<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 July 3, 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 19,424,622
(Title of each class) (Outstanding at July 31, 1994) <PAGE>
<PAGE>
THOMAS & BETTS CORPORATION
INDEX
Page
PART I. Financial Information:
Consolidated Balance Sheet -
July 3, 1994 and January 2, 1994 . . . . . . . . . 3
Consolidated Statement of Earnings - Quarters
and Six Months Ended July 3, 1994 and
July 4, 1993 . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows - Six Months
Ended July 3, 1994 and July 4, 1993. . . . . . . . 5
Notes to Consolidated Financial Statements . . . . 6
Management's Discussion and Analysis of Results
of Operations and Financial Condition. . . . . . . 9
PART II. Other Information. . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
THOMAS & BETTS CORPORATION
Consolidated Balance Sheet
(Thousands of Dollars)
<TABLE>
<CAPTION>
July 3, January 2,
1994 1994
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 82,200 $ 72,509
Marketable securities 38,109 31,543
Receivables, net 202,125 165,162
Inventories:
Finished goods 104,454 97,795
Work in process 34,377 34,389
Raw materials 76,450 68,118
215,281 200,302
Deferred income taxes 15,588 13,884
Prepaid expenses 7,947 5,691
Total Current Assets 561,250 489,091
Property, plant, and equipment, at cost 611,373 571,275
Less accumulated depreciation 301,507 275,271
Net property, plant and equipment 309,866 296,004
Intangible assets - net 305,033 311,059
Other assets 34,811 37,028
TOTAL ASSETS $1,210,960 $1,133,182
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term bank borrowings $ 21,025 $ 20,539
Current maturities of long-term debt 7,663 7,358
Accounts payable 99,687 81,571
Accrued liabilities 82,178 78,637
Income taxes 10,278 6,791
Dividends payable 10,734 10,569
Total Current Liabilities 231,565 205,465
Long-term debt 414,232 393,502
Other long-term liabilities 25,771 28,615
Deferred income taxes 27,210 24,768
Shareholders' Equity:
Common stock 9,602 9,463
Additional paid-in capital 142,507 125,400
Retained earnings 357,110 348,597
Valuation allow. for marketable securities 1,589 -
Foreign currency translation adjustment 3,519 961
Cost of treasury stock (2,145) (3,589)
Total Shareholders' Equity 512,182 480,832
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,210,960 $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 Six Months Ended
July 3 July 4 July 3 July 4
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $295,815 $264,756 $578,652 $531,880
Costs and expenses:
Cost of sales 196,143 175,349 386,872 351,613
Marketing, general and
administrative 59,234 55,693 114,320 111,615
Research and development 6,428 5,740 12,576 11,467
261,805 236,782 513,768 474,695
Earnings from operations 34,010 27,974 64,884 57,185
Other expense - net 9,429 10,495 19,117 20,820
Earnings before income taxes 24,581 17,479 45,767 36,365
Income taxes 8,481 5,244 15,790 10,910
Earnings before cumulative
effect of change in accounting
for income taxes 16,100 12,235 29,977 25,455
Cumulative effect of change in
accounting for income taxes - - - 1,628
Net earnings $ 16,100 $ 12,235 $ 29,977 $ 27,083
Per share data:
Earnings before cumulative
effect of change in accounting
for income taxes $ .84 $ .65 $ 1.57 $ 1.35
Cumulative effect of change in
accounting for income taxes - - - .09
Earnings per share $ .84 $ .65 $ 1.57 $ 1.44
Dividends declared per share $ .56 $ .56 $ 1.12 $ 1.12
Average shares outstanding 19,164 18,835 19,082 18,811
<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>
Six Months
July 3 July 4
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings $ 29,977 $ 27,083
Adjustments:
Depreciation and amortization 30,566 29,354
Cumulative effect of change in accounting
for income taxes - (1,628)
Changes in assets and liabilities:
Receivables (31,703) (27,228)
Inventories (6,479) (10,100)
Accounts payable 16,879 18,967
Accrued liabilities 2,413 (7,688)
Other 665 2,563
Net cash provided by operating activities 42,318 31,323
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of businesses (1) (2,913) -
Purchases of property, plant and equipment (29,314)(19,389)
Proceeds from sale of property, plant and
equipment 6,867 987
Marketable securities acquired (10,725) (18,747)
Proceeds from matured marketable securities 8,622 25,109
Other - (713)
Net cash used in investing activities (27,463) (12,753)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings with original
maturities less than 90 days 20,769 6,779
Proceeds from long-term debt and other
borrowings 3,400 24,071
Repayment of long-term debt and other
borrowings (6,866) (30,080)
Stock options exercised 994 3,124
Cash dividends paid (21,299) (21,038)
Net cash used in financing activities (3,002) (17,144)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,162) 1,986
Net increase in cash and cash equivalents 9,691 3,412
Cash and cash equivalents at beginning of
period 72,509 41,764
Cash and cash equivalents at end of period $82,200 $ 45,176
Cash payments for interest $14,918 $ 15,818
Cash payments for taxes $ 7,247 $ 9,841
<FN>
(1) Non-cash transaction: On January 31, 1994, the Corporation
purchased certain assets (primarily inventories and
equipment) from Eaton Corporation in exchange for $16.1
million of Thomas & Betts common stock.
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) necessary for the fair presentation of
the financial position as of July 3, 1994 and January 2, 1994,
and the results of operations and cash flows for the periods
ended July 3, 1994 and July 4, 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 July 3, 1994 are not
necessarily indicative of the operating results for the full
year.
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".
Statement No. 112 is intended to cover all benefit costs not
covered by other standards, specifically SFAS No. 87 on Pensions
and SFAS No. 106 on Other Postretirement Benefits. The adoption
of SFAS No. 112 had no material impact on the Corporation's
financial position, results of operations, or cash flows since
most provisions of the SFAS had been previously implemented by
the Corporation.
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 July 3, 1994 balance sheet
was to increase marketable securities by $2.2 million, to record
them at fair market value, with an offsetting decrease of $0.6
million to the current deferred income tax asset and an increase
of $1.6 million to shareholders' equity. The cost basis and fair
market value of these available-for-sale securities at July 3,
1994 is (in thousands):
<TABLE>
<CAPTION>
Amortized Gross Gross Fair
Cost Unrealized Unrealized Market
July 3, 1994 Basis Gains Losses Value
<S> <C> <C> <C> <C>
Equity securities 1,407 1,038 - 2,445
Mortgage-backed
securities 34,274 1,622 (432) 35,464
Other marketable
securities 200 - - 200
Total 35,881 2,660 (432) 38,109
</TABLE>
There were no sales of available-for-sale securities during
the quarter.
The mortgage-backed securities held at July 3, 1994 have
contractual maturities ranging from one to twenty-six years, with
two-thirds maturing after ten years.
6. Acquisitions. On January 31, 1994, the Corporation
purchased certain assets at book value (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 $16.1 million of Thomas & Betts
common stock. 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. Both of
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.
7. Subsequent Events. Subsequent to the close of the second
quarter, the Corporation announced several transactions. On July
18, 1994, the Corporation sold its multilayer ceramic chip
capacitor subsidiary, Vitramon Incorporated to Vishay
Intertechnology, Inc. of Malvern, Pennsylvania, for approximately
$184 million. This divestiture was reported on a Form 8-K filed
July 29, 1994, which is incorporated herein by reference. On
July 12, 1994, the Corporation entered into an agreement to
purchase the entire minority interest (approximately 29%) of a
non-controlling family group of Leviton Manufacturing Co., Inc.
(Leviton), a leading manufacturer of wiring devices and other
related products. On August 10, 1994, the Corporation closed the
transaction and currently holds such minority interest in
Leviton. The purchase is expected to be recorded under the
equity method of accounting. On August 11, 1994, the Corporation
acquired all of the outstanding stock of Commander Electrical
Products, Inc., a metal box and fittings business in Canada for
approximately $49 million from Eaton Corporation. The
Corporation also announced its intention to exercise its option
to purchase a plastic box business in the U.S. from Eaton
Corporation for approximately $6 million.
<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
operating income for the second quarter of 1994. Sales for the
quarter increased 12 percent to $295,815,000 compared to
$264,756,000 for the second quarter last year. Earnings after
income taxes of $16,100,000, or $.84 per share increased 32
percent compared to last year's $12,235,000 or $.65 per share.
Earnings before income taxes rose 41 percent but the
Corporation's 1994 tax rate has increased due to the tax law
changes enacted in 1993 relating to income earned in Puerto Rico.
The 12 percent increase in sales over the second quarter of
1993 resulted from a 15 percent increase in volume, offset by a 2
percent decline in pricing and a 1 percent decline in foreign
currencies versus the U.S. dollar. Five percentage points of the
volume gain compared to last year was attributable to incremental
sales from the January 31 acquisition of a line of circuit
breakers, safety switches and meter centers from Eaton
Corporation in the U.S., and the February 18 acquisition of the
Anford cable tray business in Canada.
All divisions serving North American electrical markets
reported sales that were equal to or greater than last year and
posted a combined sales increase of 14 percent during the second
quarter due to the acquisitions noted above coupled with
continued improvement in construction markets. The Electrical
Components and Heating/Mechanical/Refrigeration Divisions led the
way with near 20 percent growth year over year.
Sales by the Electronics Division, which encompasses North
America and the Far East, were 5 percent higher due to a 4
percent volume increase, a 1 percent price decline and a currency
gain of 2 percent.
Worldwide sales of Vitramon ceramic chip capacitors
increased 11 percent due to volume gains that offset price
reductions and weaker European currencies.
European Division sales increased 4 percent, reversing a
downtrend, due to an 18 percent volume gain that offset lower
prices and lower currencies.
Consolidated gross margin for the quarter, at 33.7 percent
of sales, was about the same as last year in all divisions.
Operating expenses for the second quarter were higher than
the prior year due to the variable selling and shipping costs on
the incremental sales volume and increased research and
development expenditures. As a percent of sales, operating
expenses were 22.2 percent of sales compared to 23.2 percent last
year.
Non-operating expenses during the quarter decreased $1.1
million from last year due to lower interest expense, higher
investment income in Puerto Rico, and a gain on the sale of an
idle office building in the U.K. The second quarter effective
tax rate was 34.5 percent compared to 30.0 percent last year, the
difference due to the reduction in the Puerto Rico exemption.
YEAR-TO-DATE COMPARISON
For the first six months of 1994, sales rose 9 percent to
$578,652,000 and earnings after income taxes were up 11 percent
to $29,977,000, or $1.57 per share. These compare with 1993
results of $531,880,000 and $27,083,000, or $1.44 per share
respectively. Earnings before income taxes for the first half of
1994 rose 26 percent, but the Corporation's higher 1994 tax rate
and the 1993 gain from the adoption of FASB 109 (Accounting for
Income Taxes) held the net earnings gain to 11 percent.
The 9 percent increase in sales over the first half of 1993
was the result of a 12 percent volume increase partially offset
by a 2 percent price decrease and a 1 percent currency decrease.
Sales by divisions serving the North American electrical
markets increased 11 percent due to strength in most markets, the
acquisition of circuit protection product lines from Eaton
Corporation in the first quarter of 1994, and the Corporation's
SIGNATURE SERVICE and Distributor/Manufacturer Integration
programs.
Electronics Division sales were up 5 percent with equal
strength in the North America and Far East markets. Sales were
strong in the professional electronics and automotive lines.
Vitramon Division sales of ceramic chip capacitors increased
10 percent as healthy volume gains worldwide offset lower
pricing.
Higher second quarter volume in the European Division nearly
erased the first quarter deficit against prior year results so
year-to-date sales lag last year by only 2 percent.
Year-to-date consolidated gross margin was 33.1 percent
compared to 33.9 percent last year. Margins were down in the
Electrical Components Division due to sales mix and in the
European Division due to lower pricing and currencies.
First half operating expenses were 21.9 percent of sales
compared to 23.1 percent last year; increased research and
development expenditures of $1.1 million were offset by a $1.2
million reduction in administrative expenses, primarily as a
result of the consolidation of the administrative functions into
the Memphis headquarters during the fourth quarter of 1993.
Non-operating expenses were reduced $1.7 million due to lower
interest expense and the gain on the sale of the idle office
facility in the U.K. The effective tax rate for the first half
was 34.5 percent compared to 30.0 percent last year, the
difference due to the reduction in the Puerto Rico exemption.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation continues and 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 second
quarter the Corporation spent a net of $10.0 million for
investments in plant and equipment and $10.7 million for the
second quarter dividend payment, offset by cash generated from
operations of $15.0 million.
On a year-to-date basis the Corporation had net capital
additions of $22.4 million, dividend payments of $21.3 million,
the $2.9 million purchase of the Anford cable tray business in
Canada, offset by cash generated from operations of $42.3
million. The January 31 acquisition of the circuit breakers,
safety switches and meter centers business from Eaton Corporation
was financed by the issuance of $16.1 million of Thomas & Betts
common stock.
Subsequent to the close of the second quarter, Thomas &
Betts announced several transactions, the net impact of which
will increase the Corporation's capital resources. In July, the
Corporation sold its Vitramon Incorporated multilayer ceramic
chip capacitor subsidiary to Vishay Intertechnology, Inc. of
Malvern, Pennsylvania, for approximately $184 million. The gain
on the sale of Vitramon, net of transaction expenses, will
approximate $60 million after taxes. The proceeds from this sale
will be used to fund several strategic product acquisitions as
well as reduce the Corporation's debt level. During July, the
Corporation entered into an agreement to purchase a minority
interest position (approximately 29%) in Leviton Manufacturing
Company, Inc., a leading manufacturer of wiring devices and other
related products; on August 10, 1994, the Corporation completed
the purchase of the approximately 29% in exchange for cash and
stock. On August 11, 1994, the Corporation acquired all of the
outstanding stock of Commander Electrical Products, Inc., a metal
electrical box and fittings business in Canada for approximately
$49 million cash from Eaton Corporation. The Corporation also
announced its intention to exercise its option to purchase a
plastic electrical box business in the U.S. from Eaton
Corporation for approximately $6 million cash.<PAGE>
<PAGE>
PART II. OTHER INFORMATION
THOMAS & BETTS CORPORATION
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were voted upon at the Annual Meeting
of Shareholders held on May 4, 1994, and received the votes set
forth below:
1. Each of the following persons nominated was elected to
serve as director and received the number of votes set opposite
his or her name:
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
Raymond B. Carey, Jr. 15,553,878 803,270
Ernest H. Drew 15,552,444 804,704
T. Kevin Dunnigan 15,526,245 830,903
Jeananne K. Hauswald 15,512,222 844,926
Thomas W. Jones 15,509,581 847,567
Robert A. Kenkel 15,509,283 847,865
Clyde R. Moore 15,484,188 867,960
J. David Parkinson 15,512,635 844,513
Ian M. Ross 15,506,734 850,414
William H. Waltrip 15,509,874 847,274
</TABLE>
2. A proposal to approve the Thomas & Betts Executive
Incentive Plan received 15,108,918 votes for and 859,513 votes
against, with 388,717 abstentions and no broker non-votes. The
Plan is intended to provide key employees with an annual
management incentive bonus based on objective, pre-establish
criteria and performance targets.
3. A proposal to ratify the appointment of KPMG Peat
Marwick as independent public accountants received 16,279,536
votes for and 40,890 votes against, with 36,722 abstentions.
Additional details regarding the above are contained in the
1994 Annual Shareholders Meeting proxy material.
Item 5. Other Information
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
For the Six
Months
Ended For the Years Ended
July 3 Jan 2 December 31
1994 1994 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges(1) 3.6x 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.<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: August 17, 1994
Ronald P. Babcock
Vice President-Finance
DATE: August 17, 1994
James D. Hay
Vice President-General Counsel
<PAGE>
EXHIBIT 12
THOMAS & BETTS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Six
Months
Ended Year Ended
July 3, Jan. 2 December 31
1994 1994 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Earnings before
income taxes $45,767 $78,444 $69,755 $67,988 $74,375 $78,925
Add:
Interest on
indebtedness 14,375 30,247 33,405 12,376 12,998 10,240
Amortization of
debt expense 487 1,062 2,538 0 0 0
Portion of rents
representative of
the interest factor 2,805 7,193 6,690 3,982 3,971 3,790
Earnings
as adjusted $63,434 $116,946 $112,388 $84,346 $91,344 $92,955
Fixed charges:
Interest on
indebtedness $14,375 $30,247 $33,405 $12,752 $12,998 $10,240
Amortization of
debt expense 487 1,062 2,538 0 0 0
Portion of rents
representative of
the interest
factor 2,805 7,193 6,690 3,982 3,971 3,790
Fixed charges $17,667 $38,502 $42,633 $16,734 $16,969 $14,030
Ratio of earnings
to fixed charges 3.6x 3.0x 2.6x 5.0x 5.4x 6.6x
</TABLE>
