Franklin Electric Company Reports Lower First Quarter Earnings on Flat Sales

Apr 12, 2001, 01:00 ET from Franklin Electric Co., Inc.

    BLUFFTON, Ind., April 12 /PRNewswire/ -- Franklin Electric Co., Inc.
 (Nasdaq:   FELE) reported first quarter 2001 net income of $3.0 million, a
 decrease of 23 percent from $3.9 million for the same period a year ago. First
 quarter 2001 diluted earnings per share were $0.53, a 23 percent decrease from
 $0.69 per share for the first quarter of 2000. Sales for the first quarter of
 2001 were $65.9 million, compared to 2000 sales of $66.1 million.
     William H. Lawson, Chairman and Chief Executive Officer, said, "Even
 though sales, not including the acquisitions we made in 2000, declined over
 ten percent from a year ago, Franklin continued to gain market share. We are
 dissatisfied with lower first quarter income, however, the cost savings
 initiatives begun last year are gaining momentum and we were able to hold
 product profit margins."
     "Submersible motor sales in North America declined ten percent. Sales in
 Europe also declined partially due to unusually wet weather. Europe's income
 was flat in Euros, but much of this performance was offset by exchange losses
 due to the strong dollar at quarter end."
     "FE Petro had a good quarter. The integration of EBW and Applied Polymer
 Technology, the Fueling Systems acquisitions made in 2000, continued on plan,
 but were non-accretive. At quarter end, we completed an important integration
 milestone, combining these two companies administratively, including
 consolidating significant work into our corporate headquarters with
 substantial cost savings."
     "The Engineered Motor Products Division located in Bluffton, Indiana
 continued to earn unsatisfactory returns. However, first quarter performance
 improved from a year ago."
     "We are planning that our markets will not improve substantially in the
 near term, and we remain focused on our long-term strategic plan that served
 Franklin well during periods of economic downturn. When business conditions
 are challenging, Franklin people worldwide rise to the call, and we appreciate
 their continued loyalty and support."
     Franklin Electric is the world's largest manufacturer of submersible water
 and fueling systems motors, a leading producer of fueling systems products,
 and a supplier of industrial motor products and electronic controls.
     "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.
 
 
                            FRANKLIN ELECTRIC CO., INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
     (In thousands, except per share amounts)
 
                                                      First Quarter Ended
                                                   March 31,          April 1,
                                                      2001              2000
 
     Net Sales                                      $65,899           $66,051
 
     Cost of sales                                   48,786            48,864
 
     Gross profit                                    17,113            17,187
 
     Selling and administrative expenses             11,341            10,309
 
     Operating income                                 5,772             6,878
 
     Interest expense                                  (325)             (285)
     Other income, net                                  143               295
     Foreign exchange loss                             (727)             (611)
 
     Income before income taxes                       4,863             6,277
 
     Income taxes                                     1,847             2,374
 
     Net Income                                      $3,016            $3,903
 
 
     Net income per share:
        Basic                                         $0.55             $0.72
        Diluted                                       $0.53             $0.69
 
     Weighted average shares and equivalent
        shares outstanding:
        Basic                                         5,498             5,424
        Diluted                                       5,726             5,658
 
 
                                FRANKLIN ELECTRIC CO., INC.
                           CONDENSED CONSOLIDATED BALANCE SHEETS
 
              (In thousands)                       March 31,          Dec. 30,
                                                     2001               2000
 
              ASSETS:
 
              Cash and equilvalents                  $3,789            $9,631
              Receivables                            31,893            31,568
              Inventories                            65,837            49,090
              Other current assets                   11,929            11,672
              Total current assets                  113,448           101,961
 
              Property, plant and
               equipment, net                        62,465            64,604
              Goodwill                               15,369            15,566
              Deferred and other assets              14,400            15,048
              Total assets                         $205,682          $197,179
 
 
              LIABILITIES AND SHAREOWNERS'
               EQUITY:
 
              Current maturities of long-
               term debt and short-term
               borrowings                           $11,073            $1,076
              Accounts payable and accrued
               liabilities                           44,812            45,988
              Total current liabilities              55,885            47,064
 
              Long-term debt                         15,601            15,874
              Employee benefit plan
               obligations                           14,241            13,981
              Other long-term liabilities             4,236             4,262
 
              Shareowners' equity                   115,719           115,998
              Total liabilities and
               shareowners' equity                 $205,682          $197,179
 
 
                            FRANKLIN ELECTRIC CO., INC.
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                                  First Quarter Ended
      (In thousands)                          March 31,          April 1,
                                                 2001              2000
 
      Cash flows from operating activities:
         Net income                                  $3,016            $3,903
         Adjustments to reconcile net
          income to net cash flows from operating
          activities:
            Depreciation and amortization             3,130             2,514
            Loss on disposals of plant and
             equipment                                   66                42
            Changes in assets and
             liabilities:
              Receivables                            (1,039)           (4,249)
              Inventories                           (17,813)          (11,579)
             Accounts payable and other
              accrued expenses                         (367)          (11,033)
             Employee benefit plan
              obligations                               331               307
             Other, net                                (548)               (9)
      Net cash flows from operating
       activities                                   (13,224)          (20,104)
      Cash flows from investing
       activities:
        Additions to plant and equipment             (1,109)           (2,932)
        Proceeds from sale of plant and
         equipment                                       18                22
        Additions to deferred assets                    (46)             (353)
        Proceeds from maturities of
         marketable securities                            -             8,968
      Net cash flows from investing
       activities                                    (1,137)            5,705
      Cash flows from financing
       activities:
        Borrowing on line of credit                  10,000                 -
        Repayment of line of credit and
         short-term borrowings                           (3)                -
        Proceeds from issuance of common
         stock                                            -               981
        Purchases of common stock                    (1,001)           (3,367)
        Reduction of loan to ESOP Trust                 232               233
        Dividends paid                               (1,210)           (1,088)
      Net cash flows from financing
       activities                                     8,018            (3,241)
      Effect of exchange rate changes on
       cash                                             501               336
      Net change in cash and equivalents             (5,842)          (17,304)
      Cash and equivalents at beginning of
       period                                         9,631            27,844
      Cash and equivalents at end of
       period                                        $3,789           $10,540
 
 

SOURCE Franklin Electric Co., Inc.
    BLUFFTON, Ind., April 12 /PRNewswire/ -- Franklin Electric Co., Inc.
 (Nasdaq:   FELE) reported first quarter 2001 net income of $3.0 million, a
 decrease of 23 percent from $3.9 million for the same period a year ago. First
 quarter 2001 diluted earnings per share were $0.53, a 23 percent decrease from
 $0.69 per share for the first quarter of 2000. Sales for the first quarter of
 2001 were $65.9 million, compared to 2000 sales of $66.1 million.
     William H. Lawson, Chairman and Chief Executive Officer, said, "Even
 though sales, not including the acquisitions we made in 2000, declined over
 ten percent from a year ago, Franklin continued to gain market share. We are
 dissatisfied with lower first quarter income, however, the cost savings
 initiatives begun last year are gaining momentum and we were able to hold
 product profit margins."
     "Submersible motor sales in North America declined ten percent. Sales in
 Europe also declined partially due to unusually wet weather. Europe's income
 was flat in Euros, but much of this performance was offset by exchange losses
 due to the strong dollar at quarter end."
     "FE Petro had a good quarter. The integration of EBW and Applied Polymer
 Technology, the Fueling Systems acquisitions made in 2000, continued on plan,
 but were non-accretive. At quarter end, we completed an important integration
 milestone, combining these two companies administratively, including
 consolidating significant work into our corporate headquarters with
 substantial cost savings."
     "The Engineered Motor Products Division located in Bluffton, Indiana
 continued to earn unsatisfactory returns. However, first quarter performance
 improved from a year ago."
     "We are planning that our markets will not improve substantially in the
 near term, and we remain focused on our long-term strategic plan that served
 Franklin well during periods of economic downturn. When business conditions
 are challenging, Franklin people worldwide rise to the call, and we appreciate
 their continued loyalty and support."
     Franklin Electric is the world's largest manufacturer of submersible water
 and fueling systems motors, a leading producer of fueling systems products,
 and a supplier of industrial motor products and electronic controls.
     "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.
 
 
                            FRANKLIN ELECTRIC CO., INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
     (In thousands, except per share amounts)
 
                                                      First Quarter Ended
                                                   March 31,          April 1,
                                                      2001              2000
 
     Net Sales                                      $65,899           $66,051
 
     Cost of sales                                   48,786            48,864
 
     Gross profit                                    17,113            17,187
 
     Selling and administrative expenses             11,341            10,309
 
     Operating income                                 5,772             6,878
 
     Interest expense                                  (325)             (285)
     Other income, net                                  143               295
     Foreign exchange loss                             (727)             (611)
 
     Income before income taxes                       4,863             6,277
 
     Income taxes                                     1,847             2,374
 
     Net Income                                      $3,016            $3,903
 
 
     Net income per share:
        Basic                                         $0.55             $0.72
        Diluted                                       $0.53             $0.69
 
     Weighted average shares and equivalent
        shares outstanding:
        Basic                                         5,498             5,424
        Diluted                                       5,726             5,658
 
 
                                FRANKLIN ELECTRIC CO., INC.
                           CONDENSED CONSOLIDATED BALANCE SHEETS
 
              (In thousands)                       March 31,          Dec. 30,
                                                     2001               2000
 
              ASSETS:
 
              Cash and equilvalents                  $3,789            $9,631
              Receivables                            31,893            31,568
              Inventories                            65,837            49,090
              Other current assets                   11,929            11,672
              Total current assets                  113,448           101,961
 
              Property, plant and
               equipment, net                        62,465            64,604
              Goodwill                               15,369            15,566
              Deferred and other assets              14,400            15,048
              Total assets                         $205,682          $197,179
 
 
              LIABILITIES AND SHAREOWNERS'
               EQUITY:
 
              Current maturities of long-
               term debt and short-term
               borrowings                           $11,073            $1,076
              Accounts payable and accrued
               liabilities                           44,812            45,988
              Total current liabilities              55,885            47,064
 
              Long-term debt                         15,601            15,874
              Employee benefit plan
               obligations                           14,241            13,981
              Other long-term liabilities             4,236             4,262
 
              Shareowners' equity                   115,719           115,998
              Total liabilities and
               shareowners' equity                 $205,682          $197,179
 
 
                            FRANKLIN ELECTRIC CO., INC.
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                                  First Quarter Ended
      (In thousands)                          March 31,          April 1,
                                                 2001              2000
 
      Cash flows from operating activities:
         Net income                                  $3,016            $3,903
         Adjustments to reconcile net
          income to net cash flows from operating
          activities:
            Depreciation and amortization             3,130             2,514
            Loss on disposals of plant and
             equipment                                   66                42
            Changes in assets and
             liabilities:
              Receivables                            (1,039)           (4,249)
              Inventories                           (17,813)          (11,579)
             Accounts payable and other
              accrued expenses                         (367)          (11,033)
             Employee benefit plan
              obligations                               331               307
             Other, net                                (548)               (9)
      Net cash flows from operating
       activities                                   (13,224)          (20,104)
      Cash flows from investing
       activities:
        Additions to plant and equipment             (1,109)           (2,932)
        Proceeds from sale of plant and
         equipment                                       18                22
        Additions to deferred assets                    (46)             (353)
        Proceeds from maturities of
         marketable securities                            -             8,968
      Net cash flows from investing
       activities                                    (1,137)            5,705
      Cash flows from financing
       activities:
        Borrowing on line of credit                  10,000                 -
        Repayment of line of credit and
         short-term borrowings                           (3)                -
        Proceeds from issuance of common
         stock                                            -               981
        Purchases of common stock                    (1,001)           (3,367)
        Reduction of loan to ESOP Trust                 232               233
        Dividends paid                               (1,210)           (1,088)
      Net cash flows from financing
       activities                                     8,018            (3,241)
      Effect of exchange rate changes on
       cash                                             501               336
      Net change in cash and equivalents             (5,842)          (17,304)
      Cash and equivalents at beginning of
       period                                         9,631            27,844
      Cash and equivalents at end of
       period                                        $3,789           $10,540
 
 SOURCE  Franklin Electric Co., Inc.