SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 27, 2004
---------------
FRANKLIN ELECTRIC CO., INC.
---------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INDIANA 0-362 35-0827455
------- ----- ----------
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.)
400 EAST SPRING STREET
BLUFFTON, INDIANA 46714
----------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(260) 824-2900
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Page 1 of 5
2
Item 8.01 Other Events.
------------------------
On August 27, 2004, Franklin Electric Co., Inc. announced that it will begin
selling its submersible motor products in North America directly to water
systems distributors in addition to its existing original equipment
manufacturer (OEM) customers. The Company also announced that it had entered
into a definitive agreement to acquire the assets of JBD, Inc, the former
Jacuzzi Brand pump company, based in Little Rock, Arkansas.
A copy of the press release issued by the Company in connection with these
announcements is filed as Exhibit 99 to this report and is incorporated
herein by reference.
Item 9.01 Financial Statements and Exhibits
-------------------------------------------
c) Exhibits
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANKLIN ELECTRIC CO., INC.
---------------------------
(Registrant)
Date August 27, 2004 By /s/ Gregg C. Sengstack
--------------- ----------------------
Gregg C. Sengstack, Senior Vice
President, Chief Financial
Officer and Secretary (Principal
Financial and Accounting Officer)
3
Exhibit 99 August 27, 2004 Press Release
Press Release
-------------
For Immediate Release For Further Information
Refer to: Gregg C. Sengstack
260-824-2900
FRANKLIN ELECTRIC CHANGES ITS
NORTH AMERICAN WATER SYSTEMS DISTRIBUTION STRATEGY
AND AGREES TO ACQUIRE JBD, INC.
BLUFFTON, INDIANA - AUGUST 27, 2004 -- Franklin Electric Co., Inc.
(NASDAQ:FELE), the world's largest manufacturer of submersible electric
motors and controls, today announced that it will begin selling its
submersible motor products in North America directly to water systems
distributors in addition to its existing original equipment manufacturer
(OEM) customers. The Company also announced that it had entered into a
definitive agreement to acquire the assets of JBD, Inc., the former Jacuzzi
Brand pump company, based in Little Rock, Arkansas.
The Company plans to sell its submersible motor products in North America
directly to Water Systems Distributors beginning November 2004. The Company
believes that this change to its distribution channel will result in lower
costs, lower investment in inventories and quicker delivery for its
distributors.
R. Scott Trumbull, Chairman and Chief Executive Officer of the Company,
stated "These changes are significant for us and for our customers and
represent our efforts to respond to the changing market conditions in the
submersible water systems industry. In recent years market conditions have
changed; there has been a significant consolidation of industry players at
both the submersible pump OEM and distributor levels. In light of these
conditions, we believe that changes to our Water Systems Distribution Channel
to allow for direct sales to distributors are necessary, appropriate and in
the best interests of Franklin and the industry we serve."
"Our prices to distribution (through both OEMs and distributors) will be set
at a level modestly above that needed to recover our additional marketing and
selling costs on an ongoing basis. It is our expectation that there will be
little impact to our 2004 profitability, after considering the start-up costs
of this endeavor. For 2005, we expect our operating margins to expand
modestly."
4
As to the Company's proposed acquisition of JBD, Inc., Mr. Trumbull
commented, "As we discussed our direct sales plan with our major
distributors, they encouraged us to consider acquiring a pump product line in
addition to selling our motors directly to them. These distributors pointed
out that JBD, Inc. has a reputation for excellent quality and hydraulics
technology. As a long time supplier to JBD, we were already aware that it
has a seasoned management team and operates out of a well-maintained 250,000
sq. ft. facility in Little Rock, Arkansas. During due diligence we confirmed
the overall quality of JBD's pump product lines and found that JBD's
manufacturing capacity could be significantly expanded with only incremental
investment. We believe that with Franklin's global purchasing reach we can
reduce JBD's manufacturing costs, and that with Franklin's manufacturing,
technical and logistics support we can improve quality and availability as
well. We are confident that we will be able to significantly increase JBD's
current annual sales rate of about $30 million."
The Company expects to close the JBD acquisition within the next thirty days.
The total consideration for the transaction was not disclosed; however, the
Company will pay for this acquisition out of cash on hand. While the Company
expects the acquisition to be immediately accretive to earnings, given the
relatively modest size of the transaction, the Company expects that the
accretion in 2004 will be approximately one cent per share.
Commenting on the relationship between the Company's distribution channel
change and its acquisition of JBD, Mr. Trumbull stated, "We believe our
acquisition of JBD will enhance our plans for selling motors directly to
distributors. We also believe that it may open the door to new longer term
growth opportunities for Franklin. It should enable us to approach our core
global water well market from a total systems perspective. We now can
combine our world leading submersible scale and technology with hydraulics
skills to produce superior products to help meet the world's growing need for
water."
"We believe we are uniquely positioned to attack this global market
opportunity. We are the world leader in submersible electric motor
technology. We are also the world leader in submersible motor drives and
control technology, and with the addition of JBD's management team and other
technical resources, we will have world-class hydraulics skills as well. We
intend to fully integrate our technical and product design expertise in these
three areas to develop continuously improving, highly reliable, cost-
effective submersible water pumping systems for the global market. These
changes have the potential to improve our profitability and prospects for
growth going forward by increasing both our product line and our customer
base."
Additional Information on Company Website
-----------------------------------------
The Company has provided a pre-recorded message from its Chief Executive
Officer and Chief Financial Officer, offering additional information
regarding these changes. This message can be reached directly by using the
following link. http://www.vcall.com/CEPage.asp?ID=89115. You can also find
this link on the Company's website www.fele.com. This message will be
available through September 6, 2004.
5
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.
########
"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.