-----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, C/r0YPPHQicIjRilCTvjv8o9RkWefhm2nYvRP5Y0CwUVevXnRFwL7fVhDXqh2ufo HJlxQ+okyModYgD6QsPLeQ== 0000038725-97-000011.txt : 19970509 0000038725-97-000011.hdr.sgml : 19970509 ACCESSION NUMBER: 0000038725-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970508 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: 97598022 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 March 29, 1997 -------------- 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 Bluffton, Indiana 46714 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (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 May 2, 1997 --------------------- ---------------- $.10 par value 5,892,529 shares FRANKLIN ELECTRIC CO., INC. Index PART I. FINANCIAL INFORMATION - --------------------------------- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of March 29, 1997 (Unaudited) and December 28, 1996 Condensed Consolidated Statements of Income for the Three Months Ended March 29, 1997 and March 30, 1996 (Unaudited) Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 29, 1997 and March 30, 1996 (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 4. Submission of Matters to a Vote of Security Holders 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) March 29, December 28, 1997 1996 (Unaudited) (Audited) ----------- --------- ASSETS Current assets: Cash and equivalents...................... $ 3,507 $ 22,968 Marketable securities..................... 14,920 31,624 Receivables, less allowances of $1,468 and $1,435, respectively......... 26,505 25,134 Inventories (Note 2)...................... 52,116 42,305 Other current assets (including deferred income taxes of $7,557 and $7,755, respectively)............... 9,000 9,485 -------- -------- Total current assets.................... 106,048 131,516 Property, plant and equipment, net (Note 3). 37,799 40,097 Deferred and other assets................... 1,491 1,846 -------- -------- Total assets................................ $145,338 $173,459 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings..................... $ 19 $ 21 Accounts payable.......................... 8,742 14,049 Accrued expenses.......................... 22,640 24,883 Income taxes.............................. 4,522 4,339 -------- -------- Total current liabilities............... 35,923 43,292 Long-term debt.............................. 20,249 20,276 Employee benefit plan obligations........... 6,469 5,741 Other long-term liabilities................. 4,118 4,144 Deferred income taxes....................... 182 183 Shareowners' equity: Common stock (Note 5)..................... 589 638 Additional capital........................ 8,038 7,613 Retained earnings......................... 74,499 95,961 Stock subscriptions....................... (829) (997) Cumulative translation adjustment......... (1,365) (625) Loan to ESOP Trust........................ (2,292) (2,524) Minimum pension liability adjustment, net of taxes............................ (243) (243) -------- -------- Total shareowners' equity............... 78,397 99,823 -------- -------- Total liabilities and shareowners' equity... $145,338 $173,459 ======== ======== 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 ------------------ March 29, March 30, 1997 1996 ---- ---- Net sales $64,200 $62,754 Costs and expenses: Cost of sales........................... 47,709 47,794 Selling and administrative expenses..... 11,464 10,254 Interest expense........................ 345 320 Other income, net....................... (497) (472) ------- ------- 59,021 57,896 Income before income taxes................ 5,179 4,858 Income taxes.............................. 1,984 1,850 ------- ------- Net income................................ $ 3,195 $ 3,008 ======= ======= Per share data: Weighted average common shares.......... 6,468 6,661 ======= ======= Net income available to common shares... $ .49 $ .45 ======= ======= Dividends per common share.............. $ .12 $ .10 ======= ======= See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three Months Ended ------------------ March 29, March 30, 1997 1996 ---- ---- Cash flows from operating activities: Net income................................ $ 3,195 $ 3,008 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization........... 1,816 2,111 Deferred income taxes................... - 132 Loss (gain) on disposals of plant and equipment......................... 38 (25) Changes in assets and liabilities: Receivables........................... (1,772) (3,671) Inventories........................... (10,688) (11,407) Other current assets.................. 34 (109) Accounts payable and other accrued expenses............................ (6,496) (4,095) Employee benefit plan obligations..... 728 283 Other long-term liabilities........... (5) (206) ------- ------- Net cash flows from operating activities.............. (13,150) (13,979) ------- ------- Cash flows from investing activities: Additions to plant and equipment........ (354) (452) Proceeds from sale of plant and equipment............................. 964 - Proceeds from maturities of marketable securities ........................... 16,704 - Other, net.............................. 207 (222) ------- ------- Net cash flows from investing activities................ 17,521 (674) ------- ------- Cash flows from financing activities: Additions to long-term debt............. - 236 Repayment of short-term debt............ - (259) Proceeds from issuance of common stock.. 399 358 Purchase of common stock ............... (24,000) - Proceeds from stock subscriptions....... 100 25 Reduction of loan from ESOP Trust....... 232 200 Dividends paid.......................... (707) (629) ------- ------- Net cash flows from financing activities................ (23,976) (69) ------- ------- Effect of exchange rate changes on cash... 144 239 ------- ------- Net decrease in cash and equivalents...... (19,461) (14,483) Cash and equivalents at beginning of period..................... 22,968 32,077 ------- ------- Cash and equivalents at end of period..... $ 3,507 $17,594 ======= ======= 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 three months ended March 29, 1997 are not necessarily indicative of the results that may be expected for the year ending January 3, 1998. 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 28, 1996. Note 2: Inventories - -------------------- Inventories consist of the following: (In thousands) March 29, December 28, 1997 1996 ---- ---- Raw Materials........................ $16,776 $15,958 Work in Process...................... 4,946 4,942 Finished Goods....................... 41,644 32,528 LIFO Reserve......................... (11,250) (11,123) ------- ------- Total Inventory...................... $52,116 $42,305 ======= ======= Note 3: Property, Plant and Equipment - -------------------------------------- Property, plant and equipment at cost consists of the following: (In thousands) March 29, December 28, 1997 1996 ---- ---- Land and Building.................... $27,314 $28,335 Machinery and Equipment.............. 93,681 95,457 ------- ------- 120,995 123,792 Allowance for Depreciation........... 83,196 83,695 ------- ------- $37,799 $40,097 ======= ======= Note 4: Tax Rates - ------------------ The effective tax rate on income before income taxes in 1997 and 1996 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 5,892,529 shares of common stock (10,000,000 shares authorized, $.10 par value) outstanding as of March 29, 1997. On January 29, 1997, pursuant to the stock repurchase plan authorized by the Company's Board of Directors in October 1996, the Company completed three separate, privately negotiated transactions to repurchase 500,000 shares of the Company's common stock for a total purchase price of $24.0 million. Of these shares, 175,000 were repurchased from a director of the Company. The shares were subsequently retired. Note 6: Earnings Per Share - --------------------------- In February 1997, the Financial Accounting Standards Boards issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" which simplifies the method for computing earnings per share. Under the new requirements, primary earnings per share will be replaced with basic earnings per share. The statement, which will not impact the results of operations, financial position or cash flows of the company, is effective for financial statements issued for periods ending after December 15, 1997 and will be adopted by the Company in the fourth quarter of 1997. Item 2. Management's Discussion And Analysis Of Financial Condition And - ------------------------------------------------------------------------ Results Of Operations - --------------------- Operations - ---------- Net sales for the first quarter of 1997 were $64.2 million, a 2 percent increase over 1996 first quarter net sales of $62.8 million. The increase in net sales was primarily due to increased export sales. Net income for the first quarter of 1997 was $3.2 million, or $.49 per share, compared to net income of $3.0 million, or $.45 per share, for the same period a year ago. The increase in net income is attributable to higher net sales and lower cost of sales as a percentage of net sales. Cost of sales as a percentage of net sales for the first quarter of 1997 was 74.3 percent compared to 76.2 percent for the same period in 1996. The decrease is principally attributable to favorable manufacturing variances. Selling and administrative expenses as a percent of net sales for the first quarter of 1997 was 17.9 percent compared to 16.3 percent for the same period in 1996. The increase is primarily a result of higher commissions paid due to the increase in export sales. Interest expense was $.3 million for the first quarter of 1997 and 1996. Included in other income, net, for the first quarter of 1997 was $.5 million of interest income and $.5 million of foreign currency losses. Interest income was $.4 million and foreign currency losses were $.1 million for the same period in 1996. Interest income was attributable to amounts invested principally in short-term US treasury notes. Capital Resources and Liquidity - ------------------------------- Cash, cash equivalents and marketable securities decreased $36.2 million during the first quarter of 1997. The decrease was principally due to the repurchase of 500,000 shares of the Company's common stock on January 29, 1997, at an aggregate purchase price of $24.0 million and due to cash used in operating activities of $13.2 million. The principal use of cash for operating activities was an increase in inventories of $10.7 million due to typical seasonal buildup. Working capital decreased $17.9 million during the first quarter of 1997 and the current ratio was 3.0 at the end of the first quarter of both 1997 and 1996. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ The Annual Meeting of Shareholders of the Company was held on April 11, 1997 for the following purposes: 1) To elect three directors for terms expiring at the 2000 Annual Meeting of Shareholders; and 2) To ratify the appointment of Deloitte & Touche LLP as independent auditors for the 1997 fiscal year. The results were: 1) Nominees for Director For Withhold Authority --------------------- --- ------------------ Robert H. Little 5,472,851 6,317 Patricia Schaefer 5,472,736 6,432 Gerard E. Veneman 5,464,475 14,693 For Against Abstain --- ------- ------- 2) Ratification of Deloitte & Touche LLP 5,474,508 1,932 2,728 Total shares represented at the Annual Meeting in person or by proxy were 5,479,168 of a total of 5,890,929 shares outstanding. This represented 93 percent of Company common stock and constituted a quorum. Total broker non- votes were 306,038 shares. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits (11) Computations of Earnings per Share (b) Reports on Form 8-K During the three months ended March 29, 1997, a Form 8-K was filed by the Company dated January 29, 1997, to report the Company's repurchase of 500,000 shares of its common stock. SIGNATURES ----------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized. FRANKLIN ELECTRIC CO., INC. --------------------------- Registrant Date May 2, 1997 By William H. Lawson ------------------------ ------------------------------ William H. Lawson, Chairman and Chief Executive Officer (Principal Executive Officer) Date May 2, 1997 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 ------------------ March 29, March 30, 1997 1996 ---- ---- Net income available to common shares and common share equivalents....................... $3,195 $3,008 ====== ====== Common shares outstanding beginning of period..................... 6,371 6,254 Weighted average of common shares issued during the period.............................. 16 35 Weighted average of common shares repurchased during the period........... (329) - Dilutive effect of options outstanding during the period.............................. 410 372 ------ ------ Weighted average of common shares outstanding during the period.............................. 6,468 6,661 ====== ====== Net income per weighted average common share.................... $ .49 $ .45 ====== ====== EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE PERIOD ENDED MARCH 29, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JAN-03-1998 MAR-29-1997 3,507 14,920 26,505 1,468 52,116 106,048 120,995 83,196 145,338 35,923 0 0 0 589 77,808 145,338 64,200 64,697 47,709 59,518 0 0 345 5,179 1,984 3,195 0 0 0 3,195 0.49 0.49
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