<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1994
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 1-4682
THOMAS & BETTS CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1326940
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification
No.)
1555 Lynnfield Road, Memphis, Tennessee 38119
(Address of principal executive offices) (Zip Code)
(901) 682-7766
(Registrant's telephone number, including area code)
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 X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock Par Value $ .50 19,580,315
(Title of each class) (Outstanding at October 2, 1994) <PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
INDEX
Page
PART I. Financial Information:
Consolidated Balance Sheet -
October 2, 1994 and January 2, 1994. . . . . . . . 3
Consolidated Statement of Earnings - Quarters
and Nine Months Ended October 2, 1994 and
October 3, 1993. . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows - Nine Months
Ended October 2, 1994 and October 3, 1993. . . . . 5
Notes to Consolidated Financial Statements . . . . 6
Management's Discussion and Analysis of Results
of Operations and Financial Condition. . . . . . . 8
PART II. Other Information. . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
THOMAS & BETTS CORPORATION
Consolidated Balance Sheet
(Thousands of Dollars)
<TABLE>
<CAPTION>
October 2, January 2,
1994 1994
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 88,974 $ 72,509
Marketable securities 43,022 31,543
Receivables, net 185,347 165,162
Inventories:
Finished goods 88,138 97,795
Work in process 29,779 34,389
Raw materials 71,804 68,118
189,721 200,302
Deferred income taxes 36,380 13,884
Prepaid expenses 4,776 5,691
Total Current Assets 548,220 489,091
Property, plant, and equipment, at cost 550,618 571,275
Less accumulated depreciation 293,561 275,271
Net property, plant and equipment 257,057 296,004
Intangible assets - net 332,930 311,059
Investments and other assets 74,388 37,028
TOTAL ASSETS $1,212,595 $1,133,182
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term bank borrowings $ 20,241 $ 20,539
Current maturities of long-term debt 4,280 7,358
Accounts payable 100,180 81,571
Accrued liabilities 116,633 78,637
Income taxes 36,297 6,791
Dividends payable 10,964 10,569
Total Current Liabilities 288,595 205,465
Long-term debt 321,423 393,502
Other long-term liabilities 35,131 28,615
Deferred income taxes 22,436 24,768
Shareholders' Equity:
Common stock 9,809 9,463
Additional paid-in capital 167,885 125,400
Retained earnings 364,424 348,597
Unrealized gain on marketable securities 1,359 -
Foreign currency translation adjustment 3,809 961
Cost of treasury stock (2,276) (3,589)
Total Shareholders' Equity 545,010 480,832
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,212,595 $1,133,182
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
Consolidated Statement of Earnings
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
October 2 October 3 October 2 October 3
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $281,767 $268,474 $860,419 $800,354
Costs and expenses:
Cost of sales 183,830 178,063 570,702 529,676
Marketing, general and
administrative 57,368 56,132 171,688 167,747
Research and development 5,088 5,659 17,664 17,126
Amortization of intangibles 2,664 2,872 8,488 8,851
Gain on sale of Vitramon (99,075) - (99,075) -
Special charge 89,643 - 89,643 -
239,518 242,726 759,110 723,400
Earnings from operations 42,249 25,748 101,309 76,954
Other expense - net 5,354 6,890 18,647 21,731
Earnings before income taxes 36,895 18,858 82,662 55,223
Income taxes 18,618 5,657 34,408 16,567
Earnings before cumulative
effect of change in accounting
for income taxes 18,277 13,201 48,254 38,656
Cumulative effect of change in
accounting for income taxes - - - 1,628
Net earnings $ 18,277 $ 13,201 $ 48,254 $ 40,284
Per share data:
Earnings before cumulative
effect of change in accounting
for income taxes $ .94 $ .70 $ 2.51 $ 2.05
Cumulative effect of change in
accounting for income taxes - - - .09
Earnings per share $ .94 $ .70 $ 2.51 $ 2.14
Dividends declared per share $ .56 $ .56 $ 1.68 $ 1.68
Average shares outstanding 19,438 18,860 19,216 18,827
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
Consolidated Statement of Cash Flows
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Oct 2 Oct 3
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings 48,254 40,284
Adjustments:
Depreciation and amortization 43,251 43,343
Cumulative effect of change in accounting
for income taxes - (1,628)
Gain on sale of Vitramon (99,075) -
Special charge 89,643 -
Deferred income taxes (26,814) 2,173
Changes in operating assets and
liabilities, net:
Receivables (32,774) (31,533)
Inventories (11,811) (12,639)
Accounts payable 23,332 18,897
Accrued liabilities 368 (7,518)
Income taxes payable 28,313 1,339
Other 1,726 3,793
Net cash provided by operating activities 64,413 56,511
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of Vitramon 184,000 -
Purchase of and investments in businesses (76,851) -
Purchases of property, plant and equipment (44,464) (27,985)
Proceeds from sale of property, plant and
equipment 7,168 1,167
Marketable securities acquired (17,968) (19,781)
Proceeds from matured marketable securities 12,888 32,063
Other (1,428) (1,023)
Net cash provided by (used in)
investing activities 63,345 (15,559)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in borrowings with
original maturities less than 90 days (8,457) 2,612
Proceeds from long-term debt and other
borrowings 6,918 26,181
Repayment of long-term debt and other
borrowings (77,643) (37,306)
Stock options exercised 3,259 3,921
Cash dividends paid (32,032) (31,593)
Net cash used in financing activities (107,955) (36,185)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (3,338) 1,885
Net increase in cash and cash equivalents 16,465 6,652
Cash and cash equivalents at beginning of
period 72,509 41,764
Cash and cash equivalents at end of period $ 88,974 $ 48,416
Cash payments for interest $ 23,051 $ 25,898
Cash payments for taxes $ 28,990 $ 12,610
Common stock issued for acquisitions $ 39,289 $ -
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
1. In the opinion of management, the accompanying consolidated
financial statements contain all adjustments (consisting of only
normal recurring accruals, except for the special charge)
necessary for the fair presentation of the financial position as
of October 2, 1994 and January 2, 1994, and the results of
operations and cash flows for the periods ended October 2, 1994
and October 3, 1993.
2. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these consolidated financial
statements be read in conjunction with the financial statements
and notes thereto included in the Corporation's Annual Report to
Shareholders for the fiscal year ended January 2, 1994. The
results of operations for the period ended October 2, 1994 are
not necessarily indicative of the operating results for the full
year.
The 1993 presentation of amortization of intangibles in the
statement of earnings has been reclassified to conform to the
1994 method of presentation.
3. Earnings per share are computed by dividing net earnings by
the weighted average shares of common stock outstanding during
the reporting period. The effect on earnings per share resulting
from the assumed exercise of outstanding stock options is not
material.
4. Effective January 3, 1994, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
112, "Employer's Accounting for Postemployment Benefits". The
adoption of SFAS No. 112 had no material impact on the
Corporation's financial position or results of operations.
5. Effective January 3, 1994, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities". This Statement required the Corporation to record
certain of its "available-for-sale" securities on a fair market
value basis rather than on an amortized cost basis. The impact
of this change on the Corporation's balance sheet as of the
adoption date was to increase marketable securities by $2.8
million, to record them at fair market value, with an offsetting
decrease of $1.1 million to the current deferred income tax asset
and an increase of $1.7 million to shareholders' equity. The
fair market value of these available-for-sale securities at
October 2, 1994 is $2.3 million in excess of cost.
6. Acquisitions. On January 31, 1994, the Corporation
purchased certain assets (primarily inventories and equipment)
from Eaton Corporation relating to the manufacture, sale and
distribution of circuit breakers, safety switches, and meter
centers in exchange for $14.3 million of Thomas & Betts common
stock, after purchase price adjustments. On February 18, 1994,
the Corporation purchased certain assets (primarily inventories
and equipment) relating to the manufacture, sale, and
distribution of the Anford Inc. (Canada) cable tray business for
$2.9 million in cash. On August 11, 1994, the Corporation
acquired from Eaton Corporation all of the outstanding stock of
Commander Electrical Products, Inc., an electrical metal outlet
box and fittings business in Canada, for $49 million in cash.
These acquisitions were accounted for using the purchase method
of accounting, and therefore, the accompanying financial
statements include the accounts of these businesses since the
dates of acquisition.
On August 10, 1994, the Corporation purchased a minority
interest (approximately 29 percent) in Leviton Manufacturing Co.,
Inc. (Leviton), a leading manufacturer of wiring devices and
other related products for approximately $50 million with a
combination of common stock and cash. The investment is expected
to be accounted for under the equity method.
The Corporation has also announced its intention to exercise
its option to purchase a plastic electrical outlet box business
in the U.S. from Eaton Corporation for approximately $6 million.
The transaction is expected to be completed during the fourth
quarter of 1994.
7. Divestitures and Restructuring. After a thorough review of
its operations and of changing market conditions, the Corporation
in the third quarter of 1994 initiated several major actions to
optimize operations and improve future profitability.
In July, the Corporation sold its multilayer ceramic chip
capacitor subsidiary, Vitramon, Incorporated, for $184 million in
cash and realized a $99.1 million pre-tax gain.
In September, the Corporation recorded a special charge of
$89.6 million for restructuring and other actions to consolidate
and realign manufacturing facilities, operations and service
processes, to provide for the discontinuance of certain products,
to reduce its overhead structure, and to reduce the carrying
value of certain previously vacated facilities. The
restructuring will impact the Corporation's operations in North
America, Europe, and the Far East. Approximately $44 million of
the charge will result in cash expenditures with the remaining
$46 million for non-cash asset write downs.
Approximately $11 million of the charge was provided for the
write-down of previously vacated facilities to their current
estimated net realizable value, approximately 60% of which will
be non-cash asset write downs with the remainder in cash, mainly
for lease and other carrying costs. The $79 million for
restructuring includes non-cash charges of $40 million related
principally to impairment of carrying values of plant, equipment,
and inventory of facilities to be closed or realigned and
products to be discontinued. Estimated future cash costs
provided for include approximately $16 million for severance
benefits and other employee termination costs, $14 million for
carrying costs and environmental clean-up of facilities to be
closed, and $9 million for other related costs. Most of the cash
cost of the restructuring will be incurred in 1995; it is
currently estimated that $13 million related to environmental
clean-up and carrying costs for facilities to be closed will be
incurred after 1995. <PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
Management's Discussion and Analysis of Results
of Operations and Financial Condition
RESULTS OF OPERATIONS
QUARTERLY COMPARISON
Thomas & Betts Corporation reported higher sales and income
for the third quarter of 1994. Sales for the quarter increased 5
percent to $281,767,000 compared to $268,474,000 for the third
quarter last year. Earnings after income taxes of $18,277,000,
or $.94 per share increased 38 percent compared to last year's
$13,201,000 or $.70 per share.
The 5 percent increase in sales over the third quarter of
1993 resulted from an 8 percent increase in volume and a 1
percent increase in foreign currencies versus the U.S. dollar
offset by a 4 percent net decrease attributable to
acquisition/divestiture activities. Acquisition sales added an
incremental 5 percent to sales while the divestiture in mid-July
of the Vitramon subsidiary reduced sales by 9 percent.
The divisions serving North American electrical markets
reported a combined sales increase of 16 percent during the third
quarter. Continuing strength in most of their markets added 8
percent to sales, acquisitions added 7 percent and pricing
accounted for 1 percent of the increase. The Electrical
Components, Heating/Mechanical/Refrigeration, and International
divisions turned in particularly good sales gains.
Sales by the Electronics/OEM Division, which serves North
America and the Far East markets, were 8 percent higher due to a
6 percent volume increase and a currency gain of 2 percent.
European Division sales continued their improvement and were
up 18 percent due to a 20 percent volume gain and 6 percent
currency gain that offset lower prices.
Consolidated gross margin for the quarter, at 34.8 percent
of sales, improved one percentage point from last year's 33.7
percent primarily due to manufacturing cost reductions and
favorable volume-related factory overhead absorption.
Operating expenses for the quarter were only slightly higher
than the prior year due to volume-driven variable selling and
shipping costs. As a percent of sales, operating expenses were
23.1 percent compared to 24.1 percent last year. These
percentages reflect the classification of amortization of
intangibles as a component of operating earnings in both periods.
Other expenses during the quarter decreased $1.5 million
from last year due to lower net interest expense resulting from
the application of net divestiture/acquisition funds to pay down
debt. The third quarter effective tax rate of 50.5 percent
reflects a non-recurring increase relating to the sale of the
Vitramon subsidiary. The fourth quarter tax rate is expected to
be close to the first half rate of 34.5 percent. The remaining
increase in the 1994 tax rate over the 30 percent rate in 1993 is
due to lower statutory benefits from the Corporation's Puerto
Rico operations.
As more fully described in notes to the third quarter
consolidated financial statements, the Corporation initiated
certain major actions to optimize its operations. These
actions, which included the sale of its Vitramon subsidiary and a
significant restructuring of operations, offset each other on an
after-tax basis.
The significant variation in the deferred income taxes in
the balance sheet and statement of cash flows is due principally
to the recording of future tax benefits associated with the
special charge. The variation in the income taxes payable
balance is due principally to taxes relating to the sale of the
Vitramon subsidiary. Variations in other balance sheet and cash
flow line items, when adjusted for acquisitions, divestitures and
the distribution of the special charge, are consistent with the
prior period, considering increased sales and production, and
seasonality.
YEAR-TO-DATE COMPARISON
For the first nine months of 1994, sales rose 8 percent to
$860,419,000 and earnings after income taxes were up 20 percent
to $48,254,000, or $2.51 per share. These compare with 1993
results of $800,354,000 and $40,284,000, or $2.14 per share
respectively. The 1993 earnings per share for the period included
a 9 cent gain from the adoption of SFAS 109 (Accounting for
Income Taxes).
The 8 percent increase in sales over the first nine months
of 1993 was the result of an 8 percent volume increase, 1 percent
price decrease, and 1 percent net increase attributable to 1994
acquisition/divestiture activities. Acquisitions added an
incremental 4 percent to revenues while the mid-July divestiture
of the Vitramon subsidiary reduced sales by 3 percent.
Sales by divisions serving the North American electrical
markets increased 13 percent due to continuing strength in most
markets which added 6 percent volume, acquisitions which added
another 6 percent, and price increases of 1 percent.
Electronics/OEM Division sales were up 6 percent with
strength in both North American and Far East markets; volume was
up 4 percent and currency gains added 2 percent.
In the European Division, higher volume in the second and
third quarters resulted in year-to-date sales 4 percent above
last year. Volume increases of 14% have been partially offset by
pricing.
Year-to-date consolidated gross margin of 33.7 percent is
essentially equal to last year's 33.8 percent.
Year-to-date operating expenses, including amortization of
intangibles, increased 2 percent. As a percent of sales, these
expenses decreased from 24.2 percent last year to 23.0 percent
this year due principally to a reduction in administrative
expenses from the consolidation of administrative functions into
the Memphis headquarters during the fourth quarter of 1993.
Other expense was reduced $3.1 million primarily due to
lower net interest expense resulting from the application of net
divestiture/acquisition funds to pay down debt. The effective
tax rate for the nine months was 41.6 percent compared to 30.0
percent last year, the difference due to the non-recurring rate
increase relating to the sale of Vitramon coupled with the lower
statutory benefits from the Corporation's Puerto Rico operations.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation believes it will continue to fund its
capital and operating needs with cash flows from operations,
augmented by borrowings available under its revolving credit
facility and from other sources. During the first three quarters
of 1994, the Corporation has made several strategic investments,
including the January 1994 asset acquisition from Eaton
Corporation, the February 1994 Anford Inc. asset acquisition; the
August 1994 acquisition of the stock of Commander Electrical
Products, Inc.; and the August 1994 investment in Leviton
Manufacturing Co., Inc. The total purchase price for these
investments was approximately $116 million, which was comprised
of $77 million cash and the remainder in the Corporation's common
stock. In addition to these investments, significant uses of
cash in 1994 have included net fixed asset additions of $37
million, net reductions of indebtedness of $79 million, and
payment of common stock dividends of $32 million. These uses of
cash were funded by cash flows from operations and the net
proceeds from the sale of Vitramon.
The Corporation has also announced its intention to exercise
its option to purchase a plastic electrical outlet box business
in the U.S. from Eaton Corporation for approximately $6 million.
The transaction is expected to be completed during the fourth
quarter of 1994.
As more fully described in notes to the third quarter 1994
consolidated financial statements, the special charge recorded in
September, 1994 will require cash outlays of approximately $44
million, the majority of which will be expended in 1995. In
addition, capital spending of $25 million for projects relating
to this optimization effort and $6 million of cash implementation
expenses are planned over the next two years. The Corporation
believes that the actions will result in depreciation,
amortization, labor and overhead savings of approximately $8
million in 1995 and over $20 million annually in subsequent
years.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
THOMAS & BETTS CORPORATION
Item 5. Other Information
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
For the Nine
Months
Ended For the Years Ended
October 2 Jan 2 December 31
1994 1994 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges(1) 4.3x 3.0x 2.6x 5.0x 5.4x 6.6x
<FN>
(1) The ratio of earnings to fixed charges represents the number
of times fixed charges are covered by earnings. For
purposes of computing this ratio, earnings consist of
earnings before income taxes, plus fixed charges. Fixed
charges consist of interest expense and such portion of
rental expense which the Corporation estimates to be
representative of the interest factor attributable to such
rental expense. See Exhibit 12.
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
(12) Computation of Ratio of Earnings to Fixed
Charges.
(b) Reports on Form 8-K
Form 8-K , filed July 29, 1994, reporting the
Corporation's sale of its multilayer ceramic chip
capacitor subsidiary, Vitramon Incorporated.
Form 8-K, filed September 19, 1994, reporting a special
charge against earnings.<PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
THOMAS & BETTS CORPORATION
(Registrant)
DATE: November 16, 1994 /s/ Ronald P. Babcock
Ronald P. Babcock
Vice President-Finance
DATE: November 16, 1994 /s/ Jerry Kronenberg
Jerry Kronenberg
Vice President-General Counsel
<PAGE>
EXHIBIT 12
THOMAS & BETTS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine
Months
Ended Year Ended
Oct. 2, Jan. 2 December 31
1994 1994 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Earnings before
income taxes $ 82,662 $78,444 $69,755 $67,988 $74,375 $78,925
Add:
Interest on
indebtedness 20,449 30,247 33,405 12,376 12,998 10,240
Amortization of
debt expense 810 1,062 2,538 0 0 0
Portion of rents
representative of
the interest factor 3,925 7,193 6,690 3,982 3,971 3,790
Earnings
as adjusted $107,846 $116,946 $112,388 $84,346 $91,344 $92,955
Fixed charges:
Interest on
indebtedness $20,449 $30,247 $33,405 $12,752 $12,998 $10,240
Amortization of
debt expense 810 1,062 2,538 0 0 0
Portion of rents
representative of
the interest
factor 3,925 7,193 6,690 3,982 3,971 3,790
Fixed charges $ 25,184 $38,502 $42,633 $16,734 $16,969 $14,030
Ratio of earnings
to fixed charges 4.3x 3.0x 2.6x 5.0x 5.4x 6.6x
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-1-1995
<PERIOD-END> SEP-2-1994
<CASH> 88974
<SECURITIES> 43022
<RECEIVABLES> 199237
<ALLOWANCES> (13890)
<INVENTORY> 189721
<CURRENT-ASSETS> 548220
<PP&E> 550618
<DEPRECIATION> (293561)
<TOTAL-ASSETS> 1212595
<CURRENT-LIABILITIES> 288595
<BONDS> 321423
0
0
<COMMON> 9809
<OTHER-SE> 535201
<TOTAL-LIABILITY-AND-EQUITY> 1212595
<SALES> 281767
<TOTAL-REVENUES> 281767
<CGS> 183830
<TOTAL-COSTS> 62456
<OTHER-EXPENSES> (457)
<LOSS-PROVISION> (19240)
<INTEREST-EXPENSE> (6074)
<INCOME-PRETAX> 36895
<INCOME-TAX> 18618
<INCOME-CONTINUING> 18277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18277
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.94
</TABLE>
