Franklin with Record Sales in Q2

Second quarter sales were a record $162.7 million, an increase of $39.1 million or 32 percent for the same quarter of 2005. Sales growth from acquisitions was approximately $26.2 million during the second quarter of which the acquisition of the Little Giant Pump Company was $25.4 million. The record sales were also driven by solid demand for Water Systems products largely from North American distributors. Western Hemisphere submersible motor sales, coming off unusually strong sales growth in the first quarter of 2006, were flat to prior year in the second quarter. However, Franklin continues to believe a portion of the Western Hemisphere submersible motor sales growth during the first half of 2006 may be attributable to submersible motor inventory increases by pump OEM’s (original equipment manufacturers) purchasing additional quantities as a hedge against future supply uncertainties resulting from Franklin’s distribution strategy change and other changes in the marketplace. Franklin’s Water Systems pump sales continued growing rapidly with unit volume increasing by over 75 percent in second quarter 2006 versus 2005. Franklin Fueling Systems product sales were also up about 40 percent from the prior year second quarter. Net sales for the European and African regions were down about 8 percent in the second quarter of 2006 compared to last year as business continues to reflect soft market conditions.

For second quarter 2006, operating earnings were $26.1 million, up $5.2 million or 25 percent compared to $20.9 million a year ago. The improvement in operating earnings was driven by the record sales level. Gross profit, although up in dollars, is down 50 basis points due primarily to raw material cost increases, led by copper, and other operating costs. Copper wire, a significant component used in the manufacture of electric motors, has experienced cost increases of more than 50 percent since the first quarter. The rise in copper and other raw materials has necessitated a market price increase action which has been announced to be effective in the third quarter. Selling and administrative expenses increased primarily due to the inclusion of Little Giant expenses since the April 21, 2006 closing of the transaction.

Scott Trumbull, Chairman and Chief Executive Officer, stated “We are pleased with the strong sales growth that our pump and control systems products achieved during the second quarter. Together, these products represented about 40 percent of total revenue for the second quarter of 2006 and grew by more than 25 percent versus their sales on a pro-forma basis adjusting for the Little Giant acquisition in the prior year. This strong growth of our pump and control systems products coupled with the ongoing manufacturing migration to low cost regions, enabled us to increase earnings in spite of flat submersible motor sales and the rapid escalation in raw material costs.

The Little Giant business integration activities are proceeding as planned. This acquisition will further solidify our position as a leading global supplier of water pumping equipment for residential and light commercial applications. Also, while the Company incurred $70 million of debt on April 21, 2006 to complete the Little Giant acquisition, we have generated sufficient cash flow to pay down $20 million of this amount as of the date of this press release.”