-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CCZiBtVLh+ZiUlBH6C7hHy49PPpFg4NuaLeRM2z4BWhWWpKp8JMCEbS9ByzC51K6 lCq6cJw/wrxcpPuIz+U76A== 0000038725-96-000023.txt : 19961113 0000038725-96-000023.hdr.sgml : 19961113 ACCESSION NUMBER: 0000038725-96-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN ELECTRIC CO INC CENTRAL INDEX KEY: 0000038725 STANDARD INDUSTRIAL CLASSIFICATION: MOTORS & GENERATORS [3621] IRS NUMBER: 350827455 STATE OF INCORPORATION: IN FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00362 FILM NUMBER: 96659381 BUSINESS ADDRESS: STREET 1: 400 E SPRING ST CITY: BLUFFTON STATE: IN ZIP: 46714 BUSINESS PHONE: 2198242900 MAIL ADDRESS: STREET 1: 400 E SPRING STREET CITY: BLUFFTON STATE: IN ZIP: 46714 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 28, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-362 FRANKLIN ELECTRIC CO., INC. (Exact name of registrant as specified in its charter) Indiana 35-0826-7455 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 East Spring Street 46714 Bluffton, Indiana (Zip Code) (Address of principal executive offices) (219) 824-2900 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO _____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class of Common Stock November 11, 1996 --------------------- ----------------- $.10 par value 6,365,266 shares FRANKLIN ELECTRIC CO., INC. Index PART I. FINANCIAL INFORMATION - --------------------------------- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of September 28, 1996 (Unaudited) and December 30, 1995 Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended September 28, 1996 and September 30, 1995 (Unaudited) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 1996 and September 30, 1995 (Unaudited) Notes to Condensed Consolidated Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION - ----------------------------- Item 6. Exhibits and Reports on Form 8-K Signatures - ---------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) Sept. 28, December 30, 1996 1995 (Unaudited) (Audited) --------- ------- ASSETS Current assets: Cash and equivalents $ 43,727 $ 32,077 Receivables, less allowances of $1,460 and $1,351, respectively 19,833 22,526 Inventories (Note 2) 48,127 45,839 Other current assets (including deferred income taxes of $7,690 and $7,823, respectively) 8,699 8,879 ------- ------- Total current assets 120,386 109,321 Property, plant and equipment, net (Note 3) 37,891 41,670 Deferred and other assets 1,686 2,366 ------- ------- Total assets $159,963 $153,357 ======= ======= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings $ 145 $ 461 Accounts payable 10,979 15,882 Accrued expenses 24,536 23,228 Income taxes 2,577 1,726 ------ ------- Total current liabilities 38,237 41,297 Long-term debt 20,301 20,171 Employee benefit plan obligations 4,647 6,069 Other long-term liabilities 4,176 4,956 Deferred income taxes 303 307 Shareowners' equity: Common stock (Note 5) 633 626 Additional capital 6,533 5,683 Retained earnings 88,916 77,363 Stock subscriptions (1,065) (1,315) Cumulative translation adjustment ( 194) 600 Loan to ESOP Trust (2,524) (2,400) ------ ------- Total shareowners' equity 92,299 80,557 ------- ------- Total liabilities and shareowners' equity. $159,963 $153,357 ======= ======= See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended ------------------ ----------------- Sept 28, Sept 30, Sept 28, Sept 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $79,380 $66,188 $215,241 $202,418 Costs and expenses: Cost of sales 59,380 51,234 161,119 156,595 Selling and administrative expenses 11,409 9,871 32,417 30,277 Interest expense 318 526 978 1,697 Other income, net (399) (500) (1,038) (1,216) -------- -------- -------- -------- 70,708 61,131 193,476 187,353 Income before income taxes 8,672 5,057 21,765 15,065 Income taxes 3,060 1,756 8,064 5,578 -------- -------- -------- -------- Net income $ 5,612 $ 3,301 $13,701 $ 9,487 ======== ======== ======== ======== Per share data: Weighted average common shares 6,684 6,590 6,676 6,596 ======== ======== ======== ======== Net income available to common shares $ .84 $ .50 $ 2.05 $ 1.44 ======== ======== ======== ======== Dividends per common share $ .12 $ .10 $ .34 $ .28 ======== ======== ======== ======== See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended ----------------- Sept 28 Sept 30, 1996 1995 ---- ---- Cash flows from operating activities: Net income $ 13,701 $ 9,487 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 6,487 6,911 Deferred income taxes - (12) Loss (Gain) on disposals of plant and equipment 297 (33) Changes in assets and liabilities: Receivables 2,374 1,097 Inventories (3,281) (9,970) Other current assets 147 (2,217) Accounts payable and other accrued expenses (2,085) (5,584) Employee benefit plan obligations (1,422) 395 Other long-term liabilities (776) (600) Other, net (43) 89 ------- ------- Net cash flows from operating activities 15,399 (437) ------- ------- Cash flows from investing activities: Additions to plant and equipment (2,220) (4,399) Proceeds from sale of plant and equipment 209 31 Additions to deferred assets (220) (636) ------ -------- Net cash flows from investing activities (2,231) (5,004) ------ -------- Cash flows from financing activities: Additions to long-term debt 195 - Repayment of long-term debt (80) - Repayment of short-term debt (257) (8,500) Additions to short-term debt - 3,100 Proceeds from issuance of common stock 592 249 Loan to ESOP Trust (324) - Repayment of loan to ESOP Trust 200 200 Proceeds from stock subscriptions 25 866 Dividends paid (2,148) (1,745) ------- ------- Net cash flows from financing activities (1,797) (5,830) ------- ------- Effect of exchange rate changes on cash 279 65 ------- ------- Net increase (decrease) in cash and equivalents 11,650 (11,206) Cash and equivalents at beginning of period 32,077 38,890 ------ ------ Cash and equivalents at end of period $ 43,727 $ 27,684 ====== ====== See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1: Condensed Consolidated Financial Statements - ---------------------------------------------------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and nine months ended September 28, 1996 are not necessarily indicative of the results that may be expected for the year ending December 28, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in Franklin Electric Co., Inc.'s annual report on Form 10-K for the year ended December 30, 1995. Note 2: Inventories - -------------------- Inventories consist of the following: (In thousands) Sept 28, December 30, 1996 1995 ---- ---- Raw Materials $ 17,584 $ 17,080 Work in Process 6,063 5,899 Finished Goods 36,827 34,614 LIFO Reserve (12,347) (11,754) ------ ------ Total Inventory $ 48,127 $ 45,839 ====== ====== Note 3: Property, Plant and Equipment - -------------------------------------- Property, plant and equipment at cost consists of the following: (In thousands) Sept 28, December 30, 1996 1995 ---- ---- Land and Building $ 28,987 $ 29,173 Machinery and Equipment 93,641 92,523 ------- ------- 122,628 121,696 Allowance for Depreciation 84,737 80,026 ------- ------- $ 37,891 $ 41,670 ======= ======= Note 4: Tax Rates - ------------------ The effective tax rate on income before income taxes in 1996 and 1995 varies from the United States statutory rate of 35 percent principally due to the effect of state and foreign income taxes. Note 5: Shareowners' Equity - ---------------------------- The Company had 6,337,539 shares of common stock (10,000,000 shares authorized, $.10 par value) outstanding as of Sept 28, 1996. Note 6 - Subsequent Event - ------------------------- On October 18, 1996 the Company's Board of Directors authorized the repurchase of up to 500,000 shares of its common stock. Item 2. Management's Discussion And Analysis Of Financial Condition - -------------------------------------------------------------------- And Results Of Operations - ------------------------- Operations - ---------- Net sales for the third quarter of 1996 were $79.4 million, a 20 percent increase compared to 1995 third quarter net sales of $66.2 million. Year to date 1996 net sales were $215.2 million, a 6 percent increase over the comparable 1995 period of $202.4 million. The increase in net sales was primarily due to higher unit volume and increases in average selling prices. Net income for the third quarter of 1996 was $5.6 million, or $.84 per share, an increase of 70 percent compared to the third quarter of 1995 net income of $3.3 million, or $.50 per share. Year to date 1996 net income was $13.7 million, or $2.05 per share, an increase of 44 percent compared to year to date 1995 net income of $9.5 million, or $1.44 per share. The increases in third quarter and year to date net income were primarily attributable to higher net sales and improvements in the operations of Oil Dynamics, Inc., (ODI), a wholly owned subsidiary, and in the Company's European operations. Cost of sales as a percent of net sales for the third quarter of 1996 was 74.8 percent compared to 77.4 percent for the same period in 1995. For the nine-month periods cost of sales as a percent of net sales for 1996 was 74.9 percent compared to 77.4 percent for 1995. The decreases for both the quarter and year to date periods were primarily due to increased sales and decreases in both fixed and variable manufacturing expenses principally at ODI and the Company's European operations. Selling and administrative expenses as a percent of net sales for the third quarter of 1996 was 14.4 percent compared to 14.9 percent for the same period in 1995. Year to date selling and administrative expenses as a percent of net sales for 1996 was 15.1 percent compared to 15.0 percent for the same period of last year. Interest expense in the third quarter of 1996 was $.3 million compared to $.5 million for the same period in 1995. Interest expense for the year to date 1996 was $1.0 million compared to $1.7 million for the same period last year. The decrease was due to lower short-term borrowings during 1996. Included in other income, net for the third quarter of 1996 was $.5 million of interest income and $.2 million of foreign currency transaction gains compared to $0.5 million of interest income and $.1 million of foreign currency transaction losses for the same period in 1995. For the year to date 1996, other income, net included $1.3 million of interest income and $.2 million of foreign currency transaction losses compared to $1.3 million of interest income and $.5 million of foreign currency transaction losses for the same period of last year. Interest income was attributable to amounts invested principally in short-term US treasury bills and notes. Capital Resources and Liquidity - ------------------------------- Cash and equivalents increased $11.7 million during the first nine months due to cash provided by operating activities of $15.4 million. During the first nine months of 1996, $2.2 million was invested in additions to plant and equipment and $2.1 million was paid as dividends on the Company's common stock. Working capital increased $14.1 million and the current ratio of the Company was 3.1 and 2.6 at the end of the third quarter of 1996 and 1995, respectively. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits (11) Computations of Earnings per Share (b) Reports on Form 8-K There were no reports on Form 8-K filed for the third quarter ended September 28, 1996. SIGNATURES - ------------ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized. FRANKLIN ELECTRIC CO., INC. --------------------------- Registrant Date November 6, 1996 By William H. Lawson -------------------- --------------------------- William H. Lawson, Chairman and Chief Executive Officer Date November 6, 1996 By Jess B. Ford -------------------- --------------------------- Jess B. Ford, Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Exhibit Index (11) Computation of Earnings per Share EXHIBIT 11 FRANKLIN ELECTRIC CO., INC. COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE (In thousands, except per share amounts) Three Months Ended Nine Months Ended ------------------ ----------------- Sept 28, Sept 30, Sept 28, Sept 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net income available to common shares and common share equivalents $5,612 $3,301 $13,701 $9,487 ===== ===== ====== ===== Common shares outstanding beginning of period 6,327 6,240 6,254 6,199 Weighted average of common shares issued during the period 6 1 61 29 Dilutive effect of options outstanding during the period 351 349 361 368 ---- ---- ---- ---- Weighted average of common shares outstanding during the period 6,684 6,590 6,676 6,596 ===== ===== ===== ===== Net income per weighted average common share $ .84 $ .50 $ 2.05 $ 1.44 ===== ===== ===== ===== EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-28-1996 SEP-28-1996 43,727 0 19,833 1,460 48,127 120,386 122,628 84,737 159,963 38,237 0 0 0 633 0 159,963 215,241 0 161,119 193,476 0 0 978 21,765 8,064 13,701 0 0 0 13,701 2.05 2.05
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