Franklin Electric form 10-K 2004

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Franklin Electric form 10-K 2004 Powered By Docstoc
					                 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549
                                       FORM 10-K
                                  ____________________

                     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934
                            For the fiscal year ended January 1, 2005

                                                      OR

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934
                           For the transition period from to _____

                                       Commission file number 0-362

                                FRANKLIN ELECTRIC CO., INC.
                           (Exact name of registrant as specified in its charter)

                     Indiana                                                  35-0827455
 (State or other jurisdiction of incorporation or                 (I.R.S. Employer Identification No.)
                  organization)

            400 East Spring Street
               Bluffton, Indiana                                               46714-3798
     (Address of principal executive offices)                                  (Zip Code)

                                              (260) 824-2900
                          (Registrant's telephone number, including area code)

                        Securities registered pursuant to Section 12(b) of the Act:
                        None                                                  None
                (Title of each class)                      (Name of each exchange on which registered)
                        Securities registered pursuant to Section 12(g) of the Act:
                                      Common Stock, $.10 par value
                                            (Title of each class)

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 (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                        YES                                                      NO 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-
2)
                           YES                                                NO 

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant at July
3, 2004 (the last business day of the registrant’s most recently completed second quarter) was
$804,461,906. The stock price used in this computation was the last sales price on that date.

                     Number of shares of common stock outstanding at January 28, 2005:

                                               22,041,332 shares

                                                  Page 1 of 70




DOCUMENTS INCORPORATED BY REFERENCE

A portion of the Proxy Statement for the Annual Meeting of Shareholders to be held on April 29, 2005
(Part III).


                                                       -2-




                                            TABLE OF CONTENTS
Part I                                                                                           Page

          Item 1.   Business                                                                      4-5
          Item 2.   Properties                                                                      6
          Item 3.   Legal Proceedings                                                             6-7
          Item 4.   Submission of Matters to a Vote of Security Holders                             7
                    Supplemental Item - Executive Officers of the Registrant                        7

Part II

          Item 5.  Market for Registrant's Common Equity, Related Stockholder                       8
                   Matters, and Issuer Repurchases of Equity Securities
          Item 6. Selected Financial Data                                                           9
          Item 7. Management's Discussion and Analysis of Financial Condition and               10-15
                   Results of Operations
          Item 7A. Quantitative and Qualitative Disclosures About Market Risk                      15
          Item 8. Financial Statements and Supplementary Data                                   16-36
          Item 9. Changes in and Disagreements with Accountants on Accounting                      37
                   and Financial Disclosure
          Item 9A. Controls and Procedures                                                         37
          Item 9B. Other Information                                                               37

Part III
      Item 10. Directors and Executive Officers of the Registrant                                 38
      Item 11. Executive Compensation                                                             38
      Item 12. Security Ownership of Certain Beneficial Owners and
               Management, and Related Stockholder Matters                                        38
      Item 13. Certain Relationships and Related Transactions                                     38
      Item 14. Principal Accountant Fees and Services                                             38

Part IV

      Item 15. Exhibits and Financial Statement Schedules                                         39
Signatures                                                                                        40
Exhibit Index                                                                                  41-42

                                                    -3-



                                                  PART I

ITEM 1. BUSINESS

Franklin Electric Co., Inc. is an Indiana corporation founded in 1944 and incorporated in 1946 that,
together with its subsidiaries, conducts business in a single reportable segment: the design, manufacture
and distribution of groundwater and fuel pumping systems, electronic controls and related parts and
equipment. Except where the content otherwise requires, “Franklin Electric” or the “Company” shall refer
to Franklin Electric Co., Inc. and its consolidated subsidiaries.

Description of Business

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. The
Company 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. The Company acquired pump products for water system applications
via the acquisition of certain assets of JBD, Inc., (the former Jacuzzi brand pump company), during 2004.

Franklin Electric’s motors and pumps are used principally in submersible applications for pumping fresh
water, fuel, wastewater and other liquids in a variety of applications including residential, industrial,
agriculture, fueling, off-shore drilling, and mining. The Company also manufactures industrial electric
motors which are used in a wide variety of applications including gasoline dispensers, paint handling
equipment, electric hoists, explosion-proof vapor exhaust fans, vacuum pumping systems, food preparation
equipment, as well as commercial and industrial water, fuel and other liquid pumping systems. Franklin
Electric also manufactures electronic drives and controls for the motors which control functionality and
provide protection from various hazards, such as electric surges, over-heating or dry wells and tanks. Along
with the fueling motor and pump applications, the Company supplies a variety of products to the petroleum
equipment industry included with the submersible pumping systems, such as flexible piping, electronic tank
monitoring equipment, fittings, and vapor recovery systems.

The Company’s products are sold in the United States, Europe, South Africa, Australia, Mexico, Japan,
China and other world markets. The Company’s products are sold through the Company’s sales force,
independent distributors and repair shops.

The market for the Company’s products is highly competitive and includes both large and small suppliers.
The Company’s submersible water, fueling and industrial motor products and related equipment are sold to
original equipment manufacturers of pumps and specialty water systems distributors as well as industrial
equipment distributors, major oil and utility companies.

ITT Industries, Inc. and its various subsidiaries and affiliates, accounted for 19.2 percent, 18.0 percent and
18.2 percent of the Company’s consolidated sales in 2004, 2003, and 2002, respectively. Pentair
Corporation and its various subsidiaries and affiliates, accounted for 20.7 percent of the Company’s
consolidated sales in 2004. Sta-Rite Industries, Inc., formerly a subsidiary of Wisconsin Energy
Corporation, accounted for 13.6 percent and 11.5 percent of the Company’s consolidated sales in 2003 and
2002, respectively. Sta-Rite Industries, Inc. was acquired by Pentair Corporation during 2004 and its sales
have been included with Pentair’s sales for 2004.

The Company offers normal and customary trade terms to its customers, no significant part of which is of
an extended nature. Special inventory requirements are not necessary, and customer merchandise return
rights do not extend beyond normal warranty provisions.

The principal raw materials used in the manufacture of the Company’s products are steel in coils and bars,
stainless steel, copper wire, and aluminum ingot. Major components are capacitors, motor protectors,
forgings, gray iron castings and bearings. Most of these raw materials are available from many sources in
the United States and world markets. In the opinion of management, no single source of supply is critical to
the Company's business. Availability of fuel and energy is adequate to satisfy current and projected overall
operations unless interrupted by government direction or allocation.

The Company employed approximately 2,600 persons at the end of 2004.

                                                     -4-




Segment and Geographic Information

Segment and geographic information is included within this Form 10-K on pages 32-33.

Research and Development

The Company spent approximately $5.4 million in 2004, $6.0 million in 2003, and $6.0 million in 2002 on
activities related to the development of new products, on improvements of existing products and
manufacturing methods, and on other applied research and development.

In 2004, the Company began production in Europe of a newly designed six-inch water systems motor,
continued development of a more corrosion resistant four-inch submersible motor, expanded the line of
variable speed constant pressure motor systems for residential applications, developed a new three phase
control panel for submersible electric motors and began testing an integrated fuel management system for
the petroleum equipment industry. The Company continued development of and expanded the
HydroDuty™ motor products which are based on its submersible electric motor technology for use
primarily in food processing applications where electric motors must withstand repeated wash-downs for
sanitation and other reasons. Research continued on new materials and processes designed to achieve
higher quality and more cost-effective construction of the Company’s high volume products.

The Company owns a number of patents, trademarks and licenses. In aggregate, these patents are of
material importance in the operation of the business; however, the Company believes that its operations are
not dependent on any single patent or group of patents.

Backlog
The dollar amount of backlog at the end of 2004 and 2003 was as follows:

                                                                                        (In millions)
                                                                                     2004           2003
Backlog                                                                          $       19.3 $         14.1

The backlog is composed of written orders at prices adjustable on a price-at-the-time-of-shipment basis for
products, primarily standard catalog items. All backlog orders are expected to be filled in fiscal 2005. The
Company's sales in the first quarter are generally less than the sales of other quarters due to generally lower
construction activity during that period in the northern hemisphere. Beyond that, there is no seasonal
pattern to the backlog and the backlog has not proven to be a significant indicator of future sales.

Environmental Matters

The Company believes that it is in compliance with all applicable federal, state and local laws concerning
the discharge of material into the environment, or otherwise relating to the protection of the environment.
The Company has not experienced any material costs in connection with environmental compliance, and
does not believe that such compliance will have any material adverse effect upon the financial position,
capital expenditures, earnings or competitive position of the Company.

Available Information

The Company’s website address is http://www.franklin-electric.com. The Company makes available free of
charge on or through its website; its annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after such
material is electronically filed with or furnished to the Securities and Exchange Commission.


                                                      -5-




ITEM 2. PROPERTIES

The Company maintains its principal executive offices in Bluffton, Indiana; manufacturing plants are
located in the United States and abroad. Location and approximate square footage for the Company's
principal facilities are described below. All principal properties are owned or held under operating leases.

The Company's principal properties are as follows:


Location                                              Acres of Land            Approximate Square Feet

Berzo Demo, Italy (1)                                          -                      23,000
Bluffton, Indiana                                           35.8                     406,000
Brno, Czech Republic                                         2.3                      79,000
Gas City (Grant County), Indiana                             9.0                      24,000
Linares, Mexico                                             10.0                     150,000
Little Rock, Arkansas (1)                                      -                     252,000
Madison, Wisconsin (1)                                         -                      92,000
Motta di Livenza, Italy (2)                                  5.0                      39,000
Muskegon, Michigan (2)                                       11.5                    112,000
Saco, Maine (1)                                                 -                     17,000
Siloam Springs, Arkansas                                     32.6                    240,000
Suzhou, China                                                 4.9                     51,000
Wilburton, Oklahoma                                          30.0                    327,000
Wittlich, Rhineland, Germany                                  6.9                    102,000
Ten facilities, each with less than 25,000 square             1.7                     75,000
feet (3)

Total                                                       149.7                  1,989,000


In the Company’s opinion, its facilities are suitable for their intended use, adequate for the Company’s
business needs and in good condition.

         (1) Leased facility.
         (2) In conjunction with the global manufacturing re-alignment program these facilities have been
         converted from manufacturing to warehousing and may be sold or leased in the future.
         (3) Nine of the facilities are leased and in the aggregate have approximately 54,000 square feet.

ITEM 3. LEGAL PROCEEDINGS

In July-August 2004, Franklin informed its original equipment manufacturer (“OEM”) submersible motor
customers that it intended to change its pricing and warranty programs for submersible motors, controls,
accessories and parts. On August 27, 2004, Franklin issued a press release announcing that it intended to
begin selling its submersible motor products directly to water systems distributors in North America, in
addition to its existing OEM customers.

In response to these announcements, on August 27, 2004, ITT Water Technology, Inc. (“ITT”) filed suit
against Franklin in the U.S. District Court for the Eastern District of Texas. ITT filed an amended
complaint in the same court on October 25, 2004. ITT’s amended complaint alleged that, for 4-inch
submersible motors, the announced changes to Franklin’s pricing and warranty programs and the changes
to its submersible motor distribution strategy breached contracts between ITT and Franklin and violated
state and federal unfair competition and antitrust laws. In addition, the ITT suit alleged that certain Franklin
motor product line acquisitions over the seven-year period ending in 1998 violated Section 7 of the Clayton
Act. ITT also asserted certain common law claims. The ITT suit sought damages and injunctive relief. On
December 27, 2004 the Company issued a press release announcing that the suit had been settled. Under
terms of the settlement agreement, Franklin agreed, for the period through December 31, 2006, to continue
supplying 4-inch submersible motors to ITT. The settlement agreement contains no limitation on the sale of
any other Franklin products to distributors, including assembled pump motor units sold through its newly
acquired Franklin Pump Systems business unit. The ITT lawsuit has been dismissed with prejudice in
accordance with the terms of the Settlement Agreement.

                                                      -6-




The Company is also defending various other claims and legal actions, including environmental matters,
which have arisen in the ordinary course of business. In the opinion of management, based on current
knowledge of the facts and 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 or cash flows
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages and all positions and offices held by the executive officers of the Company are:


         Name              Age     Positions and Offices                             In This Office Since

R. Scott Trumbull           56     Chairman of the Board and Chief Executive                 2003
                                   Officer
Jess B. Ford                53     Senior Vice President                                     1999
Peter C. Maske              54     Senior Vice President and President of Europa             1999
Gregg C. Sengstack          46     Senior Vice President, Chief Financial Officer,           1999
                                   and Secretary
Donald R. Hobbs             63     Vice President, Submersible Motor Marketing               1996
Thomas A. Miller            55     Vice President, Electronic Technology                     1998
Kirk M. Nevins              61     Vice President, Sales                                     1995
Robert J. Stone             40     Vice President, Submersible Engineering, Sales            2003
                                   and Marketing
Daniel J. Crose             56     Vice President, North American Submersible                2003
                                   Operations
Gary D. Ward                49     Vice President, Human Resources                           2004

All executive officers are elected annually by the Board of Directors at the Board meeting held in
conjunction with the annual statutory meeting of shareowners. Thereafter they are elected for one-year
terms or until their successors have been elected. All executive officers have been in executive or
management positions of Franklin Electric for the last five years with the exception of R. Scott Trumbull
and Daniel J. Crose. R Scott Trumbull has been a Director of Franklin for the last five years and was
Executive Vice President and Chief Financial Officer of Owens-Illinois, Inc. prior to joining Franklin
Electric as Chairman of the Board and Chief Executive Officer in 2003. Daniel J. Crose was Senior Vice
President of Operations at Hamilton Beach/Proctor Silex, Inc. prior to joining Franklin Electric in 2001.

                                                    -7-




                                                 PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER REPURCHASES OF EQUITY SECURITIES

The number of shareowners of record as of January 28, 2005 was 966. The Company's stock is traded on
Nasdaq National Market: Symbol FELE.

All share and per share data included in this Form 10-K reflect the Company’s two-for-one stock split
effected in the form of a 100 percent stock distribution made on June 15, 2004. Dividends paid and the
price range per common share as quoted by the Nasdaq National Market for 2004 and 2003 were as
follows:
              DIVIDENDS PER SHARE                                             PRICE PER SHARE
                              2004                   2003                  2004               2003
                                                                   Low              High          Low      High
1st Quarter                       $        .07   $     .065    $    29.005      $    34.160   $   23.500   $   29.070
2nd Quarter                       $        .08   $       .07   $    29.060      $    40.250   $   22.995   $   29.975
3rd Quarter                       $        .08   $       .07   $    35.000      $    43.000   $   25.715   $   32.000
4th Quarter                       $        .08   $       .07   $    36.080      $    43.480   $   27.670   $   32.800




The Company did not repurchase any shares of its stock in the fourth quarter of 2004. The maximum
number of shares that may yet be purchased under the Company’s repurchase program is 827,412.

                                                        -8-




ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with our consolidated financial
statements. The information set forth below is not necessarily indicative of future operations.


FIVE YEAR FINANCIAL SUMMARY

FRANKLIN ELECTRIC CO., INC.
(In thousands, except per share amounts)
                                                        2004             2003         2002        2001          2000
                                                         (a)                           (b)                       (c)
Operations:
    Net sales                                    $ 404,305 $ 359,502 $ 354,872 $322,908 $ 325,731
    Gross profit                                   130,185   111,001   104,498   92,871    85,186
    Interest expense                                   488     1,107     1,317    1,193     1,111
    Income taxes                                    20,951    16,847    18,273   16,235    13,683
    Net Income                                      38,083    34,480    32,204   27,150    22,226
    Depreciation and amortization                   15,143    13,748    12,878   12,660    10,839
    Capital expenditures                            21,110    15,261    15,568    6,709    14,108
Balance sheet:
    Working capital (d)                            111,697    82,640    62,762   69,158                     54,897
    Property, plant and equipment, net              95,924    83,916    76,033   58,839                     64,604
    Total assets                                   333,473   281,971   258,583 195,643                     197,179
    Long-term debt                                  13,752    14,960    25,946   14,465                     15,874
    Shareowners’ equity                          $ 234,333 $ 192,938 $ 153,138 $123,269 $                  115,998
Other data:
     % Net income to sales                     9.4%               9.6%         9.1%        8.4%         6.8%
     % Net income to total average assets     12.4%              12.8%        14.2%       13.8%        11.9%
     Current ratio (e)                         3.1                2.8          2.2         2.7          2.2
     Number of common shares outstanding    22,041             21,828       21,648      21,336       22,016
Per share:
     Market price range
     High                                 $ 43.48 $              32.80 $      30.27 $ 21.32 $         18.25
     Low                                     29.01               23.00        19.95   16.00           13.06
     Net income per weighted-average
     common share                             1.73                1.59         1.48        1.25         1.02
     Net income per weighted-average
     common share, assuming dilution          1.65                1.52         1.42        1.19          .98
     Book value (f)                          10.17                8.53         6.74        5.42         5.10
     Cash dividends on common stock       $   0.31 $              0.27 $       0.26 $      0.24 $       0.22

(a) Includes the results of operations of the Company’s wholly-owned subsidiary, Franklin Pump Systems,
since the acquisition of certain assets of JBD, Inc. on October 2, 2004.
(b) Includes the results of operations of the Company’s wholly-owned subsidiaries, Coverco S.r.l. and
Intelligent Controls, Inc., since their acquisition on January 7, 2002 and July 16, 2002, respectively.
(c) Includes the results of operations of the Company’s wholly-owned subsidiaries, EBW, Inc. and
Advanced Polymer Technology, Inc., since their acquisition on August 31, 2000.
(d) Working capital = Current assets minus Current liabilities
(e) Current ratio = Current assets divided by Current liabilities
(f) Book value = Shareowners equity divided by Weighted average common shares assuming full dilution




                                                     -9-



ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

Sales and earnings for 2004 were up from 2003. The increase in sales was primarily due to volume
increases across North American and International markets for water systems and fueling systems products.
Sales improvements were also attributable to the impact of foreign exchange rate changes and the
acquisition of certain assets of JBD, Inc. (the former Jacuzzi Brand pump company). However, some of the
strength in sales in North America water systems came from our original equipment manufacturer
customers buying ahead of an announced price increase. The price increase was necessitated by increases
in the cost of our raw materials, particularly steel and copper. Earnings improved in 2004 primarily due to
the increased sales. Increased earnings were partially offset by increased commodity prices and costs
associated with the Company’s global manufacturing realignment program. Included in the results for 2004
are restructuring expenses of $5.5 million pre-tax.

RESULTS OF OPERATIONS

Net sales for 2004 were $404.3 million, an increase of $44.8 million or 12 percent compared to 2003 sales
of $359.5 million. Foreign currencies, particularly the euro, strengthened relative to the U.S. dollar during
2004. The impact of this change in exchange rates was a $10.2 million or 3 percent increase in the
Company’s reported 2004 sales. Excluding the impact of changes in foreign currencies, net sales increased
$34.6 million or about 9 percent. The sales volume increase for water related products by primarily
customers in the North American market accounted for about $12.4 million or 3 percent, of the 2004. The
sales increase by European customers was about $5.4 million for 2004 (when comparing both years at the
current year exchange rate). The sales volume increase relates primarily to increased sales of small
submersible motor products worldwide, including electronic drives and controls to North American
customers. Price increases, which were necessary due to significant increased costs for certain commodities
used in the manufacture of the electric motors, primarily steel and copper, were $10.9 million for 2004 or 3
percent of the 2004 increase in sales revenue. Sales related to the acquisition of the assets of JBD, Inc. were
$5.7 million. Sales of fueling systems motors and related products increased about $3.1 million during
2004 compared to 2003. Sales of fueling systems motors and related products have increased primarily due
to increased demand from service station equipment suppliers for submersible motors and monitoring
equipment.

Net sales for 2003 were $359.5 million, a 1 percent increase from 2002 net sales of $354.9 million. Foreign
currencies, particularly the euro and the Rand, strengthened relative to the U.S. dollar during 2003. The
impact of the changes in exchange rates was a $15.9 million increase in the Company’s reported 2003
sales. Net sales also increased due to full year sales related to the INCON acquisition in mid-2002, an
increase of $4.7 million. Excluding the impact of changes in foreign currencies and the full year impact of
the 2002 acquisition, net sales decreased $16.0 million or 5%. The sales decrease of $16.0 million relates
primarily to decreased demand for submersible water products to North American customers of about $8.5
million and lower demand by European customers of about $8.8 million (when comparing both years at the
current year exchange rate).

Cost of sales as a percent of net sales for 2004, 2003 and 2002 was 67.8 percent, 69.1 percent and 70.6
percent, respectively. Cost of sales as a percent of net sales decreased in 2004 from 2003 primarily as a
result of increased sales volume leveraging fixed costs and improving the profit margin. Gross profit was
further improved by increases in selling prices. Cost increases for certain commodities, used in the
manufacture of the electric motors primarily steel and copper, were $9.3 million for 2004. Cost of sales as a
percent of net sales decreased in 2003 from 2002 primarily as a result of improved productivity which
lowered labor and overhead costs by about 0.7 percent of net sales, changes in product mix from small
motors used primarily in residential water-well applications, to larger motors used primarily in agricultural
applications and fueling systems products which decreased labor and overhead costs by about 0.5 percent
and quality improvements which reduced warranty costs by about 0.4 percent of net sales.

                                                     - 10 -




Selling and administrative (“SG&A”) expense as a percent of net sales for 2004, 2003 and 2002 was 16.0
percent, 16.5 percent and 15.4 percent, respectively. SG&A costs increased about $5.5 million in 2004 over
2003 partially due to the effect of changes in the foreign exchange rate of $1.0 million. The Company
further incurred expenses of about $1.0 million related to the announced change in distribution channels.
The Company also has incurred additional SG&A costs related to the continued growth of new electronic
products related to submersible motors; higher commissions related to the increased sales; general
insurance cost increases; and costs of internal control compliance procedures associated with the Sarbanes-
Oxley Act. The increase of SG&A expenses in 2003 over 2002 was primarily due to the effect of changes
in the foreign exchange rate, $1.4 million, and costs incurred for tax planning activities, $1.2 million. The
Company also recognized full year SG&A costs related to the INCON acquisition, a $1.1 million year over
year increase, and has incurred additional SG&A costs for its new plant in Mexico and the launch of new
electronic products related to submersible motors.

Restructuring expenses of $5.5 million pre-tax were incurred during 2004. The expenses during 2004
(included in “Restructuring Expense” on the income statement) related to the global manufacturing
realignment program. The costs were primarily for severance, training, equipment transfers, travel, and
employee relocations. The Company has completed the consolidation of FE Petro, EBW and APT
operations into a new state-of-the-art manufacturing and distribution facility in Madison, Wisconsin. The
ramp-up of our Linares, Mexico motor manufacturing facility continues on schedule and on budget. The
consolidation of our Motta di Livenza, Italy factory into our existing Wittlich, Germany and expanding
Brno, Czech Republic factories has been completed. The Company will incur additional expenses related to
the realignment program throughout 2005, such as costs to transfer equipment and other related expenses.
The global manufacturing realignment program is estimated to cost in total $10.0 million from its inception
in 2003 and is expected to be substantially complete by the end of 2005.

Interest expense for 2004, 2003 and 2002 was $0.5 million, $1.1 million and $1.3 million, respectively.
Interest expense decreased in 2004 and 2003 due primarily to lower outstanding debt.

Included in other income for 2004, 2003 and 2002 was interest income of $0.5 million, $0.4 million and
$0.5 million, respectively, primarily derived from the investment of cash balances in short-term U.S.
treasury and agency securities.

Foreign currency-based transactions produced a loss for 2004 of $0.5 million. The foreign currency-based
transaction loss in 2004 was due primarily to the euro rate changes relative to other currencies in Europe. A
gain was realized for 2003 and 2002 of $0.3 million and $1.4 million, respectively. The foreign currency-
based transaction gain was due primarily to the strengthening euro relative to the U.S. dollar during most of
2003 and 2002.

The provision for income taxes in 2004, 2003 and 2002 was $21.0 million, $16.8 million and $18.3 million,
respectively. The effective tax rates were 35.5, 32.8 and 36.2 percent for 2004, 2003 and 2002,
respectively. The lower rate of 32.8 percent for 2003 was down from the 2004 and the 2002 rates as a result
of prior years’ tax credits realized in 2003. The tax credits resulted from tax planning activities performed
in 2002 and 2003 in the areas of foreign income exclusion and R&D credits. The effective tax rate differs
from the United States statutory rate of 35 percent, due to the foreign income exclusion and R&D credits
and due to the effects of state and foreign income taxes, net of federal tax benefits.

Net income for 2004 was $38.1 million, or $1.65 per diluted share, compared to 2003 net income of $34.5
million, or $1.52 per diluted share. Net income for 2002 was $32.2 million, or $1.42 per diluted share. All
share and per share data reflects the Company’s two-for-one stock split effected in the form of a 100
percent stock distribution made on June 15, 2004.


CAPITAL RESOURCES AND LIQUIDITY

Cash flows from operations provide the principal source of current liquidity. Net cash flows provided by
operating activities were $57.5 million, $47.0 million and $54.6 million in 2004, 2003 and 2002,
respectively. The primary source of cash from operations was earnings. Significant uses of operating cash
flow in 2004 and 2003 were related to increases in inventory, $1.2 and $2.1 million, respectively and
payments to employee benefit plans, $4.0 million both years.

                                                    - 11 -




Net cash flows used in investing activities were $30.4 million, $15.5 million and $57.2 million in 2004,
2003 and 2002, respectively. The primary uses of cash for investing activities in 2004 were additions to
property plant and equipment. Other uses of cash in 2004 were for the acquisition of certain assets of JBD,
Inc. for $9.3 million. The primary uses of cash in 2003 were additions to property plant and equipment. The
primary uses of cash in 2002 were for the acquisitions of Coverco and INCON. The Company paid an
aggregate of $30.3 million for these two acquisitions, net of cash acquired.
Net cash flows used in financing activities were $7.1 million and $24.0 million in 2004 and 2003,
respectively. Financing activities in 2002 generated $0.5 million cash flow. The Company paid $6.8
million, $5.9 million and $5.5 million in dividends on the Company’s common stock in 2004, 2003 and
2002, respectively. Another principal use of cash was purchases of Company common stock under the
Company’s repurchase program. During 2004, 2003 and 2002, the Company repurchased, or received as
consideration for stock options exercised, 124,112 shares of its common stock for $3.8 million, 567,126 for
$14.8 million and 446,998 for $10.5 million, respectively. The primary use of cash in 2003 was the
repayment of long term debt, $19.9 million.

Cash and cash equivalents at the end of 2004 were $50.6 million compared to $30.0 million at the end of
2003, and $20.1 million at the end of 2002. Working capital increased $29.1 million in 2004 and the
current ratio of the Company was 3.1 for 2004 compared to a current ratio of 2.8 and 2.2 at the end of 2003
and 2002, respectively.

Principal payments of $1.0 million per year on the Company’s $20.0 million of unsecured long-term debt
began in 1998 and will continue until 2008 when a balloon payment of $10.0 million will fully retire the
debt. In September 2004, the Company entered into an unsecured, 60-month $80.0 million revolving credit
agreement (the “Agreement”). The Agreement includes a facility fee of one-tenth of one percent on the
committed amount. The Company had no outstanding borrowings under the Agreement at January 1, 2005.
The Company is subject to certain financial covenants with respect to borrowings, interest coverage,
working capital, loans or advances, and investments. The Company was in compliance with all debt
covenants at all times in 2004, 2003 and 2002.

At January 1, 2005, the Company had $2.5 million of commitments primarily for the purchase of
machinery and equipment.

Management believes that internally generated funds and existing credit arrangements provide sufficient
liquidity to meet current commitments.

AGGREGATE CONTRACTUAL OBLIGATIONS
Most of the Company’s contractual obligations to make payments to third parties are debt obligations. In
addition, the Company has certain contractual obligations for future lease payments, as well as, purchase
obligations. The payment schedule for these contractual obligations is as follows:

(In millions)
                                                                                                    More
                                                             Less Than                              Than
                                                    Total     1 Year 2-3 Years 4-5 Years           5 Years
Debt                                            $       13.3 $      1.0 $       2.0 $     10.3 $          -
Capital leases                                           1.8        0.3         0.6        0.9            -
Operating leases                                        10.5        3.0         3.0        1.9          2.6
Purchase Obligations                                     2.5        2.5           -          -            -
                                                $       28.1 $      6.8 $       5.6 $     13.1 $        2.6

Note: The Company also has pension and other post-retirement benefit obligations not included in the
above table which will result in future payments.

                                                    - 12 -
ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standards (“SFAS”) No. 151, “Inventory Costs”, an amendment of ARB No. 43, Chapter 4.
The amendments made by SFAS No. 151 clarify that abnormal amounts of idle facility expense, freight,
handling costs and wasted materials (spoilage) should be recognized as current-period charges and require
the allocation of fixed production overheads to inventory based on the normal capacity of the production
facilities. The pronouncement is effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning
after November 23, 2004. The Company currently recognizes, as period costs, any abnormal amounts of
idle facility expense, freight, handling costs and wasted materials and allocates fixed production overhead
to inventory based on the normal capacity of the production facilities. The adoption of this pronouncement
will not have a significant impact on the Company’s results of operations or financial position. The
Company will adopt this pronouncement for fiscal 2005.

On December 16, 2004, the FASB issued SFAS No. 123(R) “Share-Based Payment”, that requires
compensation costs related to share-based payment transactions recognized in the financial statements.
With minor exceptions, the amounts of compensation costs will be measured based on the grant-date fair
value of the equity or liability instruments issued, over the period that the employee provides service in
exchange for the award. In addition liability awards will be re-measured each reporting period. This
pronouncement is effective as of the first interim or annual reporting period that begins after June 15, 2005.
The impact on the Company’s results of operations or financial position as of the adoption of this
pronouncement is not expected to be materially different from the pro-forma results included in note 1:
Stock-Based Compensation.

On December 21, 2004, the FASB issued “Application of FASB Statement No. 109, Accounting for Income
Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation
Act of 2004”, a FASB Staff Position (FSP) that provides guidance on the application of SFAS No. 109 to
the tax deduction on qualified production activities provided by the American Jobs Creation Act of 2004.
FSP FAS 109-1 states that the qualified production activities deduction should be accounted for as a special
deduction in accordance with SFAS No. 109, whereby the deduction is contingent upon the future
performance of specific activities, including wage levels. The FASB also concluded that the special
deductions should be considered with measuring deferred taxes and assessing a valuation allowance. The
impact on the Company’s results of operations or financial position of FSP FAS 109-1 has not yet been
determined.

On December 21, 2004, the FASB issued “Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of 2004”, a FSP that provides accounting
and disclosure guidance for the foreign earnings repatriation provision within the American Jobs Creation
Act of 2004. The Act provides special, one-time dividends received deduction on the repatriation of certain
foreign earnings to a U.S. taxpayer. FSP FAS 109-2 states that a company is allowed time beyond the
financial reporting period of enactment to evaluate the effect of the Act on its plan for reinvestment or
repatriation of foreign earnings, as it applies to the application of SFAS No. 109. The decision process to
build the plan may occur in stages, as an enterprise may separately evaluate the provisions of the Act. The
Company has not begun the evaluation process of the effects of the repatriation provision.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of its financial condition and results of operations are based upon
the Company’s 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.

                                                     - 13 -




Revenue Recognition:
Products are shipped utilizing common carriers direct to customers or, for consignment products, to
customer specified warehouse locations. Sales are recognized when the Company’s products are shipped
direct or transferred from a warehouse location to the customer, at which time transfer of ownership and
risk of loss pass to the customer. The Company reduces sales revenues for discounts based on past
experience. Differences may result in the amount of discounts if actual experience differs significantly from
management estimates; such differences have not historically been material.

Accounts Receivable:
Accounts receivable is comprised of balances due from customers net of estimated allowances for
uncollectible accounts. In determining allowances, historical trends are evaluated and economic conditions
and specific customer issues are reviewed to arrive at appropriate allowances. Allowance levels change as
customer-specific circumstances and the other analysis areas noted above change. Differences may result in
the amount for allowances if actual experience differs significantly from management estimates; such
differences have not historically been material.

Inventory Valuation:
The Company uses certain estimates and judgments to value inventory. Inventory is recorded at the lower
of cost or market. The Company reviews its inventories for excess or obsolete products or components.
Based on an analysis of historical usage and management’s evaluation of estimated future demand, market
conditions and alternative uses for possible excess or obsolete parts, reserves are recorded or changed.
Significant fluctuations in demand or changes in market conditions could impact management’s estimates
of necessary reserves. Excess and obsolete inventory is periodically disposed through sale to third parties,
scrapping or other means, and the reserves are appropriately reduced. Differences may result in the amount
for reserves if actual experience differs significantly from management estimates; such differences have not
historically been material.

Goodwill and other intangible assets:
Under the requirements of SFAS No. 142, “Goodwill and other Intangible Assets”, goodwill is no longer
amortized; however it is tested for impairment annually or more frequently whenever events or change in
circumstances indicate that the asset may be impaired. The Company performs impairment reviews for its
reporting unit using future cash flows based on management’s judgments and assumptions. An asset’s
value is impaired if our estimate of the aggregate future cash flows, undiscounted and without interest
charges, to be generated are less than the carrying amount of the reporting unit including goodwill. Such
cash flows consider factors such as expected future operating income and historical trends, as well as the
effects of demand and competition. To the extent impairment has occurred, the loss will be measured as the
excess of the carrying amount of the reporting unit including goodwill over the fair value. Such estimates
require the use of judgment and numerous subjective assumptions, which, if actual experience varies, could
result in material differences in the requirements for impairment charges.

Income taxes:
Under the requirements of SFAS No. 109, “Accounting for Income Taxes”, we record deferred tax assets
and liabilities for the future tax consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Management judgment is required in
determining the Company’s provision for income taxes, deferred tax assets and liabilities, which, if actual
experience varies, could result in material adjustments to deferred tax assets and liabilities.

Warranty obligations:
Warranty terms are generally two years from date of manufacture or one year from date of installation.
Warranty liability is recorded when revenue is recognized and is based on actual historical return rates from
the most recent warranty periods. While the Company’s warranty costs have historically been within its
calculated estimates, it is possible that future warranty costs could exceed those estimates.

Pension and employee benefit obligations:
With the assistance of actuaries and investment advisors the Company selects the discount rate to be used
to determine pension and post-retirement plan liabilities based on a review of Moody’s Aa bond ratings and
U.S Treasury rates. A change in the discount rate selected by the Company of 25 basis points would result
in a change of about $0.1 million of employee benefit expense. The Company consults with actuaries, asset
allocation consultants and investment advisors to determine the expected long term rate of return on plan
assets based on historical and projected rates of return on the types of assets in which the plans have
invested. A change in the long term rate of return selected by the Company of 25 basis points would result
in a change of about $0.3 million of employee benefit expense. See Note 3.

                                                    - 14 -




FACTORS THAT MAY AFFECT FUTURE RESULTS
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, changes in distribution channels, supply constraints,
technology factors, litigation, government and regulatory actions, the Company’s accounting policies,
future trends, and other risks, all as described in Exhibit 99.1 of this Form 10-K. These risks and
uncertainties may cause actual results to differ materially from those indicated by the forward-looking
statements. Any forward-looking statements included in this Form 10-K are based upon information
presently available. The Company does not assume any obligation to update any forward-looking
information.


ITEM 7A. 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 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. Additional information
regarding the use of an interest rate swap is included in Note 7 to the consolidated financial statements.

                                                    - 15 -



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                               CONSOLIDATED STATEMENTS OF INCOME

             FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

(In thousands, except per share amounts)                              2004             2003        2002

Net sales                                                      $    404,305 $        359,502 $   354,872
 Cost of sales                                                      274,120          248,501     250,374
Gross profit                                                        130,185          111,001     104,498
Selling and administrative expenses                                  64,867           59,365      54,637
Restructure expense                                                   5,536                -           -
Operating income                                                     59,782           51,636      49,861
Interest expense                                                       (488)          (1,107)     (1,317)
Other income                                                            219              532         567
Foreign exchange income (loss)                                         (479)             266       1,366
Income before income taxes                                           59,034           51,327      50,477
Income taxes                                                         20,951           16,847      18,273
Net income                                                     $     38,083 $         34,480 $    32,204


Per share data :
  Basic earnings per share                                     $        1.73 $          1.59 $      1.48
  Diluted earnings per share                                   $        1.65 $          1.52 $      1.42
  Dividends per common share                                   $         .31 $           .27 $       .26



                               See Notes to Consolidated Financial Statements.




                                                    - 16 -



                                  CONSOLIDATED BALANCE SHEETS

             FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

ASSETS
                                                                                       2004        2003
(In thousands)

Current assets:
 Cash and equivalents                                                            $    50,604 $    29,962
 Receivables (less allowances of $2,281 and $1,949, respectively)                     39,312      29,194
 Inventories:
    Raw materials                                                                     25,346      17,733
    Work-in-process                                                                     7,939       6,636
    Finished goods                                                                     44,912      40,686
    LIFO reserve                                                                      (15,755)    (10,402)
                                                                                       62,442      54,653

    Other current assets (including deferred income taxes of $10,391 and
    $9,672, respectively)                                                              13,784      14,232
       Total current assets                                                           166,142     128,041

Property, plant and equipment, at cost:
  Land and buildings                                                                   52,809      44,577
  Machinery and equipment                                                             163,968     147,368
                                                                                      216,777     191,945
    Less allowance for depreciation                                                   120,853     108,029
                                                                                       95,924      83,916



Deferred and other assets                                                              14,010      13,828
Goodwill                                                                               57,397      56,186
Total Assets                                                                      $   333,473 $   281,971



                                See Notes to Consolidated Financial Statements.

                                                     - 17 -




LIABILITIES AND SHAREOWNERS' EQUITY
                                                                                        2004        2003
(In thousands)

Current liabilities:
 Current maturities of long-term debt and short-term borrowings                   $     1,304 $     1,392
 Accounts payable                                                                      16,594      15,958
 Accrued expenses                                                                      33,354      28,051
 Income taxes                                                                           3,193           -
    Total current liabilities                                                          54,445      45,401
Long-term debt                                                                         13,752      14,960
Deferred income taxes                                                                   6,304       4,354

Employee benefit plan obligations                                                      18,801      18,697

Other long-term liabilities                                                             5,838       5,621

Shareowners' equity:
  Common shares (45,000 shares authorized, $.10 par value)
    outstanding (22,041 and 21,828, respectively)                                     2,204       2,182
  Additional capital                                                                 52,743      45,826
  Retained earnings                                                                 166,557     139,057
  Loan to ESOP trust                                                                   (665)       (897)
  Accumulated other comprehensive income                                             13,494       6,770
    Total shareowners' equity                                                       234,333     192,938
Total liabilities and shareowners' equity                                       $   333,473 $   281,971




 See Notes to Consolidated Financial Statements.CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                     - 18 -




              FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES



                                                                      2004           2003        2002
(In thousands)

Cash flows from operating activities:
  Net income                                                     $   38,083 $        34,480 $    32,204
    Adjustments to reconcile net income to net cash flows
    from operating activities:
    Depreciation and amortization                                    15,143          13,748      12,878
    Deferred income taxes                                             1,219           3,117         664
    Loss on disposals of plant and equipment                            187             489         428
      Changes in assets and liabilities, excluding the effects
      of acquisitions:
      Receivables                                                     (1,243)         4,875       3,125
      Inventories                                                     (1,167)        (2,140)      7,434
      Accounts payable and other accrued expenses                      7,305         (4,439)       (315)
      Employee benefit plan obligations                               (3,491)        (2,584)      1,128
      Other, net                                                       1,471           (582)     (2,923)
Net cash flows from operating activities                             57,507          46,964      54,623
Cash flows from investing activities:
  Additions to plant and equipment                                   (21,110)       (15,261)    (15,568)
  Proceeds from sale of plant and equipment                               29            241          20
  Additions to deferred assets                                           (10)          (434)    (14,312)
  Cash paid for acquisitions, net of cash acquired                    (9,307)             -     (30,344)
  Proceeds from maturities of marketable securities                        -              -       2,999
Net cash flows from investing activities                             (30,398)       (15,454)    (57,205)
Cash flows from financing activities:
  Borrowing of long-term debt                                             -          6,648             8,575
  Repayment of long-term debt                                        (1,553)       (19,853)           (1,408)
  Borrowing on line of credit and short-term borrowings                   -         11,000             3,000
  Repayment of line of credit and short-term borrowings                   -        (11,024)           (3,017)
  Proceeds from issuance of common stock                              4,110          4,750             2,320
  Purchases of common stock                                          (3,091)        (9,782)           (3,662)
  Reduction of loan to ESOP Trust                                       232            233               232
  Dividends paid                                                     (6,815)        (5,946)           (5,505)
Net cash flows from financing activities                             (7,117)       (23,974)             535


Effect of exchange rate changes on cash                                650           2,293            1,430
Net change in cash and equivalents                                   20,642         9,829             (617)
Cash and equivalents at beginning of year                            29,962        20,133           20,750
Cash and equivalents at end of year                           $      50,604 $      29,962 $         20,133

Cash paid during 2004, 2003, and 2002 for interest was $0.6 million, $1.2 million and $1.3 million,
respectively. Also, cash paid during 2004, 2003 and 2002 for income taxes was $19.0 million, $13.8
million and $16.6 million, respectively.

                             See Notes to Consolidated Financial Statements.


                                                   - 19 -



                   CONSOLIDATED STATEMENTS OF SHAREOWNERS’ EQUITY

              FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

(In thousands, except share amounts)
                                                                      Loan Accumulated
                         Common                                        to       Other
                          Shares   Common Additional Retained         ESOP Comprehensive Comprehensive
                        Outstanding Stock  Capital Earnings           Trust Income (Loss)   Income
Balance year end
2001                     21,337,068 $ 2,134 $      22,281 $109,103 $ (1,362)          (8,887)
Net income                                                  32,204                              $        32,204
    Currency
    translation
    adjustment                                                                         5,858              5,858
  Pension liability
  adjustment                                                                          (3,172)            (3,172)
       Comprehensive
       income, net of
       tax                                                                                      $        34,890
Dividends on
common stock                                               (5,505)
Common stock issued         757,000          76     5,869
  Common stock             (446,998)        (46)       23 (10,494)
  repurchased or
  received for stock
  options exercised
  Tax benefit of stock
  options exercised                              4,824
Loan payment from
ESOP                                                                 232
Balance year end
2002                     21,647,070    2,164    32,997 125,308     (1,130)   (6,201)


Net income                                               34,480                        $   34,480
    Currency
    translation
    adjustment                                                               10,983        10,983
  Pension liability
  adjustment                                                                  1,988         1,988
       Comprehensive
       income, net of
       tax                                                                             $   47,451
Dividends on
common stock                                             (5,946)
Common stock issued        748,000       74      7,722
  Common stock
  repurchased or
  received for stock
  options exercised        (567,126)     (56)      28 (14,785)
  Tax benefit of stock
  options exercised                              5,079
Loan payment from
ESOP                                                                 233
Balance year end
2003                     21,827,944    2,182    45,826 139,057      (897)     6,770


Net income                                               38,083                        $   38,083
    Currency
    translation
    adjustment                                                                6,935         6,935
  Pension liability
  adjustment                                                                  (211)         (211)
       Comprehensive
       income, net of
       tax                                                                             $   44,807
Dividends on
common stock                                             (6,815)
Common stock issued        337,500       35      4,495
  Common stock
  repurchased or
  received for stock
  options exercised        (124,112)     (13)            (3,768)
  Tax benefit of stock
  options exercised                              2,422
Loan payment from
ESOP                                                                 232
Balance year end
2004                     22,041,332 $ 2,204 $      52,743 $166,557 $     (665)$         13,494

                             See Notes to Consolidated Financial Statements.


                                                    - 20 -




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year--The Company's fiscal year ends on the Saturday nearest December 31. The financial
statements and accompanying notes are as of and for the years ended January 1, 2005 (52 weeks), January
3, 2004 (53 weeks) and December 28, 2002 (52 weeks) and are referred to as 2004, 2003 and 2002,
respectively.

Principles of Consolidation--The consolidated financial statements include the accounts of the Company
and its subsidiaries.

Revenue Recognition--Products are shipped utilizing common carriers direct to customers or, for
consignment products, to customer specified warehouse locations. Sales are recognized when the
Company’s products are shipped direct or transferred from a warehouse location to the customer, at which
time transfer of ownership and risk of loss pass to the customer.

Cash Equivalents--Cash equivalents consist of highly liquid investments which are readily convertible to
cash, present insignificant risk of changes in value due to interest rate fluctuations and have original or
purchased maturities of three months or less.

Research and Development Expenses--The Company’s research and development activities are charged
to expense in the period incurred.

Fair Value of Financial Instruments--The carrying amounts for cash and equivalents, long-term debt, and
short-term debt approximate fair value. The fair value of long-term debt is estimated based on current
borrowing rates for similar issues and current exchange rates for foreign currency denominated amounts.
The Company’s off-balance sheet instruments consist of operating leases which are not significant (see
Note 13).

Accounts Receivable--Accounts receivable are stated at estimated net realizable value. Accounts
receivable comprise balances due from customers net of estimated allowances for uncollectible accounts. In
determining collectibility, historical trends are evaluated and specific customer issues are reviewed to
arrive at appropriate allowances.

Inventories--Inventories are stated at the lower of cost or market. The majority of the cost of domestic
inventories is determined using the last-in, first-out (LIFO) method; all remaining inventory costs are
determined using the first-in, first-out (FIFO) method. Inventories stated on the LIFO method approximated
33.1 percent and 42.8 percent of total inventories in 2004 and 2003, respectively. The Company reviews its
inventories for excess or obsolete products or components. Based on an analysis of historical usage and
management’s evaluation of estimated future demand, market conditions and alternative uses for possible
excess or obsolete parts, reserves are recorded or changed.

Property, Plant and Equipment--Property, plant and equipment are stated at cost. Depreciation of plant
and equipment is provided principally on a straight line basis over the estimated useful lives of 5 to 50
years for land improvements and buildings, 2 to 10 years for machinery, equipment, furniture, and fixtures.
Accelerated methods are used for income tax purposes. The Company reviews its property and equipment
for impairment whenever events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable.

Goodwill and Other Intangible Assets--The Company adopted SFAS No. 142, “Goodwill and Other
Intangible Assets,” in 2002. Under SFAS No. 142, goodwill is not amortized; however, it must be tested for
impairment at least annually. Amortization continues to be recorded for other intangible assets with definite
lives. The goodwill is subject to adjustment in the event that it becomes impaired.

                                                    - 21 -




Stock-Based Compensation--The Company accounts for its stock-based compensation plans under the
intrinsic value method in accordance with the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations.
No stock-based 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 underlying common stock on the date of grant.

For pro forma information regarding net income and earnings per share, the fair value for the options
awarded in 2004, 2003 and 2002 for all fixed stock option plans was estimated as of the date of the grant
using a Black-Scholes option valuation model. The following table sets forth the weighted-average
assumptions for 2004, 2003 and 2002, respectively.

                                                                    2004           2003            2002
Risk-free interest rate                                                 3.60%          3.34%           4.23%
Dividend yield                                                            .63%           .88%          1.10%
Volatility factor                                                       .181           .211            .207
Weighted-average expected life                                       6 years        6 years         6 years

For purposes of pro forma disclosures, the estimated fair value of the options is amortized over the option’s
vesting period. Therefore, in the year of adoption and subsequently affected years, the effects of applying
SFAS No. 123 for providing pro forma net income and earnings per share are not likely to be representative
of the effects on reported income in future years. The following table illustrates the effect on net income
and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123
to stock-based compensation:

(In millions, except per share amounts)
                                                                      2004            2003         2002
Reported net income                                             $        38.1 $           34.5 $          32.2
Less: Total fair value computed stock-based compensation,
net of tax                                                                 (1.5)          (1.5)           (1.3)
Pro forma net income                                            $        36.6 $           33.0 $          30.9
Reported net income available per common share                    $        1.73 $         1.59 $          1.48
Pro forma net income available per common share                   $        1.67 $         1.52 $          1.43

Reported net income available per common share, assuming
dilution                                                          $        1.65 $         1.52 $          1.42
Pro forma net income available per common share, assuming
dilution                                                          $        1.59 $         1.46 $          1.36

The weighted-average grant-date fair value of options granted during 2004, 2003 and 2002 was $7.47,
$6.06 and $6.28, respectively.

The Black-Scholes option valuation model used by the Company was developed for use in estimating the
fair value of fully tradable options which have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumptions including the expected stock
price volatility. It is management’s opinion that the Company’s stock options have characteristics
significantly different from those of traded options and because changes in the subjective input assumptions
can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.

Earnings Per Common Share--Basic and diluted earnings per share are computed and disclosed under
SFAS No. 128, “Earnings Per Share”. Diluted earnings per share is computed based upon earnings
applicable to common shares divided by the weighted-average number of common shares outstanding
during the period adjusted for the effect of other dilutive securities.

Translation of Foreign Currencies--All assets and liabilities of foreign subsidiaries whose functional
currency is other than the U.S. dollar are translated at year end exchange rates. All revenue and expense
accounts are translated at average rates in effect during the respective period.

Use of Estimates--Management’s best estimates of certain amounts are required in preparation of the
consolidated financial statements in accordance with generally accepted accounting principles, and actual
results could differ from those estimates.

                                                     - 22 -




Reclassifications--Certain prior year amounts are reclassified when necessary to conform to the current
year presentation. All share and per share data included in these financial statements reflect the Company’s
two-for-one stock splits effected in the form of a 100 percent stock distribution made on June 15, 2004.

Accounting Pronouncements-- In November 2004, the Financial Accounting Standards Board (“FASB”)
issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs”, an amendment
of ARB No. 43, Chapter 4. The amendments made by SFAS No. 151 clarify that abnormal amounts of idle
facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-
period charges and require the allocation of fixed production overheads to inventory based on the normal
capacity of the production facilities. The pronouncement is effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred
during fiscal years beginning after November 23, 2004. The Company currently recognizes, as period costs,
any abnormal amounts of idle facility expense, freight, handling costs and wasted materials and allocates
fixed production overhead to inventory based on the normal capacity of the production facilities. The
adoption of this pronouncement will not have a significant impact on the Company’s results of operations
or financial position. The Company will adopt this pronouncement for fiscal 2005.
On December 16, 2004, the FASB issued SFAS No. 123(R) “Share-Based Payment”, that requires
compensation costs related to share-based payment transactions recognized in the financial statements.
With minor exceptions, the amounts of compensation costs will be measured based on the grant-date fair
value of the equity or liability instruments issued, over the period that the employee provides service in
exchange for the award. In addition liability awards will be re-measured each reporting period. This
pronouncement is effective as of the first interim or annual reporting period that begins after June 15, 2005.
The impact on the Company’s results of operations or financial position as of the adoption of this
pronouncement is not expected to be materially different from the pro-forma results included above: Stock-
Based Compensation.

On December 21, 2004, the FASB issued “Application of FASB Statement No. 109, Accounting for Income
Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation
Act of 2004”, a FASB Staff Position (FSP) that provides guidance on the application of SFAS No. 109 to
the tax deduction on qualified production activities provided by the American Jobs Creation Act of 2004.
FSP FAS 109-1 states that the qualified production activities deduction should be accounted for as a special
deduction in accordance with SFAS No. 109, whereby the deduction is contingent upon the future
performance of specific activities, including wage levels. The FASB also concluded that the special
deductions should be considered with measuring deferred taxes and assessing a valuation allowance. The
impact on the Company’s results of operations or financial position of FSP FAS 109-1 has not yet been
determined.

On December 21, 2004, the FASB issued “Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of 2004”, a FSP that provides accounting
and disclosure guidance for the foreign earnings repatriation provision within the American Jobs Creation
Act of 2004. The Act provides special, one-time dividends received deduction on the repatriation of certain
foreign earnings to a U.S. taxpayer. FSP FAS 109-2 states that a company is allowed time beyond the
financial reporting period of enactment to evaluate the effect of the Act on its plan for reinvestment or
repatriation of foreign earnings, as it applies to the application of SFAS No. 109. The decision process to
build the plan may occur in stages, as an enterprise may separately evaluate the provisions of the Act. The
Company has not begun the evaluation process of the effects of the repatriation provision.


2. GOODWILL AND OTHER INTANGIBLE ASSETS

The company uses the purchase method of accounting for business combinations and accounts for goodwill
on an impairment-only basis in accordance with SFAS Nos. 141 and 142, “Business Combinations” and
“Goodwill and Other Intangible Assets”, respectively. During the fourth quarter of each year, the Company
performs its annual impairment testing required by SFAS No. 142. No impairment loss was required to be
recognized.

                                                     - 23 -




Information regarding the Company’s other intangible assets which are included in deferred and other
assets, and goodwill follows:

(in millions)                                                                        2004            2003


Amortized intangibles
 Patents                                                                        $         3.5 $           3.5
 Supply agreements                                                                       10.4            10.2
  Other                                                                                    1.7            1.6
  Accumulated amortization                                                                (9.3)          (6.8)
    Total                                                                       $         6.3 $           8.5


Goodwill                                                                        $        57.4 $          56.2


The change in goodwill from 2003 to 2004 is related to foreign exchange rate changes from year to year.
Amortization expense related to intangible assets for the year ended January 1, 2005 was $2.1 million.
Amortization expense for each of the five succeeding years is projected as $1.2 million, $0.8 million, $0.7
million, $0.7 million and $0.7 million for fiscal 2005, 2006, 2007, 2008, 2009, respectively.

Acquisitions

During 2004, the Company acquired certain assets of JBD, Inc., a pump manufacturer located in Little
Rock, Arkansas, for their estimated fair value of approximately $9.3 million. During 2002, the Company
paid $30.3 million for acquisitions, net of cash acquired, of which $24.3 million was recorded as goodwill
based on the estimated fair values of the net assets acquired. In January 2002, the Company acquired
certain assets and liabilities of Coverco S.p.A., and Emco S.r.L.(jointly “Coverco”) manufacturers of
submersible and industrial electric motors and controls in Italy. In July 2002, the Company acquired all of
the outstanding shares of Intelligent Controls, Inc., a producer of fueling systems electronic leak detection
and inventory management systems controls in Maine. These acquisitions did not materially affect the
Company’s financial statements. The pro forma results of the Company’s operations as if these acquisitions
had occurred at the beginning of the year acquired would not differ materially from the reported results.

These acquisitions were accounted for using the purchase method of accounting. Accordingly, a portion of
the aggregate purchase price was allocated to the net assets acquired based on the estimated fair values.
When applicable, the excess of purchase price over the fair value of the net assets acquired has been
recorded as goodwill.

3. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of January 1, 2005, the Company maintains three domestic pension plans and
one German pension plan. The Company uses a December 31 measurement date for its plans.

                                                     - 24 -




The following table sets forth aggregated information related to the Company’s pension benefits and other
postretirement benefits, including changes in the benefit obligations, changes in plan assets, funded status,
amounts recognized in the Consolidated Balance Sheets, and actuarial assumptions:



(In millions)
                                                           Pension Benefits               Other Benefits
                                                          2004         2003              2004         2003
Change in benefit obligation:
Benefit obligation, beginning of year            $        126.5 $       117.1 $          13.2 $          12.9
Service cost                                                4.3           4.1             0.4             0.3
Interest cost                                                 7.5        7.6           0.9             0.8
Plan amendments                                                 -        1.1           2.4               -
Actuarial loss                                                6.1        6.4            .6             0.4
Settlements paid                                             (0.9)      (1.0)            -               -
Benefits paid                                                (9.2)      (9.1)         (1.6)           (1.2)
Exchange                                                      0.1        0.3             -               -
Benefit obligation, end of year                $        134.4 $        126.5 $       16.0 $       13.2


Change in plan assets:
Fair value of assets, beginning of year        $        115.9 $        98.0 $            - $            -
Actual return on plan assets                             17.9          22.2              -              -
Company contributions                                     5.8           5.8            1.6            1.2
Settlements paid                                         (1.0)         (1.0)
Benefits paid                                            (9.2)         (9.1)          (1.6)           (1.2)
Fair value of assets, end of year              $        129.4 $        115.9 $           - $             -


Reconciliation of funded status:
Funded status                                  $             (5.0) $   (10.6) $      (16.0) $     (13.2)
Unrecognized net (gain)/loss                                 (0.6)       0.6           3.6          3.1
Unrecognized transition obligation                              -          -           3.9          4.4
Unrecognized prior service cost                               4.0        5.3           2.2            -
Net amount recognized                          $             (1.6) $    (4.7) $       (6.3) $         (5.7)

Amounts recognized in the Consolidated
Balance Sheets:
Employee benefit plan obligations              $            (12.5) $   (13.0) $       (6.3) $         (5.7)
Accrued expenses                                             (0.1)      (0.1)            -               -
Deferred income taxes                                         1.4        1.3             -               -
Deferred and other assets                                     7.4        5.1             -               -
Accumulated other comprehensive income
(loss)                                                       2.2        2.0              -               -
Net amount recognized                          $             (1.6) $    (4.7) $       (6.3) $         (5.7)



                                                    Pension Benefits                Other Benefits
                                                   2004        2003               2004         2003
Increase/(decrease) in minimum liability
included in other comprehensive income         $             0.2 $      (2.0) $          - $             -



                                                   - 25 -




Actuarial assumptions used to determine benefit obligations:
                                                       Pension Benefits                Other Benefits
                                                      2004         2003              2004         2003
Discount rate                                             5.75 %       6.25 %            5.75 %            6.25 %
Rate of increase in future compensation               2.5-7.00 %   2.5-7.00 %        2.5-7.00 %        2.5-7.00 %
                                                      (Graded )    (Graded )         (Graded )         (Graded )



Actuarial assumptions used to determine periodic benefit cost:

                                                        Pension Benefits                Other Benefits
                                                       2004         2003              2004         2003
Discount rate                                             6.25%        6.75%             6.25%             6.75%
Rate of increase in future compensation               2.5-7.00%    2.5-7.00%         2.5-7.00%         2.5-7.00%
                                                        (Graded)     (Graded)          (Graded)          (Graded)
Expected long-term rate of return on plan
assets                                                     9.25%            9.25%            -                 -

The accumulated benefit obligation for the Company’s qualified defined benefit pension plans was $124.6
million and $117.1 million at January 1, 2005 and January 3, 2004.

The following table sets forth aggregated net periodic benefit cost for 2004, 2003 and 2002:

(In millions)
                                             Pension Benefits                      Other Benefits
                                        2004      2003        2002            2004     2003       2002


Service cost                        $         4.3 $       4.1 $      3.6 $          0.4 $        0.3 $       0.3
Interest cost                                 7.5         7.6        7.6            0.9          0.8         0.9
Expected return on assets                   (10.9)      (10.6)     (10.4)             -            -           -
  Amortization of unrecognized
  obligation/(asset)                           -            -          -            0.5          0.5         0.5
Prior service cost                           1.4          1.5        1.2            0.2            -           -
Loss/(Gain)                                    -         (0.2)      (0.7)           0.2          0.2         0.1
Net periodic benefit cost           $        2.3 $        2.4 $     1.3 $           2.2 $        1.8 $       1.8
Settlement                                   0.3          0.2       0.1               -            -           -
Total benefit cost                  $        2.6 $        2.6 $     1.4 $           2.2 $        1.8 $       1.8

The Company consults with actuaries, asset allocation consultants and investment advisors to determine the
expected long term rate of return on plan assets. While past performance is not a guarantee of future
returns, the plan assets of the pension plans for the past fifteen years have averaged in excess of 12%
annually. Effective January 1, 2005 an expected long term rate of return on plan assets of 8.50% was
selected to reflect capital market expectations based in part on input from the Company’s actuaries,
consultants and advisors.

The plans asset allocations at December 31, 2004, and 2003, by asset category are as follows:
                                                                                  Plan Assets at December
                                                                                             31

                                                                                      2004            2003


Equity Securities                                                                             74%            76%
Fixed Income Securities                                                                       26%            24%
Total                                                                                        100%            100%

Equity securities include Company stock of $25.5 million (20% of total plan assets) and $22.0 million
(19% of total plan assets) at December 31, 2004 and 2003, respectively.

                                                     - 26 -




The Company employs a total return investment approach whereby a mix of equity and fixed-income
investments are used to maximize the long-term return on plan assets for a prudent level of risk. Risk
tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate
financial condition. The investment portfolio contains a diversified blend of equity and fixed-income
investments. Furthermore, equity investments are diversified across growth, value, and small and large
capitalizations. Investment risk is measured and monitored on an ongoing basis through investment
portfolio reviews, annual liability measurements, and periodic asset/liability studies.

One of the Company’s four pension plans covers certain management employees. The Company does not
fund this plan, and its assets were zero in 2004 and 2003. The plan’s projected benefit obligation and
accumulated benefit obligation were $6.4 million and $5.0 million, respectively, at January 1, 2005, and
$6.2 million and $4.8 million, respectively, at January 3, 2004.

The Company estimates total contributions to the plans of $3.4 million in 2005.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be
paid:

(In millions)
                                                                                     Pension           Other
                                                                                     Benefits         Benefits
2005                                                                             $            9.2 $           1.6
2006                                                                                          8.6             1.3
2007                                                                                          8.0             1.3
2008                                                                                          8.3             1.3
2009                                                                                          9.6             1.3
Years 2010 through 2014                                                                      49.6             6.5


The Company’s other postretirement benefit plans provide health and life insurance benefits to domestic
employees hired prior to 1992. The Company effectively capped its cost for those benefits through plan
amendments made in 1992, freezing Company contributions for insurance benefits at 1991 levels for
current and future beneficiaries with actuarially reduced benefits for employees who retire before age 65.
On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was
signed into law. After reviewing the Act, it was determined that there was no direct impact to the
Company’s postretirement medical plan. However, to assist retirees in maintaining their current standard of
living, the Company decided to make a one-time increase to its post-65 benefit payment to retirees. The
accumulated postretirement benefit obligation for this benefit change increased $2.4 million and the annual
net periodic postretirement benefit cost increased $0.3 million.

Defined Contribution Plans - The Company maintains an integrated 401(k) and Employee Stock
Ownership Plan (ESOP). In 1996 and 1992, the ESOP Trustee acquired shares of Company common stock
on the open market using the proceeds of a ten-year, $0.3 million loan and a fifteen-year, $3.0 million loan,
respectively, from the Company. Under the terms of the variable rate loan (6.31 percent at January 1,
2005), principal plus interest is payable in equal annual installments. The shares of stock purchased with
the loan proceeds are collateral for the loan and are considered outstanding for purposes of calculating
earnings per share.

The Company contributes a portion of its 401(k) matching contribution as well as an additional annual
contribution, both subject to the Company's annual financial results, to the ESOP Trust. The ESOP Trustee
uses a portion of the Company's contributions to make principal and interest payments on the loan. As loan
payments are made, shares of common stock are released as collateral and are allocated to participants'
accounts. The balance of the Company's contributions in cash or common stock is made to the Company
stock fund of the 401(k) and ESOP Trusts, and allocated to participants' accounts to satisfy the balance of
the Company's 401(k) matching contribution.

                                                     - 27 -




At January 1, 2005, 550,211 shares were allocated to the accounts of participants, 31,011 shares were
committed to be released and allocated to the accounts of participants for service rendered during 2004, and
85,062 shares were held by the ESOP Trust in suspense. The following table sets forth the interest expense
and Company contributions to the integrated ESOP and 401(k) Plan.

(In millions)
                                                                    2004            2003           2002
Interest expense incurred by the plan on ESOP debt              $          0.0 $           0.1 $           0.1
Company contributions to integrated plan                        $          0.9 $           1.0 $           1.1




4. ACCRUED EXPENSES

Accrued expenses consisted of:

(In millions)
                                                                                    2004           2003


Salaries, wages and commissions                                                $        13.9 $            11.5
Product warranty costs                                                                   7.1               5.4
Insurance                                                                                6.6               5.8
Employee benefits                                                                        2.1               2.1
Other                                                                                    3.7               3.3
                                                                                 $      33.4 $         28.1




5. INCOME TAXES

         Income before income taxes consisted of:




(In millions)
                                                                   2004              2003           2002


Domestic                                                       $        48.1 $          42.5 $         45.3
Foreign                                                                 10.9             8.8            5.1
                                                               $        59.0 $          51.3 $         50.4

The income tax provision consisted of:



(In millions)
                                                                   2004              2003           2002

Currently payable:
 Federal                                                       $        12.9 $              9.3 $      11.9
 Foreign                                                                 5.0                3.0         2.9
 State                                                                   1.8                1.4         2.8
Deferred:
 Federal                                                                 1.8                2.1         1.4
 Foreign                                                                (0.7 )              0.7        (0.8 )
 State                                                                   0.1                0.3         0.1
                                                               $        20.9 $          16.8 $         18.3




                                                    - 28 -




Significant components of the Company's deferred tax assets and liabilities were as follows:




(In millions)
                                                                                     2004           2003
Deferred tax assets:
 Accrued expenses and reserves                                                      $          5.7 $           5.1
 Compensation and employee benefits                                                            7.6             8.8
 Other items                                                                                   1.5             2.1
    Total deferred tax assets                                                               14.8             16.0


Deferred tax liabilities:
 Accelerated depreciation on fixed assets                                                    9.0              8.8
 Other items                                                                                 1.7              1.9
    Total deferred tax liabilities                                                          10.7             10.7


Net deferred tax assets                                                             $          4.1 $           5.3



The portions of current and non-current deferred tax assets and liabilities were as follows:



(In millions)
                                                             2004                               2003

                                                                    Deferred            Deferred       Deferred
                                                   Deferred            Tax                Tax             Tax
                                                  Tax Assets        Liabilities          Assets        Liabilities
Current                                          $        10.6 $              0.2 $            9.7 $          0.0
Non-current                                                4.2               10.5              6.3           10.7
                                                 $        14.8 $             10.7 $         16.0 $           10.7




There was no valuation allowance for deferred tax assets required in 20042003 or 2003.2002.


The differences between the statutory and effective tax rates were as follows:



                                                                      2004              2003            2002


U.S. Federal statutory rate                                               35.0 %           35.0 %           35.0 %

State income taxes, net of federal benefit                                  2.1              2.2             3.7
Extraterritorial income exclusion                                          (1.8 )           (4.0 )          (1.9 )
R&D tax credits                                                            (0.7 )           (1.2 )          (1.3 )
Other items                                                                 0.9              0.8             0.7
Effective tax rate                                                              35.5 %               32.8 %         36.2 %




                                                      - 29 -



6. DEBT

Long-term debt consisted of:

(In millions)
                                                                                               2004               2003

  Insurance Company - - 6.31%, principal payments of $1.0 million due in
  annual installments, with a balloon payment of $10.0 in 2008 ($3.4
  denominated in JPY at 1/01/05)                                                         $            13.3 $         14.2
Capital Leases                                                                                         1.8            2.2
                                                                                                      15.1           16.4
Less Current Maturities                                                                               (1.3)          (1.4)
                                                                                         $            13.8 $         15.0

The following debt payments are expected to be paid:

(In millions)

                                         Total       Year 1            Year 2       Year 3           Year 4       Year 5
Debt                                 $      13.3 $             1.0 $        1.0 $            1.0 $       10.3 $            -
Capital Leases                               1.8               0.3          0.3              0.3          0.3            0.6
                                     $      15.1 $             1.3 $        1.3 $            1.3         10.6 $          0.6

On September 9, 2004, the Company entered into an unsecured, 60-month, $80.0 million revolving credit
agreement (the “Agreement”). The Agreement provides for various borrowing rate options including
interest rates based on the London Interbank Offered Rates (LIBOR) plus interest spreads keyed to the
Company’s ratio of debt to earnings before interest, taxes, depreciation, and amortization (EBITDA). The
Agreement contains certain financial covenants with respect to borrowings, interest coverage, loans or
advances and investments. The Company had no outstanding borrowings under the Agreement at January
1, 2005.

The Company was in compliance with all debt covenants at all times in 2004 and 2003.


  7. INTEREST RATE RISK

On September 24, 2003 the company entered into a fixed-to-variable interest rate swap to achieve a desired
proportion of variable vs. fixed rate debt. The fixed-to-variable interest rate swap is accounted for as a fair
value hedge, per SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, with
effectiveness assessed based on changes in the fair value of the underlying debt using incremental
borrowing rates currently available on loans with similar terms and maturities. The effective gain or loss on
the interest rate swap and that of the underlying debt are equal and offsetting resulting in no net effect to
earnings. The fair value of this hedge instrument was $(0.1) million at January 1, 2005 and is recorded in
other assets and other long-term liabilities.

The swap contract has a notional amount of $10 million and matures on November 10, 2008. Per the terms
of the swap contract the company receives interest at a fixed rate of 6.31% and pays interest at a variable
rate based on the three month LIBOR rate plus a spread. The average variable rate paid by the company in
2004 was 4.1%. The differential in interest rates on the swap is recognized as an adjustment of interest
expense over the term of the agreement.

                                                      - 30 -




  8. SHAREOWNERS' EQUITY

The Company had 22,041,332 shares of common stock (45,000,000 shares authorized, $.10 par value)
outstanding at the end of 2004.

During 2004 and 2003, pursuant to a stock repurchase program authorized by the Company’s Board of
Directors, the Company repurchased a total of 102,800 shares for $3.1 million and 380,294 shares
for $9.8 million, respectively. Of these shares, 300,000 were repurchased from an officer of the Company
in 2003. All repurchased shares were retired.

During 2004 and 2003, under terms of a Company stock option plan, participants delivered 21,312 shares
for $0.7 million and 186,832 for $5.0 million shares of Company common stock as consideration for stock
issued upon the exercise of stock options. Of these shares, 21,312 in 2004 and 163,776 in 2003 were from
officers of the Company. In 2004 and 2003, the Company recorded a $2.4 million and a $5.1 million,
respectively, reduction in its deferred tax liability and an increase to shareowners’ equity as a result of these
exercises. The shares delivered to the Company were subsequently retired.
Accumulated other comprehensive gain (loss), consisting of the currency translation adjustment and the
pension liability adjustment, was $15.7 million and $(2.2) million, respectively, at January 1, 2005, and
$8.7 million and $(1.9) million, respectively, at January 3, 2004.


9. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

(In millions, except per share amounts)
                                                                      2004            2003             2002
Numerator:
 Net Income                                                       $        38.1 $          34.5 $          32.2


Denominator:
 Basic
 Weighted-average common shares                                            22.0            21.6            21.6
  Diluted
  Effect of dilutive securities:

    Employee and director incentive stock options and
    awards                                                                  1.1               1.0              1.1


  Adjusted weighted-average common shares                                  23.1              22.6          22.7


Basic earnings per share                                           $       1.73 $            1.59 $        1.48


Diluted earnings per share                                         $       1.65 $            1.52 $        1.42



10. STOCK-BASED COMPENSATION

The Company has authorized the grant of options to purchase common stock of the Company to employees
and non-employee directors of the Company and its subsidiaries under two fixed stock option plans. The
plans and the original number of authorized shares available for grants are as follows:

                                                                                                      Shares
1990 Non-Employee Director Stock Option Plan                                                            240,000
Franklin Electric Co., Inc. Stock Option Plan                                                         3,600,000


                                                     - 31 -




During 2004, all options outstanding under the 1990 Non-Employee Director Stock Option Plan were
exercised. There are no further shares reserved for future awards under this plan.

Under each of the above plans, the exercise price of each option equals the market price of the Company’s
common stock on the date of grant and the options expire ten years after the date of the grant. Generally,
options granted to non-employee directors vest 33 percent a year and become fully vested and exercisable
after three years and options granted to employees vest 20 percent a year and become fully vested and
exercisable after five years. Subject to the terms of the plans, in general, the aggregate option price and any
applicable tax withholdings may be satisfied in cash or its equivalent, or by the plan participant’s delivery
of shares of the Company’s common stock owned more than six months, having a fair market value at the
time of exercise equal to the aggregate option price and/or the applicable tax withholdings.

A summary of the Company’s fixed stock option plans activity and related information for 2004, 2003 and
2002 follows:

                                         2004                        2003                      2002
                                           Weighted-                   Weighted-
                                            Average                     Average                 Weighted-
                                            Exercise                    Exercise              Average Exercise
Fixed Options                      Shares     Price           Shares      Price     Shares         Price
  Outstanding at beginning of
  year                        2,533,800 $      18.925 2,927,800 $       16.060 3,324,600 $         13.150

Granted                           198,600      30.569        456,000    23.895    461,000          24.090
Exercised                        (331,200)     13.663       (748,000)   10.425   (757,000)          7.855
Forfeited                               -           -       (102,000)   21.230   (100,800)         18.480
  Outstanding at end of year    2,401,200 $    20.610 2,533,800 $       18.925 2,927,800 $         16.060

The following summarizes information about fixed stock options outstanding at January 1, 2005:



                                                      Options Outstanding        Options Exercisable
                                                           Weighted-
                                                            Average Weighted-               Weighted-
                                               Number Remaining Average Number               Average
                Range of                      Outstanding Contractual Exercise Exercisable   Exercise
              Exercise Prices                  at 1/1/05      Life       Price  at 1/1/05      Price



$10.50 to 16.00                                  117,400 2.63 years $        12.42   117,400 $      12.42
16.01 to 21.00                                 1,264,200       5.60          17.50 1,005,000        17.42
21.01 to 32.60                                 1,019,600       8.11          25.42   361,000        24.20


$10.50 to 32.60                                2,401,200            6.52 $   20.61 1,483,400 $      18.68




During 2000, the Franklin Electric Co., Inc. Key Employee Performance Incentive Stock Plan (Incentive
Plan) was established. Under the Incentive Plan, employees may be granted restricted shares of the
Company’s common stock, vesting subject to the employees’ performance of certain goals. On December
20, 2004, 6,300 shares were awarded to non-executive employees under the Incentive Plan. No shares were
awarded in 2003. At January 1, 2005, 393,700 shares were available for future awards.

On February 1, 2005, the Company terminated the 1988 Executive Stock Purchase Plan (1988 Purchase
Plan). Prior to termination, there were 2,051,200 shares available for future awards and there were no
outstanding loans to Company executives.

11. SEGMENT AND GEOGRAPHIC INFORMATION

Based on the management approach established by SFAS No. 131, “Disclosure About Segments of an
Enterprise and Related Information”, the Company’s business consists of three operating segments based
on the principal end market served: the water system segment, the industrial motor segment and the fueling
system segment.

                                                   - 32 -
The water system segment designs, manufactures and sells motors, pumps, electronic controls and related
parts and equipment primarily for use in submersible water and other fluid system applications. The
industrial motor segment designs, manufactures and sells electric motors for various industrial applications
primarily water and fueling system applications. The industrial motor segment integrates and sells
electronic controls produced by the water segment. The fueling system segment designs, manufactures and
sells pumps, electronic controls and related parts and equipment primarily for use in submersible fueling
system applications. The fueling system segment integrates and sells motors and electronic controls
produced by the water system segment.

Under SFAS No. 131’s aggregation criteria, the Company’s operating segments have been combined into a
single reportable segment. As a result, there are no significant differences between reportable segment
financial information and the Company’s consolidated results.

Net sales by product category, net of intercompany balances, is as follows:

                                                                       2004            2003             2002
Water systems                                                     $       333.5 $           291.8 $       296.2
Fueling systems                                                            70.8              67.7          58.7
Total                                                             $       404.3 $           359.5 $       354.9



Geographical information

                                                   Net Sales                         Long-lived assests
                                         2004       2003         2002           2004       2003         2002
United States                        $     254.3 $     230.6 $        232.3 $      48.5 $      43.9 $      47.8
Foreign                                    150.0       128.9          122.6        47.4        40.0        28.2
Total                                $     404.3 $     359.5 $        354.9 $      95.9 $      83.9 $      76.0

ITT Industries, Inc., and its various subsidiaries and affiliates, accounted for 19.2 percent, 18.0 percent and
18.2 percent of the Company’s consolidated sales in 2004, 2003, and 2002, respectively. Pentair
Corporation and its various subsidiaries and affiliates, accounted for 20.7 percent, of the Company’s
consolidated sales in 2004. Sta-Rite Industries, Inc., formerly a subsidiary of Wisconsin Energy
Corporation, accounted for 13.6 percent and 11.5 percent of the Company’s consolidated sales in 2003 and
2002, respectively. Sta-Rite Industries, Inc. was acquired by Pentair Corporation during 2004 and its sales
have been included with Pentair’s sales for 2004.


12. RESTRUCTURING

The Company incurred $5.5 million of expenses during 2004 (included in “Restructuring Expense” on the
income statement) related to its global manufacturing realignment program. The costs in 2004 were
primarily severance, training, equipment transfers, travel, and employee relocations related to the ongoing
ramp up of the Linares, Mexico facility and the consolidation of Motta di Livenza, Italy factory into other
European factories and to the Fueling Systems consolidation. The Company will incur additional expenses
throughout 2005 to transfer equipment and other related expenses. The operations performed in the closed
facilities will be relocated to other Company facilities and consolidated. The global manufacturing
realignment program is estimated to cost in total $10.0 million and is expected to be substantially complete
by the end of 2005.
The components and use of the restructuring reserve is summarized below:

                                                                                   Severance
(in millions)                                                                      Benefits:       Other


Balance January 3, 2004                                                        $           0.0 $          0.0

Restructuring Expense                                                                      3.4            2.1

Cost Incurred                                                                              (3.1)          (2.1)


Balance January 1, 2005                                                        $           0.3 $          0.0



                                                    - 33 -




13. 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, based on current knowledge of the
facts and 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 operation, and net
cash flows.

Total rent expense charged to operations for operating leases including contingent rentals was $3.4 million,
$3.0 million and $2.7 million for 2004, 2003 and 2002, respectively. The future minimum rental payments
for noncancellable operating leases as of January 1, 2005, are as follows: 2005, $3.0 million; 2006, $1.8
million; and 2007, $1.2 million. Rental commitments subsequent to 2007 are not significant by year, but
aggregated are $4.5 million in total.

Below is a table that shows the activity in the warranty accrual accounts:

(In millions)
                                                                                    2004           2003


Beginning Balance                                                              $           5.4 $          5.3

Accruals related to product warranties                                                     4.9            4.4
Reductions for payments made                                                               3.2            4.3
Ending Balance                                                                 $           7.1 $          5.4



14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Unaudited quarterly financial information for 2004 and 2003 is as follows:
(In millions, except per share amounts)

                                                                                          Basic    Diluted
                                                                  Gross          Net    Earnings Earnings
                                                  Net Sales       Profit       Income   Per Share Per Share
2004


1st Quarter                                      $      80.2 $        23.6 $       5.1 $     0.23 $      0.22
2nd Quarter                                            106.2          34.5        10.9       0.50        0.48
3rd Quarter                                            110.3          36.1        11.1       0.51        0.48
4th Quarter                                            107.6          36.0        11.0       0.50        0.47
                                                 $     404.3 $      130.2 $       38.1 $     1.73        1.65
2003


1st Quarter                                      $       69.8 $       19.8 $       4.0 $      .18 $        .18
2nd Quarter                                              93.8         29.0         9.4        .44          .42
3rd Quarter                                              99.7         30.8        10.5        .49          .46
4th Quarter                                              96.2         31.4        10.6        .48          .46
                                                 $     359.5 $      111.0 $       34.5 $     1.59 $      1.52



                                                     - 34 -




       REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

       To the Shareowners and Directors, Franklin Electric Co., Inc.:

We have audited the accompanying consolidated balance sheets of Franklin Electric Co., Inc. (the
“Company”) as of January 1, 2005 and January 3, 2004 and the related consolidated statements of income,
shareowners’ equity and cash flows for each of the three years in the period ended January 1, 2005. Our
audits also included the financial statement schedule listed in the index at Item 15. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of Franklin Electric Co., Inc. as of January 1, 2005 and January 3, 2004, and the results of its
operations and its cash flows for each of the three years in the period ended January 1, 2005, in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, such
financial schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of the Company’s internal control over financial reporting as of
January 1, 2005, based on the criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 10,
2005 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s
internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.

       Chicago, Illinois
       February 10, 2005


                                                     - 35 -




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareowners and Directors, Franklin Electric Co., Inc.:

We have audited management’s assessment, included in the accompanying Statement of Management’s
Responsibility for Financial Reporting and Management’s Report on Internal Control over Financial
Reporting, that Franklin Electric Co., Inc. and consolidated subsidiaries (the “Company”) maintained
effective internal control over financial reporting as of January 1, 2005, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the
effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
evaluating management’s assessment, testing and evaluating the design and operating effectiveness of
internal control, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of,
the company’s principal executive and principal financial officers, or persons performing similar functions,
and effected by the company’s board of directors, management, and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of
collusion or improper management override of controls, material misstatements due to error or fraud may
not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of
the internal control over financial reporting to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over
financial reporting as of January 1, 2005, is fairly stated, in all material respects, based on the criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of January 1, 2005, based on the criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements and financial statement schedule as of and for
the year ended January 1, 2005 and our report dated February 10, 2005 expressed an unqualified opinion on
those financial statements and the financial statement schedule.

        Chicago, Illinois
        February 10, 2005


                                                     - 36 -



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES
As of the end of the period covered by this report (the “Evaluation Date”), the Company carried out an
evaluation, under the supervision and with the participation of the Company’s management, including the
Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule
13a-15. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief
Financial Officer concluded that as of the Evaluation Date, 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.

There have been no changes in the Company’s internal control over financial reporting identified in
connection with the evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act during the
last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

System of Internal Control over Financial Reporting:
Management is responsible for establishing and maintaining an adequate system of internal control over
financial reporting of the Company. This system is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting can provide only reasonable
assurance with respect to financial statement preparation and may not prevent or detect misstatements.
Further, because of changes in conditions, effectiveness of internal controls over financial reporting may
vary over time.

Management conducted an evaluation of the effectiveness of the system of internal control over financial
reporting based on the framework in Internal Control-Integrated Framework (the “Framework”) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its
evaluation, management concluded that the Company’s system of internal control over financial reporting
was effective as of January 1, 2005.

Report of Independent Registered Public Accounting Firm:
The consolidated financial statements and management’s assessment of the effectiveness of the Company’s
internal control over financial reporting have been audited by Deloitte & Touche, an independent registered
public accounting firm, and their report is presented on page 35-36.


ITEM 9B.OTHER INFORMATION

None.

                                                      - 37 -




                                                   PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information concerning directors required by this Item 10 is set forth in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 29, 2005, under the headings of
"ELECTION OF DIRECTORS" and "INFORMATION CONCERNING NOMINEES AND
DIRECTORS," and is incorporated herein by reference.

The information concerning executive officers required by this Item 10 is contained in Part I of this Form
10-K under the heading of "EXECUTIVE OFFICERS OF THE REGISTRANT."

The information concerning Item 405 disclosures of delinquent Form 3,4 or 5 filers required by this Item
10 is set forth in the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on
April 29, 2005, under the heading of “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE,” and is incorporated herein by reference.

The information concerning the procedures for shareholders to recommend nominees to the Company’s
board of directors is set forth in the Company’s Proxy Statement to the Annual Meeting of Shareholders to
be held on April 29, 2005 under the heading “INFORMATION ABOUT THE BOARD AND ITS
COMMITTEES.”

The Company’s board of directors has determined that Jerome D. Brady, Diana S. Ferguson, and Robert H.
Little, the Audit Committee members, are “audit committee financial experts” as defined by Item 401(h) of
Regulation’s S-K of the Exchange Act, and are “independent” within the meaning of Item 7 (d)(3)(iv) of
schedule 14A of the Exchange Act.

In compliance with Section 406 of the Sarbanes-Oxley Act of 2002, the Company has adopted a code of
business conduct and ethics for its directors, principal financial officer, controller, principal executive
officer, and other employees. The Company has posted its code of ethics on the Company website at
http://www.franklin-electric.com. The company will disclose any amendments to the Code and any waivers
from the Code for directors and executive officers by posting such information on its website.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is set forth in the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held on April 29, 2005, under the headings of "INFORMATION ABOUT THE
BOARD AND ITS COMMITTEES," "PERSONNEL AND COMPENSATION COMMITTEE REPORT,"
"SUMMARY COMPENSATION TABLE," "OPTION GRANTS IN 2004 FISCAL YEAR,"
"AGGREGATED OPTION EXCERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES”, "PENSION PLANS" and "AGREEMENTS," and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is set forth in the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held on April 29, 2005, under the headings of "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" and “SECURITIES AUTHORIZED FOR
ISSUANCE UNDER EQUITY COMPENSATION PLANS,” and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is set forth in the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held on April 29, 2005, under the headings of “SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” and "AGREEMENTS," and is incorporated
herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is set forth in the Company’s Proxy Statement for the Annual Meeting
of Shareholders to be held on April 29, 2005 under the heading “Principal Accountant Fees and Services”.


                                                   - 38 -



                                                PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


                                                                                               Form 10-K
                                                                                                Annual
                                                                                              Report(page)

(a) 1. Financial Statements - Franklin
Electric

         Reports of Independent Registered Public Accounting Firm                             35-36
         Consolidated Statements of Income for the three years ended January 1, 2005             16
         Consolidated Balance Sheets as of January 1, 2005 and January 3, 2004                17-18
         Consolidated Statements of Cash Flows for the three years ended January 1,              19
         2005
         Consolidated Statements of Shareowners' Equity for the three years ended                 20
         January 1, 2005
         Notes to Consolidated Financial Statements(including quarterly financial             21-34
         data)

    2. Financial Statement Schedules -
    Franklin Electric

         II. Valuation and Qualifying Accounts                                                    39


           Schedules other than those listed above are omitted for the reason that they are not
           required or are not applicable, or the required information is disclosed elsewhere in the
           financial statements and related notes.

    3. Exhibits

           See the Exhibit Index located on pages 41-42. Management Contract, Compensatory Plan, or
           Arrangement is denoted by an asterisk (*).




                    SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 For the years 2004, 2003 and 2002
                                            (In millions)



                                                      Balance    Additions
                                                         at      charged to                       Balance at
                                                     beginning    costs and                        end of
                Description                          of period    expenses Deductions     Other    period
Allowance for doubtful accounts:
                   2004                          $         1.9 $       0.3 $    0.0(A)$     0.1(B)$      2.3


                    2003                         $         1.9 $       0.3 $    0.3(A)$       0.0 $      1.9
                     2002                      $            1.7 $      0.0 $     0.2(A)$    0.4(B)$    1.9



NOTES:

             (A) Uncollectible accounts written off, net of recoveries.
             (B) Allowance for doubtful accounts related to accounts receivable of acquired companies at
                 date of acquisition.


                                                   - 39 -




                                              SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                                              /s/ R. SCOTT
                                                              TRUMBULL
                                                            R. Scott Trumbull
                                                            Chairman of the Board and Chief
Date: February 11, 2005                                     Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities indicated on February 11, 2005.

/s/ R. SCOTT                                                Chairman of the Board and Chief
TRUMBULL
R. Scott Trumbull                                           Executive Officer (Principal
                                                            Executive Officer)

/s/ GREGG C.                                                Senior Vice President, Chief
SENGSTACK
Gregg C. Sengstack                                          Financial Officer and Secretary
                                                            (Principal Financial and Accounting
                                                            Officer)

/s/ JEROME D. BRADY
Jerome D. Brady                                             Director


/s/ DIANA S. FERGUSON
Diana S. Ferguson                                           Director
/s/ ROBERT H. LITTLE
Robert H. Little                                           Director


/s/ DAVID A. ROBERTS
David A. Roberts                                           Director


/s/ DONALD J.
SCHNEIDER
Donald J. Schneider                                        Director


/s/ HOWARD B. WITT
Howard B. Witt                                             Director


                                                  - 40 -




                                 FRANKLIN ELECTRIC CO., INC.
                      EXHIBIT INDEX TO THE ANNUAL REPORT ON FORM 10-K
                         FOR THE FISCAL YEAR ENDED JANUARY 1, 2005

   Exhibit Number                                            Description


3.1   Amended and Restated Articles of Incorporation of Franklin Electric Co., Inc. (incorporated herein
      by reference to the Company's Form 10-Q for the quarter ended July 3, 2004)

3.2   By-Laws of Franklin Electric Co., Inc. as amended July 23, 2004 (incorporated herein by reference
      to the Company’s Form 10-Q for the quarter ended July 3, 2004)

10.1 Rights Agreement dated as of October 15, 1999 between Franklin Electric Co., Inc. and Illinois
     Stock Transfer Company (incorporated herein by reference to the Company's registration statement
     on Form 8-A dated October 15, 1999)

10.2 Amended 1988 Executive Stock Purchase Plan (incorporated herein by reference to the Company's
     1998 Proxy Statement for the Annual Meeting held on April 17, 1998, and included as Exhibit A to
     the Proxy Statement)*

10.3 1990 Franklin Electric Non-Employee Director Stock Option Plan (incorporated herein by reference
     to the Company's 1991 Proxy Statement for the Annual Meeting on April 19, 1991)*

10.4 2003 Franklin Electric Co., Inc. Stock Option Plan (incorporated herein by reference to Exhibit 10.4
     of the Company’s Form 10-K for the fiscal year ended January 3, 2004)*

10.5 Amended & Restated Franklin Electric Co., Inc. Performance Incentive Stock Plan (incorporated
     herein by reference to the Company’s 2003 Proxy Statement for the Annual Meeting held on April
      25, 2003, and included as Appendix 3 to the Proxy Statement)*

10.6 Franklin Electric Co., Inc. Non-employee Directors’ Deferred Compensation Plan (incorporated
     herein by reference to Exhibit 10.9 of the Company’s Form 10-K for the fiscal year ended December
     30, 2000)*

10.7 Amended and Restated Franklin Electric Co., Inc. Pension Restoration Plan (incorporated herein by
     reference to Exhibit 10.9 of the Company’s Form 10-K for the fiscal year ended December 29,
     2001)*

10.8 Employment Agreement dated December 3, 2002 between the Company and Scott Trumbull
     (incorporated herein by reference to Exhibit 10.10 of the Company’s Form 10-K for the fiscal year
     ended December 28, 2002)*

10.9 Employment Agreement dated October 23, 1995 between the Company and Jess B. Ford
     (incorporated herein by reference to Exhibit 10.7 of the Company’s Form 10-K for the fiscal year
     ended December 30, 1995)*

10.10 Amended Employment Agreement dated December 20, 2002 between the Company and Gregg C.
      Sengstack (incorporated herein by reference to Exhibit 10.12 of the Company’s Form 10-K for the
      fiscal year ended December 28, 2002)*

10.11 $80,000,000 Credit Agreement dated as of September 9, 2004 between the Company and Bank One,
      N.A. as Administrative Agent (incorporated herein by reference to Exhibit 10.11 of the Company’s
      Form 10-Q for the quarter ended October 2, 2004)

10.12 Amended and Restated Note Purchase and Private Shelf Agreement dated September 9, 2004
      between the Company and the Prudential Insurance Company of America (incorporated herein by
      reference to Exhibit 10.12 of the Company’s Form 10-Q for the quarter ended October 2, 2004)

10.13 Consulting Agreement dated January 31, 2003 between the Company and William H. Lawson
      (incorporated herein by reference to Exhibit 10.15 of the Company’s Form 10-K for the fiscal year
      ended December 28, 2002)*

                                                  - 41 -




10.14 Managing Director Service Contract dated August 1, 2003 between Franklin Electric Europa GmbH
      and Mr. Peter-Christian Maske*

10.15 Confidentiality and Non-Compete Agreement dated February 11, 2005 between the Company and R.
      Scott Trumbull, Gregg C. Sengstack, Daniel J. Crose, Donald R. Hobbs, Thomas A. Miller, Kirk M.
      Nevins, Robert J. Stone, and Gary Ward*

10.16 Consulting Agreement dated February 11, 2005 between the Company and Jess B. Ford*

10.17 Executive Officer Annual Incentive Cash Bonus Program*

10.18 Form of Non-Qualified Stock Option Agreement for Non-Director Employees*

10.19 Form of Non-Qualified Stock Option Agreement for Director Employees*
21    Subsidiaries of the Registrant

23    Independent Registered Public Accounting Firm’s Consent

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 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

32.2 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

99.1 Forward-Looking Statements


        * Management contract or compensatory plan or arrangement


                                                    - 42 -




                                                                                             Exhibit 10.14

                              Managing Director Service Contract
Between
Franklin Electric Co., Inc
400 East Spring Street
Bluffton, Indiana 46714
USAFranklin Electric Europa GmbH
Postfach 1280 D-54502
Rudolph Diesel Strasse 20
D-54516 Wittlich, Germany

(hereinafter “Company“)

and

Mr. Peter - Christian Maske
Am Jahnplatz 7
D-54516 Wittlich

(hereinafter “Managing Director“)

The CEO Shareholders of the Company intends to appoint Mr. Maske as Managing Director of the
Company as of August 1, 2003. On this basis, the Parties agree to on the following Service Contract:

                                       1. Position and Scope of Duties
1.1    As of August 1, 2003 Mr. Maske shall be employed by the Company as Managing Director
       (Geschäftsführer). In addition, he shall have the title “President Franklin Electric Europa”.act as

1.2    The Managing Director shall represent the Company.

1.3    The CEO Shareholders may appoint additional managing directors, and may assign to the
       Managing Director further or other tasks or areas of responsibility and may determine the
       allocation of responsibilities within the management including the Managing Director’s authority
       to represent the Company singly or jointly.

1.4    The Managing Director will perform his duties as Managing Director by observing the diligence
       of a prudent businessman in accordance with the provisions of this Service Contract, the
       Company’s Articles of Association, the general and specific directions and instructions given by
       the CEOShareholders, and in accordance with the law. He will also comply with the Company’s
       policies, in particular with the Franklin policy on business ethics.

1.5    The Managing Director shall report to the CEO of Franklin Electric Co., Inc., currently Mr. Scott
       Trumbull (the “CEO”). The CEO or the Shareholders may at any time change the reporting line.

1.6    The Managing Director understands that he may be asked to abandon his post of Managing
       Director and transfer to the Grand Duchy of Luxembourg and assume, as a managing director of
       the Luxembourg affiliate, many of the management functions contemplated under the present
       Service Contract.

                                           2. Other activities

2.1    The Managing Director will devote his full working time and ability to the Company’s business.
       Any other activity, be it for remuneration or not, including any part time work, is subject to the
       explicit prior written consent of the Shareholders or of the CEO who may deny such consent if in
       their view such activity was not in the interest of the Company.

2.2    Scientific and literary activity is permitted, provided that the Company is informed prior to the
       publication, and that such activity does not adversely affect the working capacity of the Managing
       Director, does not give rise to a divulging of confidential information, or is in any other way not in
       the interest of the Company.

                                                   - 43 -



2.3.   During the term of this Service Contract and for an additional two (3years 2) years beyond the
       termination of this Contract, the Managing Director may not solicit or assist or facilitate the
       solicitation of any employee of the Company or of any of its affiliates with the intention of
       causing them to render services to any other person or activity.

2.4    An indirect or direct participation in other undertakings requires the prior written consent of the
       Shareholders or of the CEO, except that such participation concerns publicly traded companies,
       does not exceed five per cent of the shares, and does not permit influence on the undertaking in
       any other way.

                                  3. Transactions subject to consent

3.1    The Managing Director shall have single signature authority for obligations in accordance with the
       specific rules and regulations of the Company.
3.2   The CEO Shareholders reserve the right to alter the amount set forth in paragraph (3.1) above, and
      they may issue and alter a list of transactions subject to prior consent. The CEO Shareholders
      furthermore reserves the right to issue at any time directions of a general nature or for specific
      cases.

3.3   The restrictions set out in section 181 German Civil Code (Bürgerliches Gesetzbuch) (prohibition
      of self-contracting) shall apply unless explicitly stipulated otherwise in the Shareholder resolution
      appointing Mr. Maske as Managing Director.


                                           4. Remuneration


4.1   The Managing Director shall be entitled to an annual gross base salary equivalent to $260,000
      USD$ USD, payable in EURO’S determined at the average exchange rate for the month, and
      distributed in twelve (12) equal installments at the end of a calendar month. One time during the
      term of the contract the Managing Director may elect to set the EURO exchange rate at the
      prevailing exchange rate for the reminder of the contract. The Managing Director may elect to
      convert the gross base salary to a EURO denomination one time during the term of the contract at
      the then current exchange rate. After that election, the base salary will remain in that currency for
      the term of the contract.Furthermore, the Company shall pay the mandatory social security
      contributions including contributions to medical insurance according to German law. In case the
      Managing Director opts for a private medical insurance instead of the state medical insurance, the
      Company will bear half of the contributions due up to a maximum of what would have to be paid
      by the Company to the state medical insurance for the Managing Director’s personal medical
      insurance.

4.2   The annual base salary shall be reviewed annually, considering appropriately the financial and
      economic development of the Company, its affiliates, and the Managing Director’s personal
      performance. The decision whether or not to increase the base salary shall remain at the sole
      discretion of the CEOCompany.

4.3   With payment of the above-mentioned base salary, all activities, which the Managing Director
      performs under this Service Contract, shall be compensated. In particular, he shall not be entitled
      to any additional compensation for overtime work.

4.4   In addition to the salary paid in accordance with Sec. 4.1, the Company may decide to pay the
      Managing Director an annual incentive bonus of up to 70% of annual base pay. Any bonus is
      subject to the Company’s sole discretion. The Company may, subject to its sole discretion, decide
      to establish a bonus incentive plan for any fiscal year, thereby making bonus payments subject to
      additional predefined goals and further conditions as defined in the respective bonus incentive
      plan. For the ongoing fiscal year, the Company shall adapt a bonus incentive plan similar to the
      Franklin Electric Co., Inc. Executive Bonus Plan. The details of the respective bonus plan shall be
      communicated to the Managing Director no later than within sixty (60) days following the start
      date of this contract. The Company reserves the right to change such annual bonus and incentive
      plan at any time, in particular with respect to bonus percentages, incentive targets, goals and bonus
      amounts. The bonus payout, if any, shall become due on or about February 28 of the following
      year.

4.5   An assignment or pledge of the remuneration entitlement is excluded. In case that the Managing
      Director upon culpable injury by a third party becomes unable to work, and the Company
      continues payment to him, the Managing Director already now assigns his damage claim against
      said third party resulting from him having been injured, to the Company up to the amount that the
      Company pays to said injured party.

                                                 - 44 -




4.6   Insofar as the Company grants payments (bonus, ex gratia payments or other additional payments)
      over and above the above-agreed remuneration, such payments are made voluntarily. There will be
      no entitlement to them arising for the future, even if payments were made on several and
      consecutive occasions.

                                          5. Other Benefits

5.1   Travel expenses and other necessary expenses reasonably incurred by the Managing Director in
      the furtherance of the Company’s business will be reimbursed in accordance with the guidelines of
      the Company and within the framework of the principles of German or Luxembourg tax law.

5.2   The Company will in accordance with the applicable company policy as amended from time to
      time provide the Managing Director with a car allowance or a company car for business and
      private use. If he is availed a company car, the Managing Director will maintain the car in good
      condition and will arrange for regular maintenance. The costs for maintenance and use of the
      company car will be borne by the Company. The value of the private use per month as determined
      by German, or, if applicable, Luxembourg tax regulations for the particular type of car constitutes
      additional compensation, the wage withholding tax for which will be borne by the Managing
      Director. In case of his suspension / release from work the Managing Director will return the car at
      any time upon request of the Company; he shall have no right of retention, nor shall he be entitled
      to any compensation in lieu of the private use of the Company Car. In case the Managing Director
      is given a car allowance, the taxes on such allowance will be borne by the Managing Director.

5.3   The Company will take out travel accident insurance to the benefit of the Managing Director with
      the following amounts: (a) in case of death $ 1,000,000 USD (b) in case of complete invalidity
      $1,000,000 USD . The statutory taxes on the financial advantage will be borne by the Managing
      Director. In case of an insured accident, the Managing Director has to inform the Company
      immediately about such accident.

5.4   The Managing Director will start accruing additional pension benefits in the Franklin Electric
      Europa GmbH Pension Plan. This benefit will be a continuation to the benefits the Managing
      Director earned under the German Plan from 1974 - 1999.

                                   6. Inability to perform duties

6.1   In case the Managing Director is unable to perform his duties under this Service Contract, he will
      inform the Company immediately about it, its assumed duration and its reason. In case the
      inability to work is due to health reasons, the Managing Director will provide the Company with a
      medical certificate after three calendar days following the beginning of the illness at the latest,
      indicating the inability to work and its assumed duration.

6.2   In case his inability to perform his duties results from reasons of illness not caused by him, the
      Managing Director shall continue to receive his base salary for the time of such inability, but not
      for longer than six months. The Company’s obligation to continue to pay the Managing Director’s
      base salary in accordance with this Sec. 6.2 shall be reduced by the amount of any sick payments
      or disability payments the Managing Director is paid during such time, whether out of statutory
      schemes, pension funds or otherwise. In case of death of the Managing Director not caused by
      him, his widow will receive the base salary for the month in which the death occurred as well as
      for the following three months. In case there is no wife, the base salary shall be due jointly to all
      children who at the date of the death have not yet retained their 25 th birthday. Should such children
      not exist, the base salary payment shall cease with the date of death of the Managing Director.

                                              7. Vacation

7.1   The Managing Director shall be entitled to an annual holiday of 30 working days excluding
      Saturdays.

7.2   The time of holiday shall be determined in agreement with the CEO taking into considera-tion the
      personal wishes of the Managing Director and the interests of the Company.

                                                   - 45 -




7.3   Holiday entitlement shall accrue month by month evenly through the calendar year. Holidays not
      taken in any calendar year may only be carried forward to the next calendar year with the approval
      of the Company or if they could not be taken in the preceding year due to the business of the
      Company requiring the presence of the Managing Director. Absent the Company’s approval,
      holidays carried forward to the next calendar year must be scheduled before March 31, and taken
      before April 30 of said next calendar year. Otherwise, they shall forfeit without any compensation.

                                      8. Secrecy, Data Protection

8.1   The Managing Director shall not disclose to any third party, or use for personal gain, any
      confidential technical or other business information which has been entrusted to him, or which has
      otherwise become known to the Managing Director and which relates to the Company or to any of
      its affiliated companies. In particular, no information may be disclosed concerning the
      organization of the business, the relation with customers and suppliers and the Company's know-
      how. This obligation shall not expire upon termination of this Service Contract but shall continue
      to remain in force thereafter.

8.2   Business records of any kind, including private notes concerning Company affairs and activities,
      shall be carefully kept and shall be used only for business purposes. No copies or extract or
      duplicates of drawings, calculations, statistics and the like nor of any other business records or
      documents may be copied or extracted for purposes other than for the Company's business.

8.3   Upon termination of this Service Contract, or upon suspension/release from work, the Managing
      Director shall return all business records and copies thereof, regardless of the data carrier; he shall
      have no right of retention.

8.4   According to Section 5 of the Federal Statute on Data Protection (Bundesdatenschutzgesetz) and
      respective other corresponding provisions on data protection, the Managing Director shall not
      process personal data of employees or third parties for any other purpose than required in the
      ordinary fulfillment of business duties and shall not make such personal data available to other
      parties, nor publish or use them in any other way. The Managing Director agrees, however, that
      his personal data be processed by the Company and its affiliates. The Managing Director is aware
      of and agrees that, due to the internal structure of the Company’s group of affiliates and his
      position within the Company being particularly associated also with the Company’s international
      functions, his personnel data may be drawn, stored and processed not only by the Company but
      also by its affiliates, specifically by the Company’s parent company and other affiliates located in
      the U.S.
                                                9. Inventions

9.1      All rights pertaining to inventions, whether patentable or not, and to proposals for technical
         improvements made and to computer software developed by the Managing Director (hereinafter
         jointly called "Inventions") during the term of this Service Contract shall be deemed acquired by
         the Company without paying extra compensation therefore. The Managing Director shall inform
         the Company or a person designated by the Company of any Inventions immediately in writing
         and shall assist the Company in acquiring patent or other industrial property rights, if the
         Company so desires.

Any and all writings or other copyrightable material produced by the Managing Director in the course of
his services reasonably relating to the actual or potential business of the Company or one of its affiliates
shall be the sole property of the Company or such affiliate, and the Company or one of its affiliates shall
have the exclusive right to copyright such writings or other materials in any country. The same shall apply
to any and all significant ideas, works of authorship, formulae, devices, improvements, methods, processes,
or discoveries that are related to the Company or one of its affiliates (hereinafter referred to as
“Improvements”) and which the Managing Director conceives, makes up, develops, or works on in the
course of his services under this Contract shall be the sole property of the Company or of one of its
affiliates, respectively. The Managing Director shall execute any additional documents required to protect
the right, title and interest of the Company or one of its affiliates in the Improvement.


9.2      Subsection 9.1 above shall apply to any Inventions, Improvements or other industrial or
         intellectual property rights, no matter whether they are related to the business of the Company, are
         based on experience and know-how of the Company, emanate from such duties of activities as are
         to be performed by the Managing Director within the Company, or materialize during or outside
         normal business hours of the Company


                                                     - 46 -




9.3      The Company's exclusive and unlimited rights to Inventions, Improvements or other industrial or
         intellectual property acquired hereunder shall in no way be affected by any amendments to or the
         termina-tion of this Service Contract. Should the Managing Director by law be entitled to any
         compensation payment for such intellectual property rights which - as agreed above - solely
         pertain to the Company or one of its affiliates it is agreed that such payment is covered by the
         salary and that the Managing Director shall have no further claims against the Company or its
         affiliates.

                                      10. Term of Service and Notice

10.1     This Service Contract is entered into for an indefinite period. It shall, however, end without the
         need to give notice not later than the expiry of the month during which the Managing Director
         attains the age of 65, or the month during which the Managing Director is entitled to receive state
         old age pension or pension for inability to work, whichever occurs first. Both parties are entitled to
         terminate this Contract by giving six (6) months prior notice effective to the end of any calendar
         month. In case the Company is obliged to observe an extended notice period, such an extension
         shall also apply for the Managing Director.

10.2     In case this Contract has been terminated, the Com-pany is entitled to suspend and relieve the
       Managing Director from work at any time. In such case the Company shall con-tinue to pay the
       contractual remuneration to the Managing Director for six (6) months as of the termination notice.
       Any holidays not yet taken shall be set off against the time period during which the Managing
       Director is suspended/relieved from work. Any suspension period shall not count for calculating a
       possible bonus or payment exceeding his gross base salary.

10.3   Notice of extraordinary termination, effective immediately, may be given for compelling reasons.
       Such reasons shall specifically be deemed to exist in case the Managing Director violates Articles
       2, 3 and 8 of this Service Contract. The right of both Parties to terminate extraordinarily for other
       reasons remains unaffected.

10.4   Notice of termination must be given in writing. A revocation of appointment as Managing
       Director shall at the same time be deemed as termination of this Contract with notice period,
       provided that no termination for cause is made.

                                          11. Forfeiture clause

11.1   All mutual claims arising out of the Service Contract and such claims which are related to the
       Service Contract, shall lapse if they are not asserted against the other party to the contract in
       writing within two months after the due date.

11.2   If the other party rejects the claim in writing or if a written response is not given within two weeks
       after the assertion of the claim, the claim shall lapse if it is not asserted before the courts within
       two months after receipt of the rejection or after expiry of the two week-period.


                                          12. Final provisions

12.1   This Service Contract represents the entire agreement and understanding of the parties. It
       supersedes and replaces all other previous contracts of employment as issued by the Company or
       its affiliates. An amendment to this contract is the Peter Maske Benefit summary August 1, 2003
       attached to this contract.

12.2   Any amendments of or additions to this Service Contract shall be made in writing in order to be
       effective.

12.3   If one of the provisions of this Service Contract is held to be invalid, the remaining provisions
       shall remain valid, and the invalid provision shall be replaced by such valid one which shall have
       the closest admissible economic effect. The same shall apply in the event that the Contract is
       found to be incomplete.

12.4   In the event of disputes in connection with this Service Contract, the place of jurisdiction shall be
       the European seat of the Company.

12.5   This Service Contract shall be governed and construed in accordance with the laws of Germany.

12.6   The Managing Director has received an executed copy of this Service Contract.

                                                   - 47 -
Wittlich, Germany August 1, 2003 Wittlich, Germany August 1, 2003

/s/ Gary Ward                       /s/ Peter Christian Maske
Company                             Managing Director
/s/ R. Scott
Trumbull




                                                   - 48 -



Amendment to Managing Director Service Contract ( 12.1 )




Peter Maske Compensation and Benefit Summary August 1, 2003

Effective with your re-assignment to Germany and the European Operations your salary and benefits will
be adjusted as follows:

      order to maintain the net compensation level due to the tax differential between the U.S. and
       In
       Germany your annual base salary will be $260,000.00 USD payable at the current EURO
       exchange.

      will retain your pension benefits earned between 1999 and 2003 in the Cash Balance Pension
       You
       Plan and Franklin Electric Basic Pension Plan.

      will start accruing additional pension benefits in the German Plan effective August 1, 2003
       You
       until your retirement. This benefit will be a continuation to the pension benefits you have earned
       under the German Plan 1974 - 1999.

      FE EUROPA GmbH Pension Plan is attached.
       The

      there is a termination of employment and it is effected in connection with a change in control of
       If
       Franklin Electric Co., Inc. (the Company), the Company will be required to pay you your annual
       compensation for two years from the date of termination or change in control, whichever is earlier,
       and to continue to provide you with certain health benefits under the Company’s benefit plan in
       which you were a participant at the time of your termination of employment. These health benefits
       will run concurrent with any compensation payments.


                                                   - 49 -




                                                                                           EXHIBIT 10.15
                    CONFIDENTIALITY AND NON-COMPETE AGREEMENT
In consideration of my employment with Franklin Electric Co., Inc. (“Employer”) and other good and
valuable consideration, the receipt and sufficiency of which consideration are hereby acknowledged, I
agree on this ____ day of ____, in the year _______ as follows:

                                           CONFIDENTIALITY

1.      I acknowledge that Employer has certain non-public confidential information, including (a)
        technical information, such as drawings, specifications, design tolerances, manufacturing methods
        and processes, as well as research and development efforts, results and plans, and (b) client
        information, such as client contact information, contract terms, client listings, files, purchase
        history, needs and preferences; (c) financial information, such as sales plans and forecasts, sales
        and earnings figures, profitability information, and pricing; (d) corporate strategies, new product,
        marketing and other strategic plans; and (e) personnel files and information (“Confidential
        Information”). I understand that my employment with Employer places me in a position of trust
        and confidence, and in the course of my employment with Employer and because of the nature of
        my responsibilities, I have received and will receive access to Employer’s Confidential
        Information, which I recognize and agree is highly sensitive and valuable, and is the exclusive
        property of Employer.

2.      During my employment with Employer and thereafter, I will maintain all Confidential Information
        that comes into my possession as confidential and as the exclusive property of Employer, and such
        Confidential Information shall not be disclosed by me nor used by me in any way, except as
        required by my duties to, and for the benefit of, Employer. I will not remove any Confidential
        Information from Employer’s premises except as my duties shall require and as authorized by
        Employer.

3.      Upon any termination of my employment, I will immediately turn over all of the following to my
        supervisor, and I shall retain no copies thereof: all documents and files (whether paper, digital,
        electronic or otherwise) that were supplied to me by Employer, or that were obtained or created by
        me pursuant to my duties for Employer, including all drawings, designs, specifications, manuals,
        keys, computer equipment and software, computer printouts and databases, and any other
        materials supplied to me by Employer or purchased with Employer’s funds, and all copies
        (whether copied onto paper, electronic, digital, tape, or other media) thereof.

COVENANT NOT TO COMPETE, NOT TO HIRE EMPLOYEES, AND OTHER COVENANTS

4.      A. Activity Covenant: For a period of eighteen (18) months after I cease to be employed by
        Employer for any reason, I will not directly or indirectly engage in, or assist any other person or
        entity to engage in, any Restricted Activity. “Restricted Activity” as used herein means: (i) the
        design, development, manufacture, assembly, or distribution of electrical submersible motors,
        electrical submersible motor controls and submersible pumps that are sold, or are offered or
        intended for sale, within or to the United States or the European Union in competition with those
        designed, developed, manufactured, assembled, distributed or sold by Employer and the (ii)
        solicitation, encouragement, or inducement (or assisting anyone else to solicit, encourage, or
        induce) any agent, vendor, supplier or independent contractor to terminate, reduce or curtail their
        business or relationship with Employer.

        B. Customer-Based Restriction: For a period of eighteen (18) months after I cease for any reason
        to be an employee of Employer, I will not, directly or indirectly, solicit (or assist in the solicitation
        of) orders for Competitive Products from, or provide any Competitive Product to, any Customer or
        Potential Customer of Employer. “Customer” means only those customers with whom Employer
        actually did business during the last year of my employment, and “Potential Customer” shall mean
        any person or entity to which Employer provided a proposal or bid during the last year of my
        employment.
                                                - 50 -



     C. Non-Compete Covenant: For a period of eighteen (18) months after I cease to be employed by
     employer for any reason, I will not directly or indirectly, within the United States or the European
     Union, become employed by, work for, or otherwise provide services to, any Competitor in any
     capacity that relates to the design, development, manufacture, assembly, distribution or sale of
     Competitive Products. “Competitive Products” means electrical submersible motors, electrical
     submersible motor controls and submersible pumps. “Competitor” means any person or entity that
     designs, develops, manufactures, assembles, distributes or sells electrical submersible motors,
     electrical submersible motor controls and/or submersible pumps in competition with Employer.

     D. Non-Hire Agreement: For a period of eighteen (18) months after I cease for any reason to be an
     employee of Employer, I will not, directly or indirectly, (a) hire, interview for employment, offer
     employment to, or employ any Restricted Employee, or assist anyone else to do so, or (b) solicit,
     advise, encourage or induce (or assist in the solicitation, advising, encouragement or inducement
     of) any Restricted Employee to terminate his or her employment with Employer or suggest that
     s/he do so. “Restricted Employee” means any person who was employed by Employer within the
     last three (3) months of my employment with Employer, and with whom I had contact or for
     whom I had direct or indirect supervisory responsibility during my employment with Employer.

     E. Other covenants: At the time of giving my notice, I will also inform Employer of the name of
     my new Employer. I recognize that the business of Employer is global, with most of its sales and
     business activities being concentrated in the United States and the European Union, and I
     recognize that my duties for Employer relate to its business in (and its Confidential Information
     relating to) both of those areas. The foregoing restrictions will not unduly hamper my ability to
     make a living in my field, and these restrictions are a fair and reasonable way to protect Employer
     and its legitimate business interests.

                                    OTHER AGREEMENTS

5.   In addition to any damages awarded by any court and all other remedies otherwise available at law
     or in equity, Employer shall be entitled to injunctions, both preliminary and final, enjoining and
     restraining any breach or threatened or intended breach of paragraphs 2, 3 and 4, and I hereby
     consent to the issuance thereof without Employer being required to post any bond. In the event
     that Employer shall successfully enforce any part of this Agreement through legal proceedings, I
     agree to pay to Employer all costs and attorneys’ fees reasonably incurred by it in that endeavor.
     In the event that I am found to have breached any covenant in this agreement, the time period
     provided for in that covenant shall be deemed tolled (i.e., it will not run) for so long as I am in
     violation of that covenant.

6.   I understand and agree that this Agreement is not a guarantee of continued employment for any
     period. My employment is at will. This means I am free to terminate my employment at any time,
     for any reason, and that Employer retains the same rights.

7.   This Agreement shall be construed and applied under Indiana law. If any one or more of the
     provisions contained in this Agreement shall, for any reason, be held to be invalid or
     unenforceable in any respect, this Agreement shall be construed as if such provision had never
     been contained herein, and the remainder of this Agreement shall be enforceable and binding upon
     the parties. If any one or more of the provisions contained in this Agreement shall for any reason
     be held to be excessively broad (for example as to temporal scope), it shall be construed and
     limited so as to be compatible with the applicable law as it then shall appear.
EMPLOYEE:                                   EMPLOYER:


                                            by


[printed name]                              its

date:                                       date:




                                                    - 51 -




                                                                                           EXHIBIT 10.16
                                    CONSULTING AGREEMENT

This Consulting Agreement will become effective the 1st day of January 2006 or such earlier date as
determined by either party upon providing 30 days written notice, by Franklin Electric Co., Inc.
(“Franklin”) and Jess Ford (“Consultant”). By executing this agreement both parties agree to waive the
90-day notice requirement under Section 2 of Mr. Ford’s employment agreement. Under no circumstances
would this Consulting Agreement and Mr. Ford’s Employment Agreement be effective at the same time.

 1. Services. Consultant agrees to provide up to 500 hours of consulting services per annum, as requested
    by the Chief Executive Officer of Franklin, respecting the general operations of Franklin both domestic
    and international. Services will be scheduled on a mutually acceptable basis. Consultant shall exercise
    a reasonable degree of skill and care in performing the consulting services under this Agreement.

 2. Fees. In return for the services provided by Consultant, Franklin agrees to pay to Consultant
    $20,840.00 each month for a period of twelve months beginning with the effective date of this
    agreement. Further, Consultant will be eligible to receive an annual performance bonus. The
    performance bonus will be a percent of the annual retainer calculated using the Franklin Executive
    Officer Performance Bonus Plan formula. The Consultant will receive a pro-rata share of the bonus
    based upon the amount of services provided during the term of this agreement. The amount of the
    services provided for calculating the bonus will be determined by the Chief Executive Officer and the
    Consultant on a mutually acceptable basis. During the term of this agreement stock option grants
    previously awarded will continue to vest in accordance with the option agreement document.

  3. Relationship of Parties. Consultant is an independent contractor and not an agent or
employee of Franklin. Franklin shall have no right to control Consultant’s methods or means for providing
the services designated in this Agreement.

 4. Insurance, Fringe Benefits and Taxes. Consultant, during the term of this agreement, will be covered
    by Franklin’s medical and life insurance provided employees. This agreement in no way nullifies or
    changes the insurance and fringe benefits the consultant may have earned with Franklin for his
    employment years.

 5. Expenses. Consultant may incur expenses in connection with providing the services. Consultant shall
    be responsible for paying all such expenses except that Franklin agrees to reimburse Consultant for the
    following expenses: Travel and related business expenses.

 6. Confidentiality. All information provided to Consultant by Franklin or obtained by Consultant from
    Franklin shall be held in confidence and shall not be disclosed by Consultant to any third party.
    Consultant shall not use any of the confidential information for any purpose other than to provide the
    consulting services to Franklin. All confidential information, including all copies or other
    reproductions made by Consultant, shall be deemed the property of Franklin and shall be returned to
    Franklin.

                                                     - 52 -




 7. Inventions and Information. All inventions and information developed in connection with
    consultant’s services shall be the property of Franklin. Consultant shall execute any documents
    (including patent applications or the assignments thereof) necessary to vest in Franklin the full title and
    interest in all information, inventions and improvements developed.

 8. Covenant Not to Compete. During the term of this Agreement and for one (1)
additional year, Consultant shall not, by himself or in connection with any entity, directly or indirectly,
undertake, carry on, participate in or have any financial interest in, or in any manner advise or assist any
person or entity in, any business involving the subject matter of the consulting services provided hereunder.

 9. Termination. This Agreement expires twelve calendar months following the effective date but no later
    than December 31, 2006.

10. Miscellaneous. This Agreement constitutes the entire Agreement between the parties and it shall be
     governed by and enforced in accordance with the laws of the State of Indiana. Whenever possible, each
     provision of this Agreement shall be interpreted in such a manner as to be effective and valid, but if
     any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision
     shall be ineffective only to the extent of such prohibition or invalidity without invalidating the
     remainder of such provision or the remaining provisions of the Agreement.
Franklin shall defend Consultant against all claims and proceedings and shall hold them harmless from all
liabilities and losses arising from anything done or any recommendations made under this contract.

IN WITNESS WHEREOF, the parties have executed this Agreement on February 11, 2005.

Franklin Electric., Inc.                            Consultant

By /s/ Gary Ward                                    /s/ Jess B. Ford
(printed name and title)                            (signature)

                                                    (printed name)



                                                    (address)
                                                   (social security number)


Date                                               Date




                                                    - 53 -




                                                                                    EXHIBIT 10.17


                       Executive Officer Annual Incentive Cash Bonus Program
         The Company maintains an annual incentive cash bonus program to attract, retain and motivate
executive officers who can contribute to the Company's future success. The program is administered by the
Personnel and Compensation Committee (the “Committee”).

          Each year the Committee approves an annual incentive cash bonus calculation for the executive
officers with performance targets comprised of the Company’s financial performance results and the
individual’s strategic task accomplishments. Unless otherwise determined by the Committee, the
Company’s financial performance results are based on pre-tax return on net assets and earnings per share
results. The bonus amount payable is a percentage of salary based upon an executive’s participation
category and the level of attainment of the applicable performance targets. The maximum bonus payable as
a percent of base salary is 75% of salary for executive officers other than the Chief Executive Officer and
100% for the Chief Executive Officer. Performance below the target levels will result in lower or no bonus
payments.


                                                    - 54 -




                                                                                            EXHIBIT 10.18

                                        [Non-Director Employees]

       THIS DOCUMENT CONSTITUTES PART OF THE SECTION 10(a) PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933.


                              Franklin Electric Co., Inc. Stock Option Plan
                                Non-Qualified Stock Option Agreement

         The employee identified below has been selected to be a Participant in the Franklin Electric Co.,
Inc. Stock Option Plan (the “Plan”) and has been granted a Non-Qualified Option as outlined below:
Participant:
Date of Grant:
Shares Covered by the Option:
Option Exercise Price: $
Expiration Date:
Vesting Schedule:

          This Agreement, effective as of the Date of Grant set forth above, is between Franklin Electric
Co., Inc., an Indiana corporation (the “Company”), and the Participant named above. The parties hereto
agree as follows:

          The Plan provides a complete description of the terms and conditions governing the Option. If
there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms
shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless otherwise
set forth herein. A copy of the Plan is attached hereto and the terms of the Plan are hereby incorporated by
reference.

         1.      Stock Option Grant. Subject to the provisions set forth herein and the terms and
conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the
Company hereby grants to the Participant an Option to purchase from the Company the number of shares of
Common Stock, at the exercise price per share, and on the schedule, set forth above.

         2.      Acceptance by Participant. The exercise of the Option is conditioned upon the execution
of this Agreement by the Participant and the return of an executed copy of the Agreement to the Secretary
of the Company no later than 60 days after the Date of Grant or, if later, 30 days after the Participant
receives this Agreement.

         3.      Exercise of Option. Subject to Section 4 below, the Participant may exercise the vested
portion of the Option at any time prior to the Expiration Date. Written notice of an election to exercise any
portion of the Option shall be given by the Participant, or his personal representative in the event of the
Participant’s death, to the Company’s Chief Financial Officer, in accordance with procedures established
by the Personnel and Compensation Committee of the Board of Directors of the Company (the
“Committee”) as in effect at the time of such exercise.

          At the time of exercise of the Option, payment of the purchase price for the shares of Common
Stock with respect to which the Option is exercised must be made by one or more of the following
methods: (i) in cash, (ii) in cash received from a broker-dealer to whom the Participant has submitted an
exercise notice and irrevocable instructions to deliver the purchase price to the Company from the proceeds
of the sale of shares subject to the Option, or (iii) by delivery to the Company of other Common Stock
owned by the Participant that is acceptable to the Company, valued at its then fair market value.

         If applicable, an amount sufficient to satisfy all minimum Federal, state and local withholding tax
requirements prior to delivery of any certificate for shares of Common Stock must also accompany the
exercise. Payment of such taxes can be made by a method specified above, and/or by directing the
Company to withhold such number of shares of Common Stock otherwise issuable upon exercise of the
Option with a fair market value equal to the amount of tax to be withheld.


                                                     - 55 -



         No shares shall be issued upon exercise of the Option until full payment of the exercise price and
tax withholding obligation has been made.
         4.      Exercise Upon Termination of Employment. If the Participant’s employment with the
Company and all subsidiaries terminates for any reason other than death, disability or retirement, the
Option shall expire on the date of such termination, and no portion shall be exercisable after the date of
such termination.

          In the event of the Participant’s death, disability or retirement during employment with the
Company or any subsidiary, the outstanding portion of the Option shall become fully vested on such date.
The Option shall continue to be exercisable until the earlier of (i) the date the Option expires by its terms
and (ii) in the case of termination due to disability or retirement, 36 months after the date of such
termination, and in the case of termination due to death, 12 months after the date of such termination. For
this purpose (A) “disability” has the meaning, and will be determined, as set forth in the Company’s long
term disability program in which the Participant participates, and (B) “retirement” means the Participant’s
termination from employment with the Company and all subsidiaries without cause (as determined by the
Committee in its sole discretion) when the Participant is 65 or older or 55 or older with 10 years of service
with the Company and its subsidiaries.

         The foregoing provisions of this Section 4 shall be subject to the provisions of any written
employment or severance agreement that has been or may be executed by the Participant and the Company,
and the provisions in such employment or severance agreement concerning exercise of the Option shall
supercede any inconsistent or contrary provision of this Section 4.

          5.       Nontransferability of Options. The Option may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and
distribution. Notwithstanding the preceding provisions of this Section 5, the Participant, at any time prior to
his or her death, may assign all or any portion of the Option to (i) his or her spouse or lineal descendant, (ii)
the trustee of a trust established for the primary benefit of his or her spouse or lineal descendant, (iii) a
partnership of which his or her spouse and lineal descendants are the only partners, or (iv) a tax-exempt
organization as described in Section 501(c)(3) of the Code. In such event, the spouse, lineal descendants,
trustee, partnership or tax-exempt organization will be entitled to all the rights of the Participant with
respect to the assigned portion of the Option, and such portion of the Option will continue to be subject to
all of the terms, conditions and restrictions applicable to the Option as set forth in the Plan and this
Agreement. Any such assignment will be permitted only if (i) the Participant does not receive any
consideration therefor, and (ii) the assignment is expressly approved by the Board. Any such assignment
shall be evidenced by an appropriate written document executed by the Participant and a copy thereof shall
be delivered to the Board on or prior to the effective date of the assignment.

          6.      Beneficiary Designation. The Participant may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any benefit under the Option is
to be paid in the event of his or her death. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Board, and will be effectively only when filed by the
Participant in writing with the Board during his or her lifetime. In the absence of any such designation, or if
all beneficiaries predecease the Participant, benefits remaining unpaid at the Participant’s death shall be
paid to the Participant’s estate.

         7.      Rights as a Stockholder. The Participant shall have no rights as a stockholder of the
Company with respect to the shares of Common Stock subject to the Option and this Agreement until such
time as the exercise price has been paid and the shares have been issued and delivered to him or her.

         8.      Surrender of or Changes to Agreement. In the event the Option shall be exercised in
whole, this Agreement shall be surrendered to the Company for cancellation. In the event the Option shall
be exercised in part or a change in the number of designation of the shares of Common Stock shall be
made, this Agreement shall be delivered by the Participant to the Company for the purpose of making
appropriate notation thereon, or of otherwise reflecting, in such manner as the Company shall determine,
the change in the number or designation of such shares.


                                                      - 56 -




         9.      Administration. The Option shall be exercised in accordance with such administrative
regulations as the Committee shall from time to time adopt. It is expressly understood that the Committee is
authorized to administer, construe, and make all determinations necessary or appropriate to the
administration of, the Plan and this Agreement, all of which shall be binding upon the Participant.

        10.        Governing Law. This Agreement, and the Option, shall be construed, administered and
governed in all respects under and by the laws of the State of Indiana.

         IN WITNESS WHEREOF, this Agreement is executed by the parties this ____ day of ________,
____, effective as of the ____ day of ________, ____.

         FRANKLIN ELECTRIC CO., INC.




                                                      By:
Participant



                                                      - 57 -




Franklin Electric Co., Inc. Stock Option Plan

                                              Name (Please Print)

In the event of my death, the following person is to receive any benefits payable under the Franklin Electric
Co., Inc. Stock Option Plan.

NOTE:           The primary beneficiary(ies) will receive your Stock Option Plan benefits. If more than one
primary beneficiary is indicated, the benefits will be split among them equally. If you desire to provide for
a distribution of benefits among primary beneficiaries on other than an equal basis, please attach a sheet
explaining the desired distribution in full detail. If any primary beneficiary is no longer living on the date of
your death, the benefit which the deceased primary beneficiary would otherwise receive will be distributed
to the secondary beneficiary(ies), in a similar manner as described above for the primary beneficiary(ies).

              Primary Beneficiary                              Secondary Beneficiary

Last Name                      First                           M.I.          Relationship
Street Address                            City, State, Zip Code

             Primary Beneficiary                              Secondary Beneficiary

Last Name                     First                           M.I.         Relationship

Street Address                            City, State, Zip Code

             Primary Beneficiary                              Secondary Beneficiary

Last Name                     First                           M.I.         Relationship

Street Address                            City, State, Zip Code

If a trust or other arrangement is listed above, include name, address and date of arrangement below:

Name                        Address                                                Date
             For additional beneficiaries, check here and attach an additional sheet of paper.

This supersedes any beneficiary designation previously made by me under this Plan. I reserve the right to
change the beneficiary at any time.




Date                                           Sign your full name here

Date received by Franklin Electric Co., Inc.

                                               By:



                                                     - 58 -




                                                                                            EXHIBIT 10.19

                                          [Director Employees]

THIS DOCUMENT CONSTITUTES PART OF THE SECTION 10(a) PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.


                              Franklin Electric Co., Inc. Stock Option Plan
                                Non-Qualified Stock Option Agreement

         The employee identified below has been selected to be a Participant in the Franklin Electric Co.,
Inc. Stock Option Plan (the “Plan”) and has been granted a Non-Qualified Option as outlined below:
Participant:
Date of Grant:
Shares Covered by the Option:
Option Exercise Price: $
Expiration Date:
Vesting Schedule:

          This Agreement, effective as of the Date of Grant set forth above, is between Franklin Electric
Co., Inc., an Indiana corporation (the “Company”), and the Participant named above. The parties hereto
agree as follows:

          The Plan provides a complete description of the terms and conditions governing the Option. If
there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms
shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless otherwise
set forth herein. A copy of the Plan is attached hereto and the terms of the Plan are hereby incorporated by
reference.

         1.      Stock Option Grant. Subject to the provisions set forth herein and the terms and
conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the
Company hereby grants to the Participant an Option to purchase from the Company the number of shares of
Common Stock, at the exercise price per share, and on the schedule, set forth above.

         2.      Acceptance by Participant. The exercise of the Option is conditioned upon the execution
of this Agreement by the Participant and the return of an executed copy of the Agreement to the Secretary
of the Company no later than 60 days after the Date of Grant or, if later, 30 days after the Participant
receives this Agreement.

         3.      Exercise of Option. Subject to Section 4 below, the Participant may exercise the vested
portion of the Option at any time prior to the Expiration Date. Written notice of an election to exercise any
portion of the Option shall be given by the Participant, or his personal representative in the event of the
Participant’s death, to the Company’s Chief Financial Officer, in accordance with procedures established
by the Personnel and Compensation Committee of the Board of Directors of the Company (the
“Committee”) as in effect at the time of such exercise.

          At the time of exercise of the Option, payment of the purchase price for the shares of Common
Stock with respect to which the Option is exercised must be made by one or more of the following
methods: (i) in cash, (ii) in cash received from a broker-dealer to whom the Participant has submitted an
exercise notice and irrevocable instructions to deliver the purchase price to the Company from the proceeds
of the sale of shares subject to the Option, or (iii) by delivery to the Company of other Common Stock
owned by the Participant that is acceptable to the Company, valued at its then fair market value.


                                                     - 59 -



         If applicable, an amount sufficient to satisfy all minimum Federal, state and local withholding tax
requirements prior to delivery of any certificate for shares of Common Stock must also accompany the
exercise. Payment of such taxes can be made by a method specified above, and/or by directing the
Company to withhold such number of shares of Common Stock otherwise issuable upon exercise of the
Option with a fair market value equal to the amount of tax to be withheld.
         No shares shall be issued upon exercise of the Option until full payment of the exercise price and
tax withholding obligation has been made.

         4.      Exercise Upon Termination of Employment. If the Participant’s employment with the
Company and all subsidiaries terminates for any reason other than death, disability or retirement, and in
connection therewith his service on the Board terminates, the Option shall expire on the date of such
termination, and no portion shall be exercisable after the date of such termination.

          If the Participant’s employment with the Company and all subsidiaries terminates due to death,
disability or retirement, the outstanding portion of the Option shall become fully vested on such date. The
Option shall continue to be exercisable until the earlier of (i) the Option’s Expiration Date and (ii) in the
case of termination due to disability or retirement, 36 months after the date of such termination, and in the
case of termination due to death, 12 months after the date of such termination. In such case, the
Participant’s concurrent or subsequent termination of service on the Board shall have no effect on the
Option.

          In the event the Participant’s employment with the Company and all subsidiaries terminates for
any reason other than death, disability or retirement, and the Participant’s service on the Board continues
thereafter, the Option shall continue to vest and remain exercisable in accordance with its terms. If the
Participant’s service on the Board subsequently terminates, then (i) if the termination of service is due to
death, disability or retirement, the outstanding portion of the Option shall become fully vested on such date
and shall continue to be exercisable until the earlier of (A) the Expiration Date and (B) in the case of
termination due to disability or retirement, 36 months after the date of termination of service, and in the
case of termination of service due to death, 12 months after the date of termination of service and (ii) if the
termination of service is for any reason other than death, disability or retirement, the Option shall expire on
the date of such termination of service, and no portion shall be exercisable after the date of such
termination.

          For purposes of this Section 4, (i) “disability” (A) while the Participant is employed, has the
meaning, and will be determined, as set forth in the Company’s long term disability program in which the
Participant participates, and (B) while the Participant is a Non-Employee Director, means (as determined
by the Committee in its sole discretion) the inability of the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which is expected to result
in death or disability or which has lasted or can be expected to last for a continuous period of not less than
12 months and (ii) “retirement” (A) while the Participant is employed, means the Participant’s termination
from employment with the Company and all subsidiaries without cause (as determined by the Committee in
its sole discretion) when the Participant is 65 or older or 55 or older with 10 years of service with the
Company and its subsidiaries, and (B) while the Participant is a Non-Employee Director, means
termination of service on the Board when he is 70 or older.

         The foregoing provisions of this Section 4 shall be subject to the provisions of any written
employment or severance agreement that has been or may be executed by the Participant and the Company,
and the provisions in such employment or severance agreement concerning exercise of the Option shall
supercede any inconsistent or contrary provision of this Section 4.


                                                     - 60 -



          Nontransferability of Options. The Option may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
Notwithstanding the preceding provisions of this Section 5, the Participant, at any time prior to his or her
death, may assign all or any portion of the Option to (i) his or her spouse or lineal descendant, (ii) the
trustee of a trust established for the primary benefit of his or her spouse or lineal descendant, (iii) a
partnership of which his or her spouse and lineal descendants are the only partners, or (iv) a tax-exempt
organization as described in Section 501(c)(3) of the Code. In such event, the spouse, lineal descendants,
trustee, partnership or tax-exempt organization will be entitled to all the rights of the Participant with
respect to the assigned portion of the Option, and such portion of the Option will continue to be subject to
all of the terms, conditions and restrictions applicable to the Option as set forth in the Plan and this
Agreement. Any such assignment will be permitted only if (i) the Participant does not receive any
consideration therefor, and (ii) the assignment is expressly approved by the Board. Any such assignment
shall be evidenced by an appropriate written document executed by the Participant and a copy thereof shall
be delivered to the Board on or prior to the effective date of the assignment.

          5.      Beneficiary Designation. The Participant may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any benefit under the Option is
to be paid in the event of his or her death. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Board, and will be effectively only when filed by the
Participant in writing with the Board during his or her lifetime. In the absence of any such designation, or if
all beneficiaries predecease the Participant, benefits remaining unpaid at the Participant’s death shall be
paid to the Participant’s estate.

         6.      Rights as a Stockholder. The Participant shall have no rights as a stockholder of the
Company with respect to the shares of Common Stock subject to the Option and this Agreement until such
time as the exercise price has been paid and the shares have been issued and delivered to him or her.

         7.      Surrender of or Changes to Agreement. In the event the Option shall be exercised in
whole, this Agreement shall be surrendered to the Company for cancellation. In the event the Option shall
be exercised in part or a change in the number of designation of the shares of Common Stock shall be
made, this Agreement shall be delivered by the Participant to the Company for the purpose of making
appropriate notation thereon, or of otherwise reflecting, in such manner as the Company shall determine,
the change in the number or designation of such shares.

         8.      Administration. The Option shall be exercised in accordance with such administrative
regulations as the Committee shall from time to time adopt. It is expressly understood that the Committee is
authorized to administer, construe, and make all determinations necessary or appropriate to the
administration of, the Plan and this Agreement, all of which shall be binding upon the Participant.

        9.       Governing Law. This Agreement, and the Option, shall be construed, administered and
governed in all respects under and by the laws of the State of Indiana.

         IN WITNESS WHEREOF, this Agreement is executed by the parties this ____ day of ________,
____, effective as of the ____ day of ________, ____.

         FRANKLIN ELECTRIC CO., INC.



                                                     By:
Participant



                                                     - 61 -
Franklin Electric Co., Inc. Stock Option Plan

                                               Name (Please Print)

In the event of my death, the following person is to receive any benefits payable under the Franklin Electric
Co., Inc. Stock Option Plan.

NOTE:           The primary beneficiary(ies) will receive your Stock Option Plan benefits. If more than one
primary beneficiary is indicated, the benefits will be split among them equally. If you desire to provide for
a distribution of benefits among primary beneficiaries on other than an equal basis, please attach a sheet
explaining the desired distribution in full detail. If any primary beneficiary is no longer living on the date of
your death, the benefit which the deceased primary beneficiary would otherwise receive will be distributed
to the secondary beneficiary(ies), in a similar manner as described above for the primary beneficiary(ies).

             Primary Beneficiary                              Secondary Beneficiary

Last Name                      First                         M.I.            Relationship

Street Address                             City, State, Zip Code

             Primary Beneficiary                              Secondary Beneficiary

Last Name                      First                         M.I.            Relationship

Street Address                             City, State, Zip Code

             Primary Beneficiary                              Secondary Beneficiary

Last Name                      First                         M.I.            Relationship

Street Address                             City, State, Zip Code

If a trust or other arrangement is listed above, include name, address and date of arrangement below:

Name                         Address                                                Date
              For additional beneficiaries, check here and attach an additional sheet of paper.

This supersedes any beneficiary designation previously made by me under this Plan. I reserve the right to
change the beneficiary at any time.



Date                                             Sign your full name here

Date received by Franklin Electric Co., Inc.

                                                 By:
                                                       - 62 -




                                                                                       EXHIBIT 21
                                        FRANKLIN ELECTRIC CO., INC.

                                  SUBSIDIARIES OF THE REGISTRANT
                                            ____________

                                               State or country of    Percent of voting stock
                                               incorporation          owned
Subsidiaries
consolidated:
Advanced Polymer Technology, Inc.              Michigan                                         100

Coverco S.r.l.                                 Italy                                            100

EBW, Inc.                                      Michigan                                         100

Franklin Electric (Australia) Pty. Ltd.        Australia                                        100

Franklin Electric B.V.                         Netherlands                                      100

Franklin Electric Europa GmbH                  Germany                                          100

Franklin Electric International, Inc.          Delaware                                         100

Franklin Electric Manufacturing, Inc.          Indiana                                          100

Franklin Electric Sales, Inc.                  Indiana                                          100

Franklin Electric (Shanghai) Co., Ltd.         China                                            100

Franklin Electric (Shenzen) Co., Ltd.          China                                            100

Franklin Electric spol s.r.o.                  Czech Republic                                   100

Franklin Electric (South Africa) Pty. Ltd.     South Africa                                     100

Franklin Electric Subsidiaries, Inc. [inactive] Indiana                                         100

Franklin Electric (Suzhou) Co., Ltd.           China                                            100

Franklin Fueling Systems, GmbH                 Germany                                          100

Franklin Fueling Systems, Inc.                 Indiana                                          100
Franklin Pump Systems, Inc.                 Arkansas                                                  100

Intelligent Controls, Inc.                  Maine                                                     100

Mesmex S.A. de C.V.                         Mexico                                                    100

Motores Franklin S.A. de C.V.               Mexico                                                    100

Motori Sommersi Riawolgibili S.r.l.         Italy                                                      75

Servicios de Mesmex S.A. de C.V             Mexico                                                    100


                                                    - 63 -




                                                                                             EXHIBIT 23


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




We consent to the incorporation by reference in Registration Statements on Form S-8 (file numbers 2-
90330, 33-21303, 33-35958, 33-35960, 33-35962, 33-38200, 333-01957, 333-01959, 333-59771, 333-
93121, 333-34992, 333-34994, 333-34996 and 333-111370) of our reports dated February 10, 2005 relating
to the financial statements and financial statement schedule of Franklin Electric Co., Inc., and
management’s report on effectiveness of internal control over financial reporting appearing in this Annual
Report on Form 10-K of Franklin Electric Co., Inc. for the year ended January 1, 2005.


/s/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP
Chicago, Illinois
February 10, 2005




                                                    - 64 -




                                                                                           EXHIBIT 31.1

                                           CERTIFICATIONS
                     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 Annual Report on Form 10-K of Franklin Electric Co., Inc., for the year
        ending January 1, 2005;
     2. Based on my knowledge, this Annual 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 Annual Report;

     3. Based on my knowledge, the financial statements, and other financial information included in this
        Annual 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 Annual Report;

     4. The registrant’s other certifying officer 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))
        and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
        15(f)) for the registrant and we 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 Annual Report is
                  being prepared;

               b. Designed such internal control over financial reporting, or caused such internal control
                  over financial reporting to be designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and the preparation of financial
                  statements for external purposes in accordance with generally accepted accounting
                  principles.

               c. 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 end of the period covered by this Annual Report based on such
                  evaluation; and

               d. 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 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 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
        registrant’s board of directors or persons performing similar functions:

               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

               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:       February 11, 2005



/s/ R. Scott Trumbull
R. Scott Trumbull
Chairman and Chief Executive Officer
Franklin Electric Co., Inc.


                                                       - 65 -




                                                                                                 EXHIBIT 31.2


                       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 Annual Report on Form 10-K of Franklin Electric Co., Inc., for the year
           ending January 1, 2005;
        2. Based on my knowledge, this Annual 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 Annual Report;

        3. Based on my knowledge, the financial statements, and other financial information included in this
           Annual 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 Annual Report;

        4. The registrant’s other certifying officer 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))
           and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
           15(f)) for the registrant and we 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 Annual Report is
                    being prepared;

                 b. Designed such internal control over financial reporting, or caused such internal control
                    over financial reporting to be designed under our supervision, to provide reasonable
                    assurance regarding the reliability of financial reporting and the preparation of financial
                    statements for external purposes in accordance with generally accepted accounting
                    principles.
                 c. 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 end of the period covered by this Annual Report based on such
                    evaluation; and

                 d. 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 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 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
           registrant’s board of directors or persons performing similar functions:

                 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

                 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:       February 11, 2005



/s/ Gregg C. Sengstack
Gregg C. Sengstack
Senior Vice President, Chief Financial Officer and Secretary
Franklin Electric Co., Inc.


                                                       - 66 -




                                                                                                  EXHIBIT 32.1


   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 Annual Report of Franklin Electric Co., Inc. (the “Company”) on Form 10-
K for the year ending January 1, 2005 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, R. Scott Trumbull, Chairman, Chief Executive Officer and President 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:          February 11, 2005



/s/ R. Scott Trumbull
          R. Scott Trumbull
          Chairman, Chief Executive Officer
          Franklin Electric Co., Inc.




                                                       - 67 -




                                                                                                  EXHIBIT 32.2

   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 Annual Report of Franklin Electric Co., Inc. (the “Company”) on Form 10-
K for the year ending January 1, 2005 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Gregg C. Sengstack, Senior Vice President and Chief Financial 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:          February 11, 2005



/s/ Gregg C. Sengstack
         Gregg C. Sengstack
         Senior Vice President, Chief Financial Officer and Secretary
         Franklin Electric Co., Inc.
                                                    - 68 -




                                                                                              EXHIBIT 99.1


ADDITIONAL EXHIBITS

Forward-Looking Statements
Written and oral statements provided by the Company from time to time, including in the Company’s
annual report to shareholders and its annual report on Form 10-K and other filings under the Securities
Exchange Act of 1934, may contain certain forward-looking information, as that term is defined by the
Private Securities Litigation Reform Act of 1995 (the "Act") and in releases made by the Securities and
Exchange Commission ("SEC"). While the Company believes that the assumptions underlying such
forward-looking statements are reasonable based on present conditions, forward-looking statements made
by the Company involve risks and uncertainties and are not guarantees of future performance. Actual
results may differ materially from those in the Company's written or oral forward-looking statements as a
result of various factors, including, but not limited to, the following:

       A significant decline in sales with the Company's largest two customers, each of whom represents
over 10% of consolidated sales, or other significant customers.

        Continued or increased competitive pressure to reduce selling prices of products or increased
financial incentives to customers.

       The ability of the Company to fully implement its plans to sell its products directly to water
systems distributors.

        A prolonged disruption of scheduled deliveries from suppliers when alternative sources of supply
are not available to satisfy the Company's requirements for raw material and components.

      Delays in the Company's ability to pass along significant increases in the cost of raw material,
components, other materials and/or services.

       The amount of and rate of growth in selling, general and administrative expenses, and occurrences
which could affect the Company's ability to reduce or limit the increase in such expenses.

         The costs and other effects of legal and administrative cases and proceedings (whether civil or
criminal), settlements and investigations, claims, developments or assertions by or against the Company
relating to intellectual property rights and licenses.

       The adoption of new, or changes in, accounting policies and practices.
        Difficulties or delays in the development, production, testing and marketing of products, including,
but not limited to, a failure to ship new products when anticipated, failure of customers to accept these
products when planned, any defects in products or a failure of manufacturing economies to develop when
planned.

       Circumstances impacting the Company’s ability to fund and accomplish technological innovation,
improve processes, and attract and retain capable staff in order to deal with increasing volume and
complexity in its products.

        Occurrences affecting the slope or speed of decline of the life cycle of the Company's products, or
affecting the Company's ability to reduce product costs and other costs or to increase productivity.

        The impact of unusual items resulting from the Company's ongoing evaluation and implementation
of its business strategies, acquisitions or divestitures, asset valuations and organizational structures.

         The effects of and changes in, trade, monetary and fiscal policies, laws and regulations and other
activities of governments, agencies and similar organizations, including, but not limited to, trade
restrictions or prohibitions, inflation, monetary fluctuations, import and other charges or taxes, foreign
exchange rates, nationalizations and unstable governments.

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        The future health of the U.S. and international economies and other economic factors that directly
or indirectly affect the demand for the Company's products.

       Labor strikes or work stoppages by employees of the Company, its customers, suppliers, or freight
contractors or other providers.

       Environmental factors such as fires, floods, or other natural disasters and weather conditions which
could impact the Company's ability to produce products or the demand for its products.

        Increased competition due to industry consolidation or new entrants into the Company's existing
markets.

        The introduction of alternative products or governmental and regulatory activities that favor
alternative methods of serving the same function as the Company's products.

All forward-looking statements included herein are based upon information presently available, and the
Company assumes no obligation to update any forward-looking statements.


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