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 27, 2003
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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
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COMMISSION FILE NUMBER 0-362
FRANKLIN ELECTRIC CO., INC.
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(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
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Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES X NO
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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 3, 2003
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$.10 PAR VALUE 10,898,272 SHARES
2
FRANKLIN ELECTRIC CO., INC.
Index
Page
PART I. FINANCIAL INFORMATION Number
- --------------------------------- ------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
as of September 27, 2003
and December 28, 2002 ........................ 3
Condensed Consolidated Statements of
Income for the Third Quarter and Nine
Months Ended September 27, 2003 and
September 28, 2002 ........................... 4
Condensed Consolidated Statements
Of Cash Flows for the Nine Months
Ended September 27, 2003 and
September 28, 2002 ........................... 5
Notes to Condensed Consolidated
Financial Statements ......................... 6-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations......................... 9-11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk............................. 11-12
Item 4. Controls and Procedures ...................... 12
PART II. OTHER INFORMATION
- -----------------------------
Item 6. Exhibits and Reports on Form 8-K.............. 13
Signatures................................................ 14
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Exhibit Index............................................. 15
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Exhibits.................................................. 16-21
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3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) Sept. 27, Dec. 28,
2003 2002
---- ----
ASSETS
Current assets:
Cash and equivalents.................... $ 18,064 $ 20,133
Receivables, less allowances of
$1,987 and $1,907, respectively....... 34,302 31,711
Inventories (Note 2).................... 53,233 48,268
Other current assets (including
deferred income taxes of $8,718
and $8,615, respectively)............. 13,262 12,897
-------- -------
Total current assets.................. 118,861 113,009
Property, plant and equipment,
net (Note 3)............................ 77,740 76,033
Deferred and other assets (including
deferred income taxes of $1,391)........ 15,228 16,504
Goodwill.................................. 54,747 53,037
-------- --------
Total assets.............................. $266,576 $258,583
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Current maturities of long-term
debt and short-term borrowings........ $ 1,477 $ 1,467
Accounts payable........................ 14,523 18,584
Accrued expenses........................ 30,373 28,484
Income taxes............................ 5,793 1,712
-------- --------
Total current liabilities............. 52,166 50,247
Long-term debt............................ 15,923 25,946
Employee benefit plan obligations......... 20,868 23,988
Other long-term liabilities............... 5,386 5,264
Shareowners' equity:
Common stock (Note 5)................... 1,082 1,082
Additional capital...................... 42,807 34,079
Retained earnings....................... 131,091 125,308
Loan to ESOP Trust...................... (897) (1,130)
Accumulated other comprehensive
loss (Note 7)......................... (1,850) (6,201)
-------- --------
Total shareowners' equity............. 172,233 153,138
-------- --------
Total liabilities and shareowners' equity. $266,576 $258,583
======== ========
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 Quarter Ended Nine Months Ended
------------------- -----------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2003 2002 2003 2002
Net sales.............................. $99,685 $97,125 $263,303 $258,876
Cost of sales.......................... 68,917 67,572 183,780 184,872
------- ------- -------- --------
Gross Profit........................... 30,768 29,553 79,523 74,004
Selling and administrative expenses.... 14,933 13,957 43,567 39,046
------- ------- -------- --------
Operating Income....................... 15,835 15,596 35,956 34,958
Interest expense....................... (313) (367) (975) (1,026)
Other income, net...................... 14 61 248 268
Foreign exchange gain (loss)........... (278) (327) 404 777
------- ------- -------- --------
Income before income taxes............. 15,258 14,963 35,633 34,977
Income taxes........................... 4,745 5,335 11,724 12,661
------- ------- -------- --------
Net income............................. $10,513 $ 9,628 $ 23,909 $ 22,316
======= ======= ======== ========
Per share data (Note 6):
Net income per common share.......... $ 0.97 $ 0.89 $ 2.22 $ 2.07
======= ======= ======== ========
Net income per common share,
assuming dilution.................. $ 0.93 $ 0.85 $ 2.12 $ 1.96
======= ======= ======== ========
Dividends per common share........... $ 0.14 $ 0.13 $ 0.41 $ 0.38
======= ======= ======== ========
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. 27, Sept. 28,
2003 2002
---- ----
Cash flows from operating activities:
Net income................................ $23,909 $22,316
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization........... 10,329 9,848
Loss on disposals of plant and
equipment............................. 436 2
Changes in assets and liabilities:
Receivables........................... (1,083) 1
Inventories........................... (2,882) 3,504
Accounts payable and other accrued
expenses............................ 1,992 1,096
Employee benefit plan obligations..... (3,245) 885
Other, net............................ (915) (1,965)
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Net cash flows from operating activities.... 28,541 35,687
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Cash flows from investing activities:
Additions to plant and equipment.......... (8,925) (9,016)
Proceeds from sale of plant and
equipment............................... 243 19
Additions to deferred assets.............. (433) (14,232)
Cash paid for acquisitions,
net of cash acquired.................... - (30,344)
Proceeds from maturities of marketable
securities ............................. - 2,999
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Net cash flows from investing activities.... (9,115) (50,574)
------- -------
Cash flows from financing activities:
Borrowing on long-term debt............... 6,648 8,350
Repayment of long-term debt............... (18,407) (208)
Borrowing on line of credit
and short-term borrowings............... 11,000 3,000
Repayment of line of credit
and short-term borrowings............... (11,024) (3,013)
Proceeds from issuance of common stock.... 3,282 1,731
Purchase of Common Stock.................. (9,782) (2,253)
Reduction of loan to ESOP Trust........... 233 232
Dividends paid............................ (4,420) (4,098)
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Net cash flows from financing activities.... (22,470) 3,741
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Effect of exchange rate changes on cash..... 975 935
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Net change in cash and equivalents.......... (2,069) (10,211)
Cash and equivalents at beginning of period. 20,133 20,750
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Cash and equivalents at end of period....... $18,064 $10,539
======= =======
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 accounting principles generally accepted in
the United States of America 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 accounting entries and adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation of
the financial position and the results of operations for the interim periods
have been made. Operating results for the nine months ended September 27,
2003 are not necessarily indicative of the results that may be expected for
the year ending January 3, 2004. For further information, including a
discussion of Franklin Electric's significant accounting policies, 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, 2002.
Note 2: Inventories
- --------------------
Inventories consist of the following:
(In thousands) Sept. 27, Dec. 28,
2003 2002
---- ----
Raw Materials........................ $15,060 $16,115
Work in Process...................... 6,733 7,481
Finished Goods....................... 41,498 33,905
LIFO Reserve......................... (10,058) (9,233)
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Total Inventory...................... $53,233 $48,268
======= =======
Note 3: Property, Plant and Equipment
- --------------------------------------
Property, plant and equipment, at cost, consists of the following:
(In thousands) Sept. 27, Dec. 28,
2003 2002
---- ----
Land and Building.................... $ 40,206 $ 34,126
Machinery and Equipment.............. 145,796 141,347
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186,002 175,473
Allowance for Depreciation........... 108,262 99,440
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$ 77,740 $ 76,033
======== ========
Note 4: Tax Rates
- ------------------
The effective tax rate on income before income taxes in 2003 and 2002 varies
from the United States statutory rate of 35 percent principally due to the
effect of state and foreign income taxes and related tax credits.
7
Note 5: Shareowners' Equity
- ----------------------------
The Company has 25,000,000 authorized shares of common stock, $.10 par value,
of which 10,823,200 shares of common stock were outstanding as of September
27, 2003.
During the first quarter, under terms of a Company stock option plan, an
officer of the company remitted 76,588 shares ($3.9 million) of Company common
stock as consideration for stock issued upon the exercise of stock options.
The Company recorded a $1.8 million reduction in its deferred tax liability
and a $1.8 million increase to shareowners' equity as a result of the
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:
(In thousands, except Third Qtr. Ended Nine Months Ended
---------------- -----------------
per share amounts) Sept. 27, Sept. 28, Sept. 27,Sept. 28,
2003 2002 2003 2002
---- ---- ---- ----
Numerator:
Net Income..................... $10,513 $ 9,628 $23,909 $22,316
======= ======= ======= =======
Denominator:
Basic
Weighted average common
shares....................... 10,813 10,824 10,783 10,781
Diluted
Effect of dilutive securities:
Employee and director
stock options.............. 544 502 503 607
------ ------- ------- -------
Adjusted weighted average
common shares................ 11,357 11,326 11,286 11,388
====== ====== ======= =======
Basic earnings per share......... $ 0.97 $ 0.89 $ 2.22 $ 2.07
====== ====== ======= =======
Diluted earnings per share....... $ 0.93 $ 0.85 $ 2.12 $ 1.96
====== ====== ======= =======
8
Note 7: Other Comprehensive Income
- -----------------------------------
Comprehensive income is as follows:
(In thousands) Third Qtr. Ended Nine Months Ended
---------------- -----------------
Sept. 27, Sept. 28, Sept. 27,Sept. 28,
2003 2002 2003 2002
---- ---- ---- ----
Net income......................... $10,513 $ 9,628 $23,909 $22,316
Other comprehensive gain:
Foreign currency translation
adjustments..................... 391 (566) 4,351 3,551
------- ------- ------- -------
Comprehensive income, net of tax... $10,904 $ 9,062 $28,260 $25,867
======= ======= ======= =======
Accumulated other comprehensive loss consists of the following:
(In thousands) Sept. 27, Dec. 28,
2003 2002
---- ----
Cumulative translation adjustment........... $ 2,100 $(2,251)
Minimum pension liability adjustment,
net of tax................................ (3,950) (3,950)
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$(1,850) $(6,201)
======= =======
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, results of operations, and
net cash flows.
The Company provides warranties on most of its products. The warranty terms
vary but are generally two years from date of manufacture or one year from
date of installation. Provisions for estimated expenses related to product
warranty are made at the time products are sold or when specific warranty
issues are identified. These estimates are established using historical
information about the nature, frequency, and average cost of warranty claims.
The Company actively studies trends of warranty claims and takes action to
improve product quality and minimize warranty claims. The Company believes
that the warranty reserve is appropriate; however, actual claims incurred
could differ from the original estimates, requiring adjustments to the
reserve.
Below is a table that shows the activity in the warranty accrual accounts:
(In thousands) Third Qtr. Ended Nine Months Ended
---------------- -----------------
Sept. 27, Sept 28, Sept. 27,Sept. 28,
2003 2002 2003 2002
---- ---- ---- ----
Beginning Balance.................. $5,531 $5,221 $5,308 $4,970
Accruals related to
product warranties............... 1,245 1,540 3,283 3,781
Reductions for payments made....... 1,179 1,106 2,994 3,096
------ ------ ------ ------
Ending Balance..................... $5,597 $5,655 $5,597 $5,655
====== ====== ====== ======
9
Note 9: Stock-Based Compensation
- ---------------------------------
The Company accounts for stock-based employee compensation plans under the
recognition and measurement principles of APB Opinion No. 25, "Accounting for
Stock Issued to Employees." No stock-based employee compensation cost is
reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the stock at date of grant. As
permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure," the Company follows the disclosure requirements only of SFAS
No. 123. The following table illustrates the proforma effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS No. 123:
(In Thousands, Except Third Qtr. Ended Nine Months Ended
---------------- -----------------
Per Share Amounts) Sept. 27, Sept. 28 Sept. 27, Sept. 28
2003 2002 2003 2002
---- ---- ---- ----
Net income as reported ........... $10,513 $9,628 $23,909 $22,316
Deduct: Stock-based
employee compensation
cost, net of income tax.......... 394 342 1,236 964
------- ------ ------- -------
Pro forma net income ............. $10,119 $9,286 $22,673 $21,352
======= ====== ======= =======
Earnings per share:
Basic - as reported............... $ 0.97 $ 0.89 $ 2.22 $ 2.07
Basic - pro forma................. $ 0.94 $ 0.86 $ 2.10 $ 1.98
Diluted - as reported............. $ 0.93 $ 0.85 $ 2.12 $ 1.96
Diluted - pro forma............... $ 0.89 $ 0.82 $ 2.01 $ 1.87
Note 10: Reclassifications
- ---------------------------
The Company has reclassified certain deferred and other assets to goodwill as
of the third quarter of 2003. Amounts in prior year have been reclassified to
conform to the current year presentation. In addition, subsequent to the end
of the third quarter, the Company performed its annual impairment testing
required by SFAS No. 142. No impairment loss was required to be recorded.
Item 2. Management's Discussion And Analysis Of Financial Condition And
- ------------------------------------------------------------------------
Results Of Operations
- ---------------------
Operations
- ----------
Sales for the third quarter of 2003 were $99.7 million, up $2.6 million or 2.6
percent compared to sales of $97.1 million for the same period a year ago.
Foreign currencies, particularly the euro, strengthened relative to the U.S.
dollar since the third quarter of 2002. The impact of this change in exchange
rates was a $3.7 million increase in the Company's reported third quarter 2003
sales. Excluding the impact of stronger foreign currencies, the Company's
sales were down about 1 percent primarily due to lower demand for water
systems products in North America partially offset by increased export sales.
10
Lower demand in North America is attributed to extremely wet weather
conditions in the eastern half of the country. Sales of fueling systems
products increased $1.5 million from the same period last year or about 9
percent of comparable fueling systems products sales for the prior year. For
the first nine months of 2003, sales were $263.3 million, an increase of 1.7
percent compared to 2002 sales of $258.9 million. Sales for the first nine
months of 2003 were increased by the strengthening of foreign currencies
($11.3 million) and inclusion of INCON sales ($4.1 million). Excluding the
impact of the change in exchange rates and INCON sales, the Company's sales
were down about 4.2 percent primarily due to lower demand in North America and
Europa (i.e., Europe, Middle East and North Africa).
Cost of sales as a percent of net sales for the third quarter of 2003 was 69.1
percent, a decrease from 69.6 percent for the same period in 2002. Cost of
sales as a percent of net sales for the year to date 2003 was 69.8 percent, a
decrease from 71.4 percent for the same period in 2002. The decrease is
attributable to productivity improvements and cost reductions as well as
increased sales of fueling system products as a percentage of total sales.
Selling and administrative expenses as a percent of net sales for the third
quarter of 2003 were 14.9 percent compared to 14.4 percent for the same period
in 2002. Selling and administrative expenses as a percent of net sales for
year to date 2003 were 16.5 percent compared to 15.1 percent for the year to
date 2002. The year to date increase in selling and administrative expenses
of $4.5 million was primarily attributable to the impact of stronger foreign
currencies, $1.3 million, primarily the euro; the INCON acquisition, $1.2
million; and selling costs associated with new product launches.
The effective tax rate on income before income taxes in 2003 and 2002 varies
from the United States statutory rate of 35 percent principally due to the
effect of state and foreign income taxes and related tax credits. The
effective tax rate for the first nine months of 2003 has decreased to about 33
percent from the prior year effective rate of 36 percent due to the benefits
(some of which are applicable to the current year only) realized from
increased tax credits from tax planning activities.
Net income for the third quarter of 2003 was $10.5 million, or $.93 per
diluted share, a 9 percent increase compared to net income of $9.6 million, or
$.85 per diluted share, for the same period a year ago. Year to date 2003 net
income was $23.9 million, or $2.12 per diluted share, a 7 percent increase
compared to year to date 2002 net income of $22.3 million, or $1.96 per
diluted share.
During the third quarter the Company's Board of Directors approved a
manufacturing re-alignment program. The program includes expanding production
capacity in Mexico and the Czech Republic. It also includes curtailing some
manufacturing operations in the USA and Western Europe. The total capital
investment required to implement the program is expected to be $20 million.
The capital will be invested from 2004 through 2006. In addition, the Company
also estimates that for full year 2003 the incremental expenses associated
with the construction and start-up of these facilities, as well as the
recently completed facility in China, to be $1 million incurred relatively
evenly throughout the year. During the two year period beginning January,
2004, management currently estimates that the one-time costs associated with
construction and start-up of the new facilities and consolidation of existing
operations will total approximately $10 million. Based on current plans, more
than half of these incremental costs will be recognized in the last three
quarters of 2004 with the balance expected to be recognized in the first three
quarters of 2005. These costs will be recognized
11
as incurred and are anticipated to result in a material reduction in the cost
structure of the Company in late 2005 and beyond.
Capital Resources and Liquidity
- -------------------------------
Cash and cash equivalents decreased $2.1 million during the first nine months
of 2003. The principal source of cash was earnings from operations, $23.9
million. Cash was used to repay long term debt, $18.4 million, fund payments
to employee benefit plans, $4.0 million and increases in inventories, $2.9
million. Working capital increased $3.9 million during the first nine months
of 2003. The current ratio was 2.3 and 2.2 at September 27, 2003 and December
28, 2002, respectively.
Net cash flows used in investing activities were $9.1 million and were
principally used for additions to plant and equipment, $8.9 million. The
Company also purchased $9.8 million of its common stock during the first nine
months of 2003.
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 revenue
recognition, allowance for doubtful accounts, accounts receivable,
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 detailed in the Company's Securities
and Exchange Commission filings. These risks and uncertainties may cause
actual results to differ materially from those indicated by the forward
looking statements.
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
12
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 limited to variable rate interest
borrowings under the Company's revolving credit agreement and an interest rate
swap agreement.
Item 4. Controls and Procedures
- --------------------------------
The Company's management carried out an evaluation, under the supervision and
with the participation of the Company's Chief Executive Officer and the
Company's Chief Financial Officer, of the effectiveness of the Company's
disclosure controls and procedures (as that term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the
end of the period covered by this report. Based upon that evaluation, the
Company's Chief Executive Officer and the Company's Chief Financial Officer
concluded that as of the end of the period covered by this report, 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.
13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (Filed with this quarterly report)
(31) Rule 13a-14(a)/15d-14 Certifications
(i) Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
(ii) Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
(32) Section 1350 Certifications
(i) 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.
(ii) 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
A Current Report on Form 8-K was filed with the SEC by the Company on
April 15, 2003, pursuant to Item 9, "Regulation FD Disclosure" and
Item 12, "Disclosure of Results of Operations and Financial
Condition", to report the Company's issuance of a press release
setting forth its first-quarter 2003 earnings.
A Current Report on Form 8-K was filed with the SEC by the Company on
July 16, 2003, pursuant to Item 9, "Regulation FD Disclosure" and
Item 12, "Disclosure of Results of Operations and Financial
Condition", to report the Company's issuance of a press release
setting forth its second-quarter 2003 earnings.
14
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 xxxxxx xx, 2003 By /s/ R. Scott Trumbull
---------------------- ---------------------------
R. Scott Trumbull, Chairman
and Chief Executive Officer
(Principal Executive Officer)
Date xxxxxx xx, 2003 By /s/ Gregg C. Sengstack
---------------------- ---------------------------
Gregg C. Sengstack, Senior Vice
President, Chief Financial
Officer and Secretary (Principal
Financial and Accounting Officer)
15
FRANKLIN ELECTRIC CO., INC.
EXHIBIT INDEX TO THE SECOND QUARTER REPORT ON FORM 10-Q
FOR THE SECOND QUARTER ENDED June 28, 2003
Exhibit
Number Description
- ------ -----------
(31) Rule 13a-14(a)/15d-14 Certifications
(i) Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(ii) Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(32) Section 1350 Certifications
(i) 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
(ii) 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
16
EXHIBIT (31)(i)
---------------
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
----------------------------------------
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
---------------------------------------------------------
I, R. Scott Trumbull, Chairman and Chief Executive 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 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors:
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
17
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 3, 2003
-----------------------
/s/ R. Scott Trumbull
------------------------
R. Scott Trumbull
Chairman and Chief Executive Officer
Franklin Electric Co., Inc.
18
EXHIBIT (31)(ii)
----------------
CERTIFICATION OF CHIEF FINANCIAL OFFICER
----------------------------------------
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
---------------------------------------------------------
I, Gregg C. Sengstack, Senior Vice President, Chief Financial Officer
and Secretary 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 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors:
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
19
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 3, 2003
----------------------
/s/ Gregg C. Sengstack
----------------------
Gregg C. Sengstack
Senior Vice President, Chief Financial Officer and Secretary
Franklin Electric Co., Inc.
20
EXHIBIT (32)(i) 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 June 28, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
R. Scott Trumbull, Chairman and Chief Executive 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 3, 2003
---------------------------
/s/ R. Scott Trumbull
---------------------------
R. Scott Trumbull
Chairman and Chief Executive Officer
Franklin Electric Co., Inc.
The certification accompanies the Report pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Franklin Electric
Co., Inc. for purposes of section 18 of the Securities Exchange Act of 1934,
as amended.
A signed original of the written statement required by section 906 has been
provided to Franklin Electric Co., Inc. and will be retained by Franklin
Electric Co., Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
21
EXHIBIT (32)(ii) 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 June 28, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Gregg C. Sengstack, Senior Vice President, Chief Financial Officer and
Secretary 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: xxxxxx xx, 2003
---------------------------
/s/ Gregg C. Sengstack
---------------------------
Gregg C. Sengstack
Senior Vice President, Chief Financial Officer and Secretary
Franklin Electric Co., Inc.
The certification accompanies the Report pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Franklin Electric
Co., Inc. for purposes of section 18 of the Securities Exchange Act of 1934,
as amended.
A signed original of the written statement required by section 906 has been
provided to Franklin Electric Co., Inc. and will be retained by Franklin
Electric Co., Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
5