-----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, UPT0sxP4+bXJ344WDr/38zfnUsKm+xw8AXWiOdkdJ/aXKFk2cIooutJGeQ+7mcy+ cMZHM30+7owhUI46LsOO3A== 0000038725-97-000016.txt : 19970728 0000038725-97-000016.hdr.sgml : 19970728 ACCESSION NUMBER: 0000038725-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970725 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: 97645268 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 June 28, 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 35-0827455 ------------------------------- ------------------- (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 July 23, 1997 --------------------- ---------------- $.10 par value 5,911,364 shares FRANKLIN ELECTRIC CO., INC. Index PART I. FINANCIAL INFORMATION - --------------------------------- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 28, 1997 (Unaudited) and December 28, 1996 Condensed Consolidated Statements of Income for the Second Quarter and First Half ended June 28, 1997 (Unaudited) and June 29, 1996 (Unaudited) Condensed Consolidated Statements of Cash Flows for the First Half ended June 28, 1997 (Unaudited) and June 29, 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) June 28, 1997 December 28, (Unaudited) 1996 ----------- ---- ASSETS Current assets: Cash and equivalents.................... $ 13,381 $ 22,968 Marketable securities................... 6,874 31,624 Receivables, less allowances of $1,508 and $1,435, respectively....... 26,735 25,134 Inventories (Note 2).................... 53,993 42,305 Other current assets (including deferred income taxes of $7,742 and $7,755, respectively)............. 9,140 9,485 -------- -------- Total current assets.................. 110,123 131,516 Property, plant and equipment, net (Note 3)............................ 38,165 40,097 Deferred and other assets................. 2,319 1,846 -------- -------- Total assets.............................. $150,607 $173,459 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings................... $ 19 $ 21 Accounts payable........................ 9,395 14,049 Accrued expenses........................ 23,797 23,636 Income taxes............................ 1,687 4,339 -------- -------- Total current liabilities............. 34,898 42,045 Long-term debt............................ 20,175 20,276 Employee benefit plan obligations......... 8,288 6,904 Other long-term liabilities............... 4,090 4,228 Deferred income taxes..................... 183 183 Shareowners' equity: Common stock (Note 5)................... 590 638 Additional capital...................... 8,367 7,613 Retained earnings....................... 78,884 95,961 Stock subscriptions..................... (760) (997) Cumulative translation adjustment....... (1,574) (625) Loan to ESOP Trust...................... (2,291) (2,524) Minimum pension liability adjustment, net of taxes.......................... (243) (243) -------- -------- Total shareowners' equity............. 82,973 99,823 -------- -------- Total liabilities and shareowners' equity. $150,607 $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) Second Qtr Ended First Half Ended ---------------- ---------------- June 28, June 29, June 28, June 29, 1997 1996 1997 1996 ---- ---- ---- ---- Net sales.............................. $75,935 $73,107 $140,135 $135,861 Costs and expenses: Cost of sales........................ 56,234 53,858 103,943 101,652 Selling and administrative expenses.. 11,504 10,791 22,968 21,045 Interest expense..................... 324 340 669 660 Other income, net.................... (465) (117) (962) (589) ------- ------- ------- ------- 67,597 64,872 126,618 122,768 Income before income taxes............. 8,338 8,235 13,517 13,093 Income taxes........................... 3,069 3,154 5,053 5,004 ------- ------- ------- ------- Net income............................. $ 5,269 $ 5,081 $ 8,464 $ 8,089 ======= ======= ======== ======== Per share data: Weighted average common shares....... 6,291 6,674 6,380 6,667 ======= ======= ======== ======== Net income per common share.......... $ .84 $ .76 $ 1.33 $ 1.21 ======= ======= ======== ======== Dividends per common share........... $ .15 $ .12 $ .27 $ .22 ======= ======= ======== ======== See Notes to Condensed Consolidated Financial Statements. FRANKLIN ELECTRIC CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) First Half Ended ---------------- June 28, June 29, 1997 1996 ---- ---- Cash flows from operating activities: Net income.................................. $ 8,464 $ 8,089 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization............. 3,753 4,272 Loss (Gain) on disposals of plant and equipment........................... 41 (34) Changes in assets and liabilities: Receivables............................. (2,047) (3,503) Inventories............................. (12,736) (12,056) Other assets............................ (956) 103 Accounts payable and other accrued expenses...................... (6,204) (4,147) Employee benefit plan obligations....... 1,500 570 Other long-term liabilities............. (109) (384) ------- ------- Net cash flows from operating activities............... (8,294) (7,090) ------- ------- Cash flows from investing activities: Additions to plant and equipment.......... (2,273) (1,100) Proceeds from sale of plant and equipment..................... 966 41 Purchase of marketable securities......... (6,846) - Proceeds from maturities of marketable securities.............................. 31,596 - Other, net................................ 31 (246) ------- ------- Net cash flows from investing activities.................. 23,474 (1,305) ------- ------- Cash flows from financing activities: Additions to long-term debt............... - 166 Repayment of long-term debt............... (76) (10) Repayment of short-term debt.............. - (197) Purchase of common stock.................. (24,000) - Proceeds from issuance of common stock.... 526 468 Loan to ESOP Trust........................ - (324) Repayment of loan to ESOP Trust........... 232 200 Proceeds from stock subscriptions......... 100 25 Dividends paid............................ (1,591) (1,388) ------- ------- Net cash flows from financing activities.................. (24,809) (1,060) ------- ------- Effect of exchange rate changes on cash..... 42 353 ------- ------- Net decrease in cash and equivalents........ (9,587) (9,102) Cash and equivalents at beginning of period....................... 22,968 32,077 ------- ------- Cash and equivalents at end of period............................. $13,381 $22,975 ======= ======= 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 first half ended June 28, 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) June 28, December 28, 1997 1996 ---- ---- Raw Materials......................... $18,046 $15,958 Work in Process....................... 5,212 4,942 Finished Goods........................ 42,238 32,528 LIFO Reserve.......................... (11,503) (11,123) ------- ------- Total Inventory....................... $53,993 $42,305 ======= ======= Note 3: Property, Plant and Equipment - -------------------------------------- Property, plant and equipment at cost consists of the following: (In thousands) June 28, December 28, 1997 1996 ---- ---- Land and Building..................... $ 27,220 $ 28,335 Machinery and Equipment............... 95,853 95,457 -------- -------- 123,073 123,792 Allowance for Depreciation............ 84,908 83,695 -------- -------- $ 38,165 $ 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 5,903,364 shares of common stock (10,000,000 shares authorized, $.10 par value) outstanding as of June 28, 1997. Note 6: Earnings Per Share - --------------------------- In February 1997, the Financial Accounting Standards Board 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. Note 7: Other - ------------- On June 24, 1997, the Company announced the signing of a definitive agreement to sell its subsidiary, Oil Dynamics, Inc., to Baker Hughes Incorporated. The pending sale, which is subject to regulatory approval and certain other conditions, is anticipated to close in the third quarter of 1997. Note 8: Subsequent Event - ------------------------- On July 14, 1997, the Company's Board of Directors authorized the repurchase of up to 500,000 shares of its common stock. The Company completed a previously authorized repurchase of 500,000 shares earlier this year. Item 2. Management's Discussion And Analysis Of Financial Condition And - ------------------------------------------------------------------------ Results Of Operations - --------------------- Operations - ---------- Net sales for the second quarter of 1997 were $75.9 million, up 4 percent over 1996 second quarter net sales of $73.1 million. Although domestic submersible motor sales were flat due to delays in pump installations as a result of inclement weather, the Company's German subsidiary experienced increased sales volume through market share and new products. Year to date 1997 net sales were $140.1 million, up 3 percent from year to date 1996 net sales of $135.9 million. Strong export sales from the first quarter of 1997 contributed to the increase in year to date sales. Cost of sales as a percent of net sales for the second quarter of 1997 was 74.1 percent, an increase from 73.7 percent for the same period in 1996. This increase was caused by higher employee and fixed manufacturing and engineering costs. Cost of sales as a percent of net sales for the year to date 1997 was 74.2 percent compared to 74.8 percent for the same period in 1996. Net income for the second quarter of 1997 was $5.3 million, or $.84 per share, an increase of 4 percent compared to the second quarter of 1996 net income of $5.1 million, or $.76 per share. Year to date 1997 net income was $8.5 million, or $1.33 per share, an increase of 5 percent compared to year to date 1996 net income of $8.1 million, or $1.21 per share. Selling and administrative expenses as a percent of net sales for the second quarter of 1997 was 15.1 percent compared to 14.8 percent for the same period in 1996. Selling and administrative expenses as a percent of net sales for the year to date 1997 was 16.4 percent, an increase from 15.5 percent for the same period of last year. The increase in year to date selling and administrative expenses was primarily a result of higher commissions paid due to the increase in export sales. Included in other income, net for the second quarter of 1997 and 1996 was $.3 million of interest income and $.1 and $.3 million, respectively, of foreign currency losses. Included in other income, net for the year to date 1997 was $.8 million of interest income and $.6 million of foreign currency losses compared to $.7 million of interest income and $.3 million of foreign currency losses for the same period in 1996. Interest income was attributable to amounts invested principally in short-term US treasury bills and notes. Capital Resources and Liquidity - ------------------------------- Cash, cash equivalents, and marketable securities decreased $34.3 million during the first half 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 $8.3 million. Changes in working capital items accounted for most of the cash used in operating activities. The increase in inventory was primarily due to a typical seasonal build up and lower than expected sales because of inclement weather conditions over much of the Company's principal markets. Working capital decreased $14.2 million during the first half of 1997, and the current ratio of the Company was 3.2 and 3.1 at June 28, 1997, and December 28, 1996, respectively. 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; 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 There were no reports on Form 8-K filed for the second quarter ended June 28, 1997. 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 July 23, 1997 By William H. Lawson --------------------- -------------------------------- William H. Lawson, Chairman and Chief Executive Officer (Principal Executive Officer) Date July 23, 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) Second Qtr Ended First Half Ended ---------------- ---------------- June 28, June 29, June 28, June 29, 1997 1996 1997 1996 ---- ---- ---- ---- Net income available to common shares and common share equivalents.................. $5,269 $5,081 $8,464 $8,089 ====== ====== ====== ====== Common shares outstanding beginning of period................ 5,893 6,314 6,371 6,254 Weighted average of common shares issued during the period......................... 4 9 21 52 Weighted average of common shares repurchased during the period......................... - - (414) - Dilutive effect of options outstanding during the period......................... 394 351 402 361 ------ ------ ------ ------ Weighted average of common shares outstanding during the period......................... 6,291 6,674 6,380 6,667 ====== ====== ====== ====== Net income per weighted average common share............... $ .84 $ .76 $ 1.33 $ 1.21 ====== ====== ====== ====== EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE PERIOD ENDED JUNE 28, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JAN-03-1998 JUN-28-1997 13,381 6,874 28,243 1,508 53,993 110,123 123,073 84,908 150,607 34,898 0 0 0 590 82,383 150,607 75,935 76,400 56,234 68,062 0 0 324 8,338 3,069 5,269 0 0 0 5,269 0.84 0.83
-----END PRIVACY-ENHANCED MESSAGE-----