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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
--------------------

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 28, 2002

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 46714-3798
BLUFFTON, INDIANA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(260) 824-2900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE NONE
(TITLE OF EACH CLASS) (NAME OF EACH EXCHANGE ON WHICH REGISTERED)

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.10 PAR VALUE
(TITLE OF EACH CLASS)

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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES X NO
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]





Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2)

YES X NO
----- -----

The aggregate market value of the registrant's common stock held by non-
affiliates of the registrant at June 29, 2002 (the last business day of the
registrant's most recently completed second quarter) was $432,296,293. The
stock price used in this computation was the last sales price on that date.

NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT FEBRUARY 14, 2003:

10,737,947 SHARES
-----------------

Page 1 of 51



2

DOCUMENTS INCORPORATED BY REFERENCE

A portion of the Proxy Statement for the Annual Meeting of Shareholders to be
held on April 25, 2003 (Part III).

The exhibits filed with this Form 10-K are listed in the exhibit index located
on pages 43-44.




3

TABLE OF CONTENTS

Page
----
Part I

Item 1. Business........................................ 4-6
Item 2. Properties...................................... 6-7
Item 3. Legal Proceedings............................... 7
Item 4. Submission of Matters to a Vote of
Security Holders................................ 7
Supplemental Item - Executive
Officers of the Registrant...................... 7

Part II

Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters................. 8
Item 6. Selected Financial Data......................... 8-9
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations...................................... 10-13
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk .................................... 13
Item 8. Financial Statements and Supplementary Data..... 14-34
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.......... 35

Part III

Item 10. Directors and Executive Officers
of the Registrant............................... 35
Item 11. Executive Compensation.......................... 35
Item 12. Security Ownership of Certain
Beneficial Owners and Management,
and Related Stockholder Matters................. 35
Item 13. Certain Relationships and Related
Transactions.................................... 36
Item 14. Controls and Procedures......................... 36


Part IV

Item 15. Exhibits, Financial Statement Schedules
and Reports on Form 8-K......................... 37-38

Signatures ................................................ 39

Certifications ................................................ 40-43

Exhibit Index ................................................ 44-45



4

PART I
------

ITEM 1. BUSINESS
- -----------------

Franklin Electric Co., Inc. is an Indiana corporation founded in 1944 and
incorporated in 1946, that, together with its subsidiaries, conducts business
in a single reportable segment: the design, manufacture and distribution of
motors, electronic controls and related parts and equipment. Except where the
content otherwise requires, "Franklin Electric" or the "Company" shall refer
to Franklin Electric Co., Inc. and its consolidated subsidiaries.

Description of Business
- -----------------------

Franklin Electric, a technical leader in electric motors, drives and controls,
is the world's largest manufacturer of submersible water and fueling systems
motors, a manufacturer of underground fueling systems hardware and flexible
piping systems and a leader in engineered industrial motor products.

The principal application for Franklin Electric's submersible motors is
providing the electrical motors for water well pumping systems. These
submersible motors are also used in underground fueling systems and for the
pumping of wastewater.

Franklin Electric's fueling systems products are found all over the world in
industrial, commercial, and agricultural fueling applications. These products
consist of over 500 items, including submersible pumping systems, nozzles,
fittings, flexible piping, electronic tank monitoring equipment and vapor
recovery systems.

Franklin Electric's engineered industrial motor products and electronic drives
and controls are used in a wide variety of products, including gasoline
dispensers, paint handling equipment, electric hoists, explosion-proof vapor
exhaust fans, vacuum pumping systems, livestock systems, and soft-serve ice
cream machines.

The Company's products are sold principally by a single company sales force in
the United States, Canada, Mexico, Europe, Australia, South Africa, Mexico,
Japan, China and other world markets. The Company's products are also sold
through independent distributors and repair shops.

The market for the Company's products is highly competitive and includes both
large and small suppliers. The Company's submersible water, fueling and
industrial motor products are sold to original equipment manufacturers of
pumps, compressors, fans, swimming pool equipment, medical furniture and
business machines.

ITT Industries, Inc., and its various subsidiaries and affiliates, accounted
for 18.2 percent, 18.7 percent and 15.7 percent of the Company's consolidated
sales in 2002, 2001, and 2000, respectively. Sta-Rite Industries, Inc.
accounted for 11.5 percent of the Company's consolidated sales in 2002.

The Company offers normal and customary trade terms to its customers, no
significant part of which is of an extended nature. Special inventory
requirements are not necessary, and customer merchandise return rights do not
extend beyond normal warranty provisions.

5

The principal raw materials used in the manufacture of the Company's products
are steel in coils and bars, copper wire, and aluminum ingot. Major
components are capacitors, motor protectors, forgings, gray iron castings and
bearings. Most of these raw materials are available from many sources in the
United States and in many world markets. In the opinion of management, no
single source of supply is critical to the Company's business. Availability of
fuel and energy is adequate to satisfy current and projected overall
operations unless interrupted by government direction or allocation.

During 2002, the Company paid $30.3 million for acquisitions, net of cash
acquired, of which $24.3 million was recorded as goodwill based on the
estimated fair values of the net assets acquired. Included in the
acquisitions were Coverco, a manufacturer of submersible and industrial
electric motors and controls in Italy, and Intelligent Controls, Inc. (INCON),
a producer of fueling systems electronic leak detection and inventory
management systems controls in Maine. During 2000, the Company acquired all
of the outstanding shares of capital stock of EBW, Inc. and Advanced Polymer
Technology, Inc., manufacturers of products for use in fueling systems. Also
in 2000, the Company completed transactions to integrate submersible motor
production of KSB AG into its Berzo Demo, Italy operations, and acquired
Mitsubishi Electric Company's submersible electric motor business. See also
Item 8 Footnote 2.

The Company employed 2,658 persons at the end of 2002.

Segment and Geographic Information
- ----------------------------------

Segment and geographic information is included within this Form 10-K at page
32.

Research and Development
- ----------------------------------------------------------------------------

The Company spent approximately $ 6.0 million in 2002, $ 5.2 million in 2001,
and $ 5.0 million in 2000 on activities related to the development of new
products, on improvements of existing products and manufacturing methods, and
on other applied research and development.

In 2002, the Company continued development of a more corrosion resistant 4"
submersible motor, developed a new rewindable 6" submersible motor, expanded
the line of variable speed constant pressure motor systems for residential
applications, and developed a Turbine Pump Interface controller for petroleum
products. Research continued on new materials and processes designed to
achieve higher quality and more cost-effective construction of the Company's
high volume products.

The Company owns a number of patents. In aggregate, these patents are of
material importance in the operation of the business; however, the Company
believes that its operations are not dependent on any single patent or group
of patents.








6

Backlog
- -------

The dollar amount of backlog at the end of 2002 and 2001 was as follows:

(In thousands)
2002 2001
---- ----
Backlog....................... $18,890 $15,136

The backlog is composed of written orders at prices adjustable on a price-at-
the-time-of-shipment basis for products, some of which are specifically
designed for the customer, but most of which are standard catalog items. Both
add-ons and cancellations of catalog items are made without charge to the
customer, but charges are generally made on any cancellation of a specifically
designed product. All backlog orders are expected to be filled in fiscal
2003.

The Company's sales and earnings are not substantially seasonal in nature.
There is no seasonal pattern to the backlog and the backlog has not proven to
be a significant indicator of future sales.

Environmental Matters
- ---------------------

Compliance with federal, state and local provisions regulating the discharge
of material into the environment, or otherwise relating to the protection of
the environment, is not expected to have any material adverse effect upon the
financial position, capital expenditures, earnings or competitive position of
the Company.

Website
- -------

The Company's website address is http://www.franklin-electric.com. The
Company makes available free of charge on or through its website its annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and all amendments to those reports as soon as reasonably practicable
after such material is electronically filed with or furnished to the
Securities and Exchange Commission.


ITEM 2. PROPERTIES
- -------------------

The Company maintains its principal executive offices in Bluffton, Indiana;
manufacturing plants are located in the United States and abroad. Location
and approximate square footage for the Company's principal facilities are
described below. All principal properties are owned or held under operating
leases.

The Company's principal properties are as follows:
Acres Approximate
Location of Land Square Feet
-------- ------- -----------
Bluffton, Indiana 35.8 405,660
Siloam Springs, Arkansas 32.6 240,400
Wilburton, Oklahoma 30.0 327,135
Jonesboro, Indiana (1) - 34,570
7

Grant County, Indiana 9.0 24,100
Muskegon, Michigan 10.8 113,951
Saco, Maine (1) - 27,800
Wittlich, Rhineland, Germany 6.9 76,937
Brno, Czech Republic 2.3 51,158
Berzo Demo, Italy (1) - 22,865
Motta di Livenza, Italy (1) - 39,152
Linares, Mexico 10.0 30,000
Fifteen facilities, each with less
than 56,500 square feet(2) 6.1 260,565
----- ---------
Total 143.5 1,654,293
===== =========

In the Company's opinion, its facilities are suitable for their intended use,
adequate for the Company's business needs and in good condition.

(1) Leased facility.
(2) Thirteen of the facilities are leased and in the aggregate have
approximately 183,474 square feet.


ITEM 3. LEGAL PROCEEDINGS
- --------------------------

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
clams and legal actions can be successfully defended or resolved without a
material adverse effect on the Company's financial position or results of
operations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------

None.



EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------

The names, ages and all positions and offices held by the executive officers
of the Company are:
In this
Name Age Positions and Offices office since
---- --- --------------------- ------------

William H. Lawson 66 Chairman of the Board, 1985
Chief Executive Officer
and President
Jess B. Ford 51 Senior Vice President 1999
Peter C. Maske 52 Senior Vice President, 1999
Operations
Gregg C. Sengstack 44 Senior Vice President and 1999
Chief Financial Officer
Donald R. Hobbs 61 Vice President, Submersible 1996
Motor Marketing
Thomas A. Miller 53 Vice President, Submersible 1998
Motor Engineering
Kirk M. Nevins 59 Vice President, Sales 1995


Each executive officer is elected by the board of directors for a term of one
year or until his successor is elected and qualified. Each executive officer
was employed by the Company during the preceding five years as an officer or
in a management position.




















































8

PART II
-------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------

The number of shareowners of record as of February 14, 2003 was 968. The
Company's stock is traded on Nasdaq National Market: Symbol FELE.

All share and per share data included in this Form 10-K reflect the Company's
two-for-one stock split effected in the form of a 100 percent stock
distribution made on March 22, 2002. Dividends paid and the price range per
common share as quoted by the Nasdaq National Market for 2002 and 2001 were as
follows:

DIVIDENDS PER SHARE PRICE PER SHARE
2002 2001 2002 2001
---- ---- ---- ----
Low High Low High
--- ---- --- ----
1st Quarter... $.12 $.11 $40.600 $53.900 $32.000 $36.625
2nd Quarter... $.13 $.12 $43.520 $60.528 $33.040 $37.950
3rd Quarter... $.13 $.12 $39.900 $52.640 $34.125 $41.414
4th Quarter... $.13 $.12 $41.151 $51.000 $35.315 $42.640









ITEM 6. SELECTED FINANCIAL DATA
- ---------------------------



FIVE YEAR FINANCIAL SUMMARY
- ------------------------------------------------------------------------------------------------------------
FRANKLIN ELECTRIC CO., INC.
(In thousands, except per share amounts)
2002 2001 2000 1999 1998

- ------------------------------------------------------------------------------------------------------------

Operations:
Net sales.............................$354,872 $322,908 $325,731 $293,236 $272,533
Gross profit.......................... 104,935 92,871 85,186 84,171 79,955
Interest expense...................... 1,317 1,193 1,111 1,317 1,364
Income taxes ......................... 18,273 16,235 13,683 15,591 15,237
Net income............................ 32,204 27,150 22,226 26,805 24,784
Depreciation and amortization......... 12,878 12,660 10,839 7,460 6,687
Capital expenditures.................. 15,568 6,709 14,108 13,691 24,601
Balance sheet:
Working capital...................... 62,762 69,158 54,897 56,886 61,878
Property, plant and equipment, net... 76,033 58,839 64,604 57,047 51,461
Total assets......................... 258,583 195,643 197,179 176,101 167,590
Long-term debt....................... 25,946 14,465 15,874 17,057 18,089
Shareowners' equity.................. $153,138 $123,269 $115,998 $ 96,293 $ 91,597
Other data:
% Net income to sales................ 9.1% 8.4% 6.8% 9.1% 9.1%
% Net income to total
average assets..................... 14.2% 13.8% 11.9% 15.6% 15.0%
Current ratio........................ 2.2 2.7 2.2 2.2 2.4
Number of common shares
outstanding........................ 10,824 10,668 11,008 10,826 11,148
Per share:
Market price range
High................................. $ 60.53 $ 42.64 $ 36.50 $ 37.438 $ 36.25
Low.................................. 39.90 32.00 26.125 29.50 20.00
Net income per weighted-average
common share....................... 2.98 2.49 2.04 2.44 2.16
Net income per weighted-average
common share,
assuming dilution.................. 2.83 2.39 1.96 2.30 2.01
Book value........................... 13.47 10.84 10.21 8.27 7.42
Cash dividends on common
stock.............................. $ .51 $ 0.47 $ 0.43 $ 0.39 $ 0.33
- ------------------------------------------------------------------------------------------------------------


9


Includes the results of operations of its wholly-owned subsidiaries
Coverco S.r.l. and Intelligent Controls, Inc., since their acquisition on
January 7, 2002 and July 16, 2002, respectively.
Includes the results of operations of its wholly-owned subsidiaries EBW,
Inc. and Advanced Polymer Technology, Inc., since their acquisition on
August 31, 2000.






10

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------

RESULTS OF OPERATIONS
- ---------------------
Net sales for 2002 were $354.9 million, a 9.9 percent increase from 2001 net
sales of $322.9 million. The increased sales 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 5.2 percent of
sales for the year. These increases were partially offset by lower demand
from the petroleum equipment industry. Net sales for 2001 were $322.9
million, a 0.9 percent decrease from 2000 net sales of $325.7 million. The
decreased sales were primarily the result of the global manufacturing
recession as well as the strong U.S. dollar/weak euro and South African rand
that affected foreign sales. The lower sales were partially offset by the
inclusion of the full year results of EBW, Inc. ("EBW") and Advanced Polymer
Technology, Inc. ("APT") which were acquired in August 2000 as well as sales
to KSB AG and customers of Mitsubishi Electric Company under new motor supply
agreements for a full year in 2001. 2001 sales were approximately 8.0 percent
lower than 2000 excluding the incremental sales from these acquisitions and
supply agreements.

Cost of sales as a percent of net sales for 2002, 2001 and 2000 was 70.4
percent, 71.2 percent and 73.8 percent, respectively. Cost of sales as a
percent of net sales decreased in 2002 from 2001 primarily as a result of
productivity improvements, cost reductions and other operations initiatives as
well as lower costs in key commodities. 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. Cost of sales as a
percent of net sales decreased in 2001 from 2000 primarily as a result of
specific productivity initiatives and cost reduction which resulted in
improved labor efficiencies and lower material costs as well as lower costs in
key commodities.

Selling and administrative expense as a percent of net sales for 2002, 2001
and 2000 was 15.4 percent, 14.7 percent and 13.8 percent, respectively. The
addition of fixed expenses from acquired companies is the primary reason for
the increase in selling and administrative expense as a percent of net sales
for 2002 and 2001 (full year impact of 2000 acquisitions).

Interest expense for 2002, 2001 and 2000 was $1.3 million, $1.2 million and
$1.1 million, respectively.

During the third quarter of 2000, the Company recorded a one-time $3.2 million
($2.0 million after-tax) charge to earnings to recognize the costs of the
unsuccessful acquisition of the fuel pumping systems business of the Marley
Pump Company, a division of United Dominion Industries.

Included in other income for 2002, 2001 and 2000 was interest income of $0.5
million, $0.6 million and $1.2 million, respectively, primarily derived from
the investment of cash balances in short-term U.S. treasury and agency
securities.

Foreign currency-based transactions produced a gain for 2002 of $1.4 million.
The foreign currency-based transaction gain was due primarily to the
11

strengthening euro relative to the U.S. dollar during most of 2002. The
foreign currency-based transaction losses in 2001 and 2000 were primarily due
to the strengthening U.S. dollar relative to the euro and South African rand
resulting in losses of $0.5 million and $0.7 million, respectively.

The provision for income taxes in 2002, 2001 and 2000 was $18.3 million, $16.2
million and $13.7 million, respectively. The effective tax rate in 2002 of
36.2% is less than the 2001 rate of 37.4% as a result of tax planning savings
realized in 2002. The effective tax rate for each year differs from the
United States statutory rate of 35 percent, due principally to the effects of
state and foreign income taxes, net of federal tax benefits.

Net income for 2002 was $32.2 million, or $2.83 per diluted share, compared to
2001 net income of $27.2 million, or $2.39 per diluted share. Net income for
2000 was $22.2 million, or $1.96 per diluted share. All share and per share
data reflect the Company's two-for-one stock split effected in the form of a
100 percent stock distribution made on March 22, 2002.

CAPITAL RESOURCES AND LIQUIDITY
- -------------------------------
Cash flows from operations provide the principal source of current liquidity.
Net cash flows provided by operating activities were $57.9 million, $39.9
million and $18.8 million in 2002, 2001 and 2000, respectively. The primary
source of cash from operations for 2002 was earnings. The increases in 2002
and 2001 were related to decreases in accounts receivable. The decrease in
2000 was related to increases in accounts receivable and decreases in accounts
payable.

Net cash flows used in investing activities were $57.2 million, $10.2 million
and $25.6 million in 2002, 2001 and 2000, respectively. The primary uses of
cash in 2002 were for the acquisitions of Coverco and INCON. The Company paid
an aggregate of $30.3 million for these two acquisitions, net of cash
acquired. During the third quarter of 2002, the Company paid $10.5 million in
cash (included in deferred assets) 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 primary use of cash in 2001 was for additions to plant and equipment. The
primary uses of cash in 2000 were for the acquisition of EBW and APT and
additions to plant and equipment.

Net cash flows used in financing activities were $2.7 million, $19.0 million
and $12.3 million in 2002, 2001 and 2000, respectively. The primary uses of
cash in each of these three years related to the repurchase of shares of
Company common stock under the Company's repurchase program and the payment of
dividends. During 2002, 2001 and 2000, the Company repurchased, or received
as consideration for stock options exercised, 223,499, 408,200 and 253,400
shares of its common stock for $10.5 million, $14.2 million and $8.4 million,
respectively. The Company paid $5.5 million, $5.1 million and $4.7 million in
dividends on the Company's common stock in 2002, 2001 and 2000, respectively.
The Company has authority under its Board-approved stock repurchase program to
purchase an additional 655,253 shares of its common stock after December 28,
2002.

Cash, cash equivalents and marketable securities at the end of 2002 were $20.1
million compared to $23.7 million at the end of 2001. Working capital
decreased $6.4 million in 2002 and the current ratio of the Company was 2.2
and 2.7 at the end of 2002 and 2001, respectively.


12

Principal payments of $1.0 million per year on the Company's $20.0 million of
unsecured long-term debt began in 1998 and will continue until 2008 when a
balloon payment of $10.0 million will fully retire the debt. In November
2001, the Company entered into an unsecured, 38-month $60.0 million revolving
credit agreement (the "Agreement"). The amount available for borrowing under
the Agreement is reduced by the amount of certain standby letters-of-credit.
These standby letters-of-credit totaled $2,008 and $1,650 at December 28, 2002
and December 29, 2001, respectively. The Agreement includes a facility fee of
one-eighth of one percent on the committed amount. The Company's borrowings
under the Agreement totaled $10.1 million and $0 at December 28, 2002 and
December 29, 2001, respectively. The Company is subject to certain financial
covenants with respect to borrowings, interest coverage, working capital, net
worth, loans or advances, and investments. The Company was in compliance with
all debt covenants at all times in 2002 and 2001. See Note 6.

At December 28, 2002, the Company had $2.4 million of commitments for the
construction of a building in Linares, Mexico and the purchase of machinery
and equipment.

During 2003, the Company intends to continue to seek acquisition candidates
that are compatible with its existing product lines and that provide leveraged
growth potential.

Management believes that internally generated funds and existing credit
arrangements provide sufficient liquidity to meet current commitments.

ACCOUNTING PRONOUNCEMENTS
- -------------------------
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123". SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation and amends the related existing disclosure requirements. As more
fully described in Notes 1 and 9, the Company accounts for its stock-based
compensation under the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees".
Accordingly, SFAS No. 148 does not have an impact on the Company's operating
results or financial position.

In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN No. 45 elaborates on the
disclosures to be made by a guarantor about its obligations under certain
guarantees it has issued and clarifies the accounting for such guarantees. The
initial recognition and measurement provisions of FIN No. 45 are effective on
a prospective basis to guarantees issued or modified after December 31, 2002,
and the disclosure requirements are effective for periods ending after
December 15, 2002. The Company does not expect the adoption of FIN No. 45 to
have a material impact on its operating results or financial position.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
- ------------------------------------------
Management's discussion and analysis of its financial condition and results of
operations are based upon the Company's 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

13

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, all as described in Exhibit 99 of this Form
10-K. These risks and uncertainties may cause actual results to differ
materially from those indicated by the forward-looking statements. Any
forward-looking statements included in this Form 10-K are based upon
information presently available. The Company does not assume any obligation
to update any forward-looking information.


ITEM 7A. 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 variable
rate interest borrowings under the Company's revolving credit agreement.




















14

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
- ------------------------------------------------------------------------------
2002 2001 2000
(In thousands, except per share amounts)
- ------------------------------------------------------------------------------

Net sales............................. $354,872 $322,908 $325,731

Cost of sales (including research
and development expenses of $6,035,
$5,232 and $4,978, respectively).... 249,937 230,037 240,545
-------- -------- --------

Gross profit.......................... 104,935 92,871 85,186

Selling and administrative expenses... 54,637 47,522 44,967
-------- -------- --------

Operating income...................... 50,298 45,349 40,219

Interest expense...................... (1,317) (1,193) (1,111)
Costs of unsuccessful acquisition..... - - (3,237)
Other income (expense),net............ 130 (239) 764
Foreign exchange income (loss)........ 1,366 (532) (726)
-------- -------- --------

Income before income taxes............ 50,477 43,385 35,909

Income taxes (Note 5)................. 18,273 16,235 13,683
-------- -------- --------

Net income............................ $ 32,204 $ 27,150 $ 22,226
======== ======== ========

Per share data (Note 8):

Net income per common share......... $ 2.98 $ 2.49 $ 2.04
======== ======== ========

Net income per common share,
assuming dilution................. $ 2.83 $ 2.39 $ 1.96
======== ======== ========

Dividends per common share.......... $ .51 $ .47 $ .43
======== ======== ========


See Notes to Consolidated Financial Statements.


15

CONSOLIDATED BALANCE SHEETS

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
- ------------------------------------------------------------------------------
ASSETS
2002 2001
(In thousands)
- ------------------------------------------------------------------------------
Current assets:
Cash and equivalents........................ $ 20,133 $ 20,750
Marketable securities....................... - 2,999
Receivables (less allowances of $1,907
and $1,658, respectively)................. 31,711 27,486
Inventories:
Raw materials............................. 16,115 16,447
Work-in-process........................... 7,481 6,005
Finished goods............................ 33,905 35,662
LIFO reserve.............................. (9,233) (10,106)
-------- --------
48,268 48,008
Other current assets (including deferred
income taxes of $8,615 and $8,667,
respectively, Note 5)..................... 12,897 10,340
-------- --------
Total current assets.................... 113,009 109,583

Property, plant and equipment, at cost:
Land and buildings.......................... 34,126 25,343
Machinery and equipment..................... 141,347 121,791
-------- --------
175,473 147,134
Less allowance for depreciation........... 99,440 88,295
-------- --------
76,033 58,839
Deferred and other assets (including deferred
income taxes of $1,391 and $17,
respectively, Note 5)...................... 30,795 12,710
Goodwill...................................... 38,746 14,511
-------- --------


Total Assets.................................. $258,583 $195,643
======== ========



See Notes to Consolidated Financial Statements.


16

- ------------------------------------------------------------------------------
LIABILITIES AND SHAREOWNERS' EQUITY
2002 2001
(In thousands)
- ------------------------------------------------------------------------------

Current liabilities:
Current maturities of long-term debt and
short-term borrowings (Note 6)............ $ 1,467 $ 1,058
Accounts payable............................ 18,584 11,683
Accrued expenses (Note 4)................... 28,484 24,146
Income taxes (Note 5)....................... 1,712 3,538
-------- --------
Total current liabilities................. 50,247 40,425

Long-term debt (Note 6)....................... 25,946 14,465

Employee benefit plan obligations (Note 3).... 23,988 13,199

Other long-term liabilities................... 5,264 4,285

Shareowners' equity (Note 7):
Common shares outstanding
(10,824 and 10,669, respectively)......... 1,082 1,067
Additional capital.......................... 34,079 23,348
Retained earnings........................... 125,308 109,103
Loan to ESOP Trust (Note 3)................. (1,130) (1,362)
Accumulated other comprehensive loss........ (6,201) (8,887)
-------- --------
Total shareowners' equity................ 153,138 123,269
-------- --------

Total Liabilities and Shareowners' Equity..... $258,583 $195,643
======== ========



See Notes to Consolidated Financial Statements.


17


CONSOLIDATED STATEMENTS OF CASH FLOWS

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
- ------------------------------------------------------------------------------
2002 2001 2000
(In thousands)
- ------------------------------------------------------------------------------
Cash flows from operating activities:
Net income................................. $32,204 $27,150 $22,226
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation and amortization............ 12,878 12,660 10,839
Deferred income taxes.................... 664 2,916 (34)
Loss on disposals of plant
and equipment.......................... 428 1,980 275
Changes in assets and liabilities,
excluding the effects of acquisitions:
Receivables............................ 3,125 2,963 (7,473)
Inventories............................ 7,434 (697) (2,516)
Accounts payable and other
accrued expenses..................... 2,915 (8,028) (2,612)
Employee benefit plan obligations...... 1,128 (718) 2,156
Other, net............................. (2,923) 1,697 (4,113)
------- ------- -------
Net cash flows from operating activities..... 57,853 39,923 18,748
------- ------- -------

Cash flows from investing activities:
Additions to plant and equipment........... (15,568) (6,709) (14,108)
Proceeds from sale of plant and equipment.. 20 354 61
Additions to deferred assets............... (14,312) (802) (2,829)
Purchases of marketable securities......... - (2,999) (2,915)
Cash paid for acquisitions, net of cash
acquired (Note 2)........................ (30,344) - (17,687)
Proceeds from maturities of marketable
securities............................... 2,999 - 11,883
------- ------- -------
Net cash flows from investing activities..... (57,205) (10,156) (25,595)
------- ------- -------

Cash flows from financing activities:
Borrowing of long-term debt................ 8,575 - -
Repayment of long-term debt (Note 6)....... (1,408) (1,016) (1,017)
Borrowing on line of credit and short-term
borrowings............................... 3,000 11,055 -
Repayment of line of credit and short-term
borrowings............................... (3,017) (11,073) (41)
Proceeds from issuance of common stock..... 5,945 1,059 1,541
Purchases of common stock (Note 7)......... (10,517) (14,157) (8,351)
Reduction of loan to ESOP Trust............ 232 232 233
Dividends paid............................. (5,505) (5,122) (4,685)
------- ------- -------
Net cash flows from financing activities..... (2,695) (19,022) (12,320)
------- ------- -------

Effect of exchange rate changes on cash...... 1,430 374 954
------- ------- -------

Net change in cash and equivalents........... (617) 11,119 (18,213)
Cash and equivalents at beginning of year.... 20,750 9,631 27,844
------- ------- -------
Cash and equivalents at end of year.......... $20,133 $20,750 $ 9,631
======= ======= =======

Cash paid during 2002, 2001, and 2000 for interest was $1.3 million, $1.1
million and $1.1 million, respectively. Also, cash paid during 2002, 2001 and
2000 for income taxes was $16.6 million, $13.1 million and $14.6 million,
respectively.




See Notes to Consolidated Financial Statements.


18