FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2002
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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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 East Spring Street
Bluffton, Indiana 46714
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(Address of principal executive offices) (Zip Code)
(260) 824-2900
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(Registrant's telephone number, including area code)
Not Applicable
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(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 4, 2002
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$.10 par value 10,821,078 shares
Page 1 of 19
2
FRANKLIN ELECTRIC CO., INC.
Index
Page
PART I. FINANCIAL INFORMATION Number
- --------------------------------- ------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
as of September 28, 2002
and December 29, 2001 ........................ 3
Condensed Consolidated Statements of
Income for the Third Quarter and Nine Months
Ended September 28, 2002 and
September 29, 2001 ........................... 4
Condensed Consolidated Statements
Of Cash Flows for the Nine Months
Ended September 28, 2002 and
September 29, 2001 ........................... 5
Notes to Condensed Consolidated
Financial Statements ......................... 6-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations......................... 10-11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk............................. 12
Item 4. Controls and Procedures....................... 12
PART II. OTHER INFORMATION
- -----------------------------
Item 6. Exhibits and Reports on Form 8-K.............. 12
Signatures................................................ 13
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Certifications............................................ 14-17
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Exhibits.................................................. 18-19
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3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) September 28, December 29,
2002 2001
---- ----
ASSETS
Current assets:
Cash and equivalents.................... $ 10,539 $ 20,750
Marketable Securities................... - 2,999
Receivables, less allowances of
$2,108 and $1,658, respectively....... 33,951 27,486
Inventories (Note 2).................... 51,067 48,008
Other current assets (including
deferred income taxes of $8,799
and $8,667, respectively)............. 12,193 10,340
-------- --------
Total current assets.................. 107,750 109,583
Property, plant and equipment,
net (Note 3)............................ 71,452 58,839
Deferred and other assets (including
deferred income taxes of $79
and $17, respectively).................. 25,754 12,710
Goodwill.................................. 36,834 14,511
-------- --------
Total assets.............................. $241,790 $195,643
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Current maturities of long-term
debt and short-term borrowings........ $ 1,552 $ 1,058
Accounts payable........................ 17,599 11,683
Accrued expenses........................ 29,132 24,146
Income taxes............................ 3,050 3,538
-------- --------
Total current liabilities............. 51,333 40,425
Long-term debt............................ 25,402 14,465
Employee benefit plan obligations......... 14,193 13,199
Other long-term liabilities............... 5,166 4,285
Shareowners' equity:
Common stock (Note 5)................... 1,081 533
Additional capital...................... 32,456 23,882
Retained earnings....................... 118,625 109,103
Loan to ESOP Trust...................... (1,130) (1,362)
Accumulated other comprehensive
loss (Note 7)......................... (5,336) (8,887)
-------- --------
Total shareowners' equity............. 145,696 123,269
-------- --------
Total liabilities and shareowners' equity. $241,790 $195,643
======== ========
See Notes to Condensed Consolidated Financial Statements.
4
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Third Qtr. Ended Nine Months Ended
---------------- -----------------
Sept 28, Sept 29, Sept 28, Sept 29,
2002 2001 2002 2001
---- ---- ---- ----
Net sales.............................. $97,125 $86,764 $258,876 $235,523
Costs and expenses:
Cost of sales........................ 67,572 61,729 184,872 170,219
Selling and administrative expenses.. 13,957 12,267 39,046 35,415
Interest expense..................... 367 274 1,026 974
Other expense/(income), net.......... (61) 31 (268) (183)
Foreign exchange loss/(gain)......... 327 (561) (777) 542
------- ------- -------- --------
82,162 73,740 223,899 206,967
Income before income taxes............. 14,963 13,024 34,977 28,556
Income taxes........................... 5,335 4,832 12,661 10,734
------- ------- -------- --------
Net income............................. $ 9,628 $ 8,192 $ 22,316 $ 17,822
======= ======= ======== ========
Per share data (Note 6):
Net income per common share.......... $ 0.89 $ 0.75 $ 2.07 $ 1.62
======= ======= ======== ========
Net income per common share,
assuming dilution.................. $ 0.85 $ 0.72 $ 1.96 $ 1.56
======= ======= ======== ========
Dividends per common share........... $ 0.13 $ 0.12 $ 0.38 $ 0.35
======= ======= ======== ========
See Notes to Condensed Consolidated Financial Statements.
5
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands) Nine Months Ended
-----------------
Sept 28, Sept 29,
2002 2001
---- ----
Cash flows from operating activities:
Net income................................ $22,316 $17,822
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization........... 9,848 9,917
Loss on disposals of plant
and equipment......................... 2 316
Changes in assets and liabilities:
Receivables........................... 1 3,000
Inventories........................... 3,504 (9,163)
Accounts payable and other accrued
expenses............................ 4,197 (461)
Employee benefit plan obligations..... 885 990
Other, net............................ (1,965) (137)
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Net cash flows from
operating activities.............. 38,788 22,284
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Cash flows from investing activities:
Additions to plant and equipment.......... (9,016) (4,320)
Proceeds from sale of plant and
equipment............................... 19 32
Additions to deferred assets.............. (14,232) (693)
Cash paid for acquisitions, net of cash
acquired................................ (30,344) -
Proceeds from maturities of marketable
securities ............................. 2,999 -
------- -------
Net cash flows from
investing activities.................. (50,574) (4,981)
------- -------
Cash flows from financing activities:
Borrowing on long-term debt............... 8,350 -
Repayment of long-term debt............... (208) (8)
Borrowing on line of credit
and short-term borrowings............... 3,000 11,056
Repayment of line of credit
and short-term borrowings............... (3,013) (11,069)
Proceeds from issuance of common stock.... 5,091 795
Purchases of common stock................. (8,714) (12,665)
Reduction of loan to ESOP Trust........... 232 232
Dividends paid............................ (4,098) (3,842)
------- -------
Net cash flows from
financing activities.................. 640 (15,501)
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Effect of exchange rate changes on cash..... 935 158
------- -------
Net change in cash and equivalents.......... (10,211) 1,960
Cash and equivalents at beginning of period. 20,750 9,631
------- -------
Cash and equivalents at end of period....... $10,539 $11,591
======= =======
See Notes to Condensed Consolidated Financial Statements.
6
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 nine months
ended September 28, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 28, 2002. 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 29, 2001.
Note 2: Inventories
- --------------------
Inventories consist of the following:
(In thousands) Sept 28, Dec 29,
2002 2001
---- ----
Raw Materials........................ $17,276 $16,447
Work in Process...................... 7,980 6,005
Finished Goods....................... 35,475 35,662
LIFO Reserve......................... (9,664) (10,106)
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Total Inventory...................... $51,067 $48,008
======= =======
Note 3: Property, Plant and Equipment
- --------------------------------------
Property, plant and equipment, at cost, consists of the following:
(In thousands) Sept 28, Dec 29,
2002 2001
---- ----
Land and Building.................... $ 37,305 $ 25,343
Machinery and Equipment.............. 130,230 121,791
-------- --------
167,535 147,134
Allowance for Depreciation........... (96,083) (88,295)
-------- --------
$ 71,452 $ 58,839
======== ========
Note 4: Tax Rates
- ------------------
The effective tax rate on income before income taxes in 2002 and 2001 varies
from the United States statutory rate of 35 percent principally due to the
effect of state and foreign income taxes.
7
Note 5: Shareowners' Equity
- ----------------------------
The Company had 10,813,758 shares of common stock (25,000,000 shares
authorized, $.10 par value) outstanding as of September 28, 2002.
During the third quarter and year to date 2002, pursuant to the stock
repurchase program authorized by the Company's Board of Directors, the Company
repurchased a total of 48,149 shares for $2.0 million and 52,588 shares for
$2.2 million, respectively. All repurchased shares were retired.
During the second quarter of 2002, under terms of a Company stock option plan,
a participant delivered 129,488 shares of Company common stock as
consideration for stock issued upon the exercise of stock options. The total
exercise price of the respective stock options was $6.5 million. The Company
recorded a $4.0 million reduction in its deferred tax liability and an
increase to shareowners' equity as a result of this exercise. The shares
delivered to the Company were subsequently retired.
Note 6: Earnings Per Share
- ---------------------------
Following is the computation of basic and diluted earnings per share:
Third Qtr. Ended Nine Months Ended
---------------- -----------------
(In thousands, except Sept 28, Sept 29, Sept 28, Sept 29,
per share amounts) 2002 2001 2002 2001
---- ---- ---- ----
Numerator:
Net Income..................... $9,628 $8,192 $22,316 $17,822
====== ====== ======= =======
Denominator:
Basic
-----
Weighted average common
shares....................... 10,824 10,900 10,781 10,958
Diluted
-------
Effect of dilutive securities:
Employee and director
stock options.............. 502 470 607 466
------ ------ ------- --------
Adjusted weighted average
common shares................ 11,326 11,370 11,388 11,424
====== ====== ======= =======
Basic earnings per share......... $ 0.89 $ 0.75 $ 2.07 $ 1.62
====== ====== ======= =======
Diluted earnings per share....... $ 0.85 $ 0.72 $ 1.96 $ 1.56
====== ====== ======= =======
8
Note 7: Other Comprehensive Income
- -----------------------------------
Comprehensive income is as follows:
Third Qtr. Ended Nine Months Ended
(In thousands) ---------------- -----------------
Sept 28, Sept 29, Sept 28, Sept 29,
2002 2001 2002 2001
---- ---- ---- ----
Net income......................... $9,628 $8,192 $22,316 $17,822
Other comprehensive gain/(loss):
Foreign currency translation
adjustments..................... (566) 956 3,551 (1,055)
------ ------ ------- -------
Comprehensive income, net of tax... $9,062 $9,148 $25,867 $16,767
====== ====== ======= =======
Accumulated other comprehensive loss consists of the following:
(In thousands) Sept 28, Dec 29,
2002 2001
---- ----
Cumulative translation adjustment........... $(4,558) $(8,109)
Minimum pension liability adjustment,
net of tax................................ (778) (778)
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$(5,336) $(8,887)
======= =======
Note 8: Contingencies and Commitments
- --------------------------------------
The Company is defending various claims and legal actions, including
environmental matters, which have arisen in the ordinary course of business.
In the opinion of management, after discussion with counsel, these claims and
legal actions can be successfully defended or resolved without a material
adverse effect on the Company's financial position or results of operation.
Note 9: Goodwill and Other Intangible Assets
- ---------------------------------------------
Statement of Financial Accounting Standards (SFAS) Nos. 141 and 142,
"Business Combinations" and "Goodwill and Other Intangible Assets",
respectively, were published in June 2001. SFAS No. 141 requires the purchase
method of accounting for business combinations, and SFAS No. 142 changes the
accounting for goodwill from an amortization method to an impairment-only
approach. The Company adopted the provisions of SFAS Nos. 141 and 142
effective December 30, 2001, and accordingly, the Company's recorded goodwill
is no longer being amortized. In addition, during the first quarter of 2002,
the Company performed its initial impairment testing required by SFAS No. 142.
No impairment loss or transition adjustments were required. During 2002, the
Company paid $30.3 million for acquisitions, net of cash acquired, of which,
$22.3 million was recorded as goodwill based on the estimated fair values of
the net assets acquired. These estimated fair values will continue to be
evaluated by the Company over a one-year period from the respective dates of
acquisition.
9
In September 2002, the Company paid $10.5 million in cash (recorded as a
deferred asset) as contingent consideration in accordance with the terms of an
agreement entered into in 1998 in which the company purchased certain
operating and intangible assets from a motor manufacturer. The payment
settled all contingencies remaining from the original transaction. The
Company has determined that the intangible assets that arose from this
agreement have an indefinite life, and accordingly, the Company ceased
amortizing these intangible assets after making this payment.
The following sets forth a reconciliation of reported net income and earnings
per share to the same amounts adjusted to exclude amortization expense
recognized on goodwill in each respective period:
Third Qtr. Ended Nine Months Ended
---------------- -----------------
(In thousands, except Sept 28, Sept 29, Sept 28, Sept 29,
per share amounts) 2002 2001 2002 2001
---- ---- ---- ----
Reported net income................. $9,628 $8,192 $22,316 $17,822
Add back: Goodwill amortization.... - 198 - 592
------ ------ ------- -------
Adjusted net income................. $9,628 $8,390 $22,316 $18,414
====== ====== ======= =======
Basic earnings per share:
Reported net income................. $ 0.89 $ 0.75 $ 2.07 $ 1.62
Add back: Goodwill amortization.... - 0.02 - 0.05
------ ------ ------- -------
Adjusted net income................. $ 0.89 $ 0.77 $ 2.07 $ 1.67
====== ====== ======= =======
Diluted earnings per share:
Reported net income................. $ 0.85 $ 0.72 $ 1.96 $ 1.56
Add back: Goodwill amortization.... - 0.02 - 0.05
------ ------ ------- -------
Adjusted net income................. $ 0.85 $ 0.74 $ 1.96 $ 1.61
====== ====== ======= =======
10
Item 2. Management's Discussion And Analysis Of Financial Condition And
- ------------------------------------------------------------------------
Results Of Operations
- ---------------------
Operations
- ----------
Net sales for the third quarter of 2002 were $97.1 million, an 11.9 percent
increase from 2001 third quarter net sales of $86.8 million. Year to date
2002 net sales were $258.9 million, up 9.9 percent from year to date 2001 net
sales of $235.5 million. The increased sales for the quarter and year to date
were primarily the result of strong residential submersible electric motor
sales in North America, as well as the inclusion of Coverco, a January 2002
acquisition and Incon, a July 2002 acquisition. Sales from these acquisitions
represented 5.7 percent and 4.9 percent of sales for the third quarter and
year to date, respectively. These increases were partially offset by lower
sales of fueling systems.
Cost of sales as a percent of net sales for the third quarter of 2002 was 69.6
percent, a decrease from 71.1 percent for the same period in 2001. Cost of
sales as a percent of net sales for the year to date 2002 was 71.4 percent, a
decrease from 72.3 percent for the same period in 2001. The decrease is
primarily the result of productivity improvement, cost reduction and other
operations initiatives. The Company has achieved these results by continually
focusing on improving its quality and has combined certain manufacturing
operations on specific products to one location, as well as identified
alternative sources for certain materials.
Selling and administrative expenses as a percent of net sales for the third
quarter of 2002 were 14.4 percent compared to 14.1 percent for the same period
in 2001. Selling and administrative expenses as a percent of net sales for
the year to date 2002 was 15.1 percent compared to 15.0 percent for the year
to date 2001.
Interest expense was $0.4 million for the third quarter of 2002 compared to
$0.3 million for the third quarter of 2001. Interest expense for the year to
date 2002 and year to date 2001 was $1.0 million.
Included in other income for the third quarter of 2002 was $0.1 million of
interest income compared to $0.2 million of interest income for the third
quarter of 2001. Included in other income for the year to date 2002 was $0.3
million of interest income compared to $0.5 million of interest income for the
same period in 2001. Interest income was attributable to amounts invested
principally in short-term US treasury and agency securities.
Foreign currency based transactions for the third quarter of 2002 produced a
loss of $0.3 million compared to a $0.6 million gain for the same period in
2001. The third quarter foreign currency transaction loss was due primarily
to the strengthening U.S. dollar relative to the Euro. Foreign currency based
transactions for the year to date 2002 produced a gain of $0.8 million
compared to a $0.5 million loss for the same period in 2001. The foreign
currency transaction gain was due primarily to the strengthening Euro relative
to the U.S. dollar during the first half of 2002.
11
Net income for the third quarter of 2002 was $9.6 million, or $0.85 per
diluted share, a 17.5 percent increase compared to net income of $8.2 million,
or $0.72 per diluted share, for the same period in 2001. Year to date 2002
net income was $22.3 million, or $1.96 per diluted share, a 25.2 percent
increase compared to year to date 2001 net income of $17.8 million, or $1.56
per diluted share.
Capital Resources and Liquidity
- -------------------------------
Cash, cash equivalents and marketable securities decreased $13.2 million
during the first nine months of 2002. Working capital decreased $12.7 million
during the first nine months of 2002 and the current ratio was 2.1 and 2.7 at
September 28, 2002, and December 29, 2001, respectively.
Net cash flows used in investing activities were $50.6 million and were
principally used for the acquisition of Coverco and Incon. During 2002, the
Company paid $30.3 million for these acquisitions, net of cash acquired, of
which, $22.3 million was recorded as goodwill. During the third quarter, the
Company also paid $10.5 million in cash (recorded as a deferred asset) as
contingent consideration in accordance with the terms of an agreement entered
into in 1998 in which the company purchased certain operating and intangible
assets from a motor manufacturer. The Company utilized its existing credit
facilities and cash balances to effect these transactions.
Critical Accounting Policies and Estimates
- ------------------------------------------
Management's discussion and analysis of its financial condition and results of
operations are based upon the Company's condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
the related disclosure of contingent assets and liabilities. On an on-going
basis, management evaluates its estimates, including those related to
allowance for doubtful accounts, inventories, recoverability of long-lived
assets, intangible assets, income taxes, warranty obligations, pensions and
other employee benefit plan obligations, and contingencies. Management bases
its estimates on historical experience and on other assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
- ------------------------------------------------------------------------------
1995
- ----
Any forward-looking statements contained herein involve risks and
uncertainties, including, but not limited to, general economic and currency
conditions, various conditions specific to the Company's business and
industry, market demand, competitive factors, supply constraints, technology
factors, government and regulatory actions, the Company's accounting policies,
future trends, and other risks which are described in detail in Exhibit 99 to
the Company's Annual Report on Form 10-K for the fiscal year ended December
29, 2001. These risks and uncertainties may cause actual results to differ
materially from those indicated by the forward-looking statements.
12
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
The Company is subject to market risk associated with changes in foreign
currency exchange rates and interest rates. Foreign currency exchange rate
risk is mitigated through several means: maintenance of local production
facilities in the markets served, invoicing of customers in the same currency
as the source of the products, prompt settlement of intercompany balances
utilizing a global netting system and limited use of foreign currency
denominated debt. Interest rate exposure is principally limited to any
marketable U.S. treasury and agency securities owned by the Company and is
mitigated by the short-term, generally less than 6 months, nature of these
investments.
Item 4. Controls and Procedures
- -------------------------------
Within the 90 days prior to the date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and the
Company's Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Company's Chief
Executive Officer and the Company's Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company and its subsidiaries
required to be included in the Company's periodic SEC filings. There have been
no significant changes in the Company's internal controls or in other factors
which could significantly affect internal controls subsequent to the date the
Company carried out its evaluation.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (Filed with this quarterly report)
99.1 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.
99.2 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.
(b) Reports on Form 8-K
None.
13
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 5, 2002 By /s/ William H. Lawson
------------------- ------------------------------
William H. Lawson, Chairman
and Chief Executive Officer
(Principal Executive Officer)
Date November 5, 2002 By /s/ Gregg C. Sengstack
------------------- ------------------------------
Gregg C. Sengstack, Senior Vice
President and Chief Financial
Officer (Principal Financial
and Accounting Officer)
14
CERTIFICATIONS
--------------
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
----------------------------------------
I, William H. Lawson, Chairman, Chief Executive Officer and President of
Franklin Electric Co., Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric
Co., Inc.;
2. Based on my knowledge, this Quarterly 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 Quarterly Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this Quarterly Report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c. presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
Quarterly Report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
15
Date: November 5, 2002
-----------------------
/s/ William H. Lawson
-----------------------
William H. Lawson
Chairman, Chief Executive Officer
and President
Franklin Electric Co., Inc.
16
CERTIFICATION OF CHIEF FINANCIAL OFFICER
----------------------------------------
I, Gregg C. Sengstack, Senior Vice President and Chief Financial Officer
of Franklin Electric Co., Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric
Co., Inc.;
2. Based on my knowledge, this Quarterly 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 Quarterly Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this Quarterly Report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c. presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
Quarterly Report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
17
Date: November 5, 2002
-----------------------
/s/ Gregg C. Sengstack
-----------------------
Gregg C. Sengstack
Senior Vice President and Chief Financial Officer
Franklin Electric Co., Inc.
18
EXHIBIT 99.1 CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C.
------------------------------------------------------------------------
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
- ----------------------------------------------------------------------------
2002
----
In connection with the Quarterly Report of Franklin Electric Co., Inc.
(the "Company") on Form 10-Q for the period ending September 28, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, William H. Lawson, Chairman, Chief Executive Officer and President of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: November 5, 2002
-----------------------
/s/ William H. Lawson
-----------------------
William H. Lawson
Chairman, Chief Executive Officer
and President
Franklin Electric Co., Inc.
19
EXHIBIT 99.2 CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C.
------------------------------------------------------------------------
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
- ----------------------------------------------------------------------------
2002
----
In connection with the Quarterly Report of Franklin Electric Co., Inc.
(the "Company") on Form 10-Q for the period ending September 28, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Gregg C. Sengstack, Senior Vice President and Chief Financial Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: November 5, 2002
-----------------------
/s/ Gregg C. Sengstack
-----------------------
Gregg C. Sengstack
Senior Vice President and Chief Financial Officer
Franklin Electric Co., Inc.
5