Franklin Electric Company Reports Record Income

20.10.2005

Franklin Electric Co., Inc. reported record third quarter 2005 net income of $13.2 million, an increase of 19 percent from $11.1 million for the same period a year ago. Diluted earnings per share were $0.57 compared to $0.48 for the third quarter of 2004.

Sales of $119.0 million in the third quarter of 2005 were also a record, an increase of $8.7 million or about 8 percent from $110.3 million for the same period a year ago. Incremental sales related to acquisitions for the third quarter of 2005 were about $6.7 million or 6 percent of prior year sales.

Operating earnings in the third quarter of 2005 were a record $20.2 million, up $2.8 million or about 16 percent compared to $17.5 million for the same period a year ago. The improvement in operating earnings was driven by the record sales as well as reduced labor cost from the Company’s growing manufacturing base in Mexico, Czech Republic and China. These improvements were partially offset by higher commodity costs and increased fixed costs incurred in connection with the company’s water systems distribution channel strategy change.

R. Scott Trumbull, Chairman and Chief Executive Officer, stated, “While we are pleased with the financial results we remain focused on achieving our strategic goals of serving our expanded customer base and lowering costs through our previously announced Global Manufacturing Realignment Program. Sales from our Franklin Pump Systems business unit grew significantly in the third quarter as we are in the early stages of establishing national distribution for three new pump brands. We are encouraged by the reception we are receiving from many leading water systems distributors. We also acquired technological rights for two additional pump product lines (large centrifugal and submersible turbine pumps) which will further expand our water systems product offerings. The Realignment Program is proceeding on schedule and is favorable to anticipated restructuring spending through the close of the third quarter of 2005. In the third quarter, approximately 25 percent of our global water systems manufacturing man-hours were in low cost countries (Mexico, Czech Republic and China) versus about 13 percent in the third quarter of 2004. While the Realignment Program is nearing completion, these activities to improve our overall manufacturing cost base will be an ongoing process that is a cornerstone of our competitive strategy going forward.”

Water system product sales worldwide were up about 9 percent for third quarter of 2005 compared to the third quarter of 2004. Our pump, drives and controls product lines contributed significantly to the growth. However, third quarter 2005 unit sales of small submersible motors declined from the exceptionally strong third quarter of 2004, as last year, original equipment manufacturer (OEM) customers purchased ahead of our announced distribution strategy change.

Fueling system product sales worldwide during the third quarter were comparable to the same period in the prior year. During the third quarter Franklin Fueling Systems introduced its new electronic tank gauging and monitoring product (TS-5 SERIES) internationally. The new products will be introduced in the United States at the Petroleum Equipment Institute (PEI) trade show in November. We have received UL 971 Listing for our flexible piping in the quarter. We are the only flexible pipe supplier that has received this UL 971 Listing.

Franklin Electric is a global leader in the production and marketing of groundwater and fuel pumping systems and is a technical leader in submersible motors, drives, controls, and monitoring devices.

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