|---|
Apr. 02, 2016
USD ($)
| |
Commitments | |
Purchase obligations | $ 18.8 |
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 | $ 9.3 |
Accruals related to product warranties | 1.2 |
Reductions for payments made | (1.7) |
Ending balance | $ 8.8 |
SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
May. 04, 2012 |
Apr. 24, 2009 |
|
Fair Value Assumptions | ||||
Risk-free interest rate (as a percent) | 1.21% | 1.59% | ||
Dividend yield (as a percent) | 1.32% | 0.95% | ||
Volatility factor (as a percent) | 37.70% | 37.90% | ||
Expected term (in years) | 5 years 6 months | 5 years 5 months 26 days | ||
Forfeiture rate (as a percent) | 3.77% | 3.67% | ||
Stock Option Plans Activity and Related Information | ||||
Outstanding beginning of period, shares | 1,472,000 | 1,397,000 | ||
Outstanding beginning of period, weighted-average exercise price (in dollars per share) | $ 23.26 | $ 21.17 | ||
Granted, shares | 265,270 | 184,706 | ||
Granted, weighted-average exercise price (in dollars per share) | $ 29.08 | $ 36.67 | ||
Exercised, shares | (21,000) | (46,000) | ||
Exercised, weighted-average exercise price (in dollars per share) | $ 18.98 | $ 19.36 | ||
Outstanding end of period, shares | 1,716,000 | 1,536,000 | ||
Outstanding end of period, weighted-average exercise price (in dollars per share) | $ 24.22 | $ 23.09 | ||
Expected to vest after applying forfeiture rate, shares | 1,680,000 | 1,511,000 | ||
Expected to vest after applying forfeiture rate, weighted-average exercise price (in dollars per share) | $ 24.05 | $ 22.86 | ||
Vested and exercisable end of period, shares | 1,183,000 | 1,124,000 | ||
Vested and exercisable end of period, weighted-average exercise price (in dollars per share) | $ 20.54 | $ 18.75 | ||
Summary of Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value | ||||
Outstanding end of period, weighted-average remaining contractual term (in years) | 5 years 9 months 25 days | |||
Outstanding end of period, aggregate intrinsic value (in dollars) | $ 15,402 | |||
Expected to vest after applying forfeiture rate, weighted-average remaining contractual term (in years) | 5 years 8 months 26 days | |||
Expected to vest after applying forfeiture rate, aggregate intrinsic value (in dollars) | $ 15,338 | |||
Vested and exercisable end of period, weighted-average remaining contractual term (in years) | 4 years 4 months 20 days | |||
Vested and exercisable end of period, aggregate intrinsic value (in dollars) | $ 14,348 | |||
Intrinsic value of options exercised (in dollars) | $ 200 | $ 800 | ||
Stock/Stock Unit Award Activity and Related Information | ||||
Non-vested at beginning of period, shares | 510,000 | 554,000 | ||
Non-vested at beginning of period, weighted-average grant date fair value (in dollars per share) | $ 34.43 | $ 32.72 | ||
Awarded, shares | 162,000 | 120,000 | ||
Awarded, weighted-average grant date fair value (in dollars per share) | $ 29.08 | $ 36.67 | ||
Vested, shares | (31,000) | (74,000) | ||
Vested, weighted-average grant date fair value (in dollars per share) | $ 34.32 | $ 25.01 | ||
Forfeited, shares | (11,000) | 0 | ||
Forfeited, weighted-average grant date fair value (in dollars per share) | $ 32.53 | $ 0.00 | ||
Non-vested at end of period, shares | 630,000 | 600,000 | ||
Non-vested at the end of period, weighted-average grant date fair value (in dollars per share) | $ 33.10 | $ 34.47 | ||
Options | ||||
Share-based Compensation | ||||
Total unrecognized compensation cost related to nonvested share-based compensation (in dollars) | $ 2,500 | |||
Total unrecognized compensation cost, recognized over a weighted-average period (in years) | 2 years 8 months 19 days | |||
Employee Stock/Stock Unit Award | ||||
Share-based Compensation | ||||
Total unrecognized compensation cost related to nonvested share-based compensation (in dollars) | $ 11,400 | |||
Total unrecognized compensation cost, recognized over a weighted-average period (in years) | 2 years 8 months 1 day | |||
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 |
RESTRUCTURING (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 02, 2016 |
Apr. 04, 2015 |
Jul. 01, 2014 |
|
Restructuring Cost and Reserve | |||
Restructuring expense | $ 820 | $ 463 | |
Restructuring reserves | 200 | $ 6,400 | |
Employee Severance | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 100 | ||
Equipment Relocation | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 0 | ||
Asset write-off | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 400 | ||
Other | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 300 | ||
Water Systems | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 400 | ||
Water Systems | Employee Severance | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 100 | ||
Water Systems | Equipment Relocation | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 0 | ||
Water Systems | Asset write-off | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 0 | ||
Water Systems | Other | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 300 | ||
Fueling Systems | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 400 | ||
Fueling Systems | Employee Severance | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 0 | ||
Fueling Systems | Equipment Relocation | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 0 | ||
Fueling Systems | Asset write-off | |||
Restructuring Cost and Reserve | |||
Restructuring expense | 400 | ||
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 | Asset write-off | |||
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, expected cost | $ 19,400 |
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