<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended January 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 (I.R.S. Employer
of incorporation or organization) Identification Number)
1555 Lynnfield Road, Memphis, Tennessee 38119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(901) 682-7766
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, Par Value $.50 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 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. [X]
The aggregate market value of the voting stock held by
nonaffiliates of the registrant as of February 3, 1995:
$1,304,525,743
(For purposes of this filing only, the registrant classified all
executive officers and directors as affiliates).
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Class Outstanding at February 3, 1995
Common Stock, Par Value $.50 19,631,435 Shares
DOCUMENTS OR PARTS THEREOF INCORPORATED BY REFERENCE
Form 10-K Part Into Which the
Document or Part Thereof Document is Incorporated
1994 Annual Report to Shareholders Part I, Item 1
Part II, Items 5-8
Part IV, Items 14(a)(1)
1995 Proxy Statement Part III, Items 10-13<PAGE>
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(Items either not applicable or not material have been
excluded.)
(a) (c) General Development and Narrative Description of
Business
Thomas & Betts Corporation ("the Corporation") designs,
manufactures and markets a broad line of electrical and
electronic connectors and components as well as other related
products for worldwide construction and original equipment
manufacturer ("OEM") markets. In North America, the Corporation
is one of the largest manufacturers of electrical connectors and
accessories for industrial, commercial and residential
construction, renovation, and maintenance applications and is a
leading supplier of transmission poles, towers and industrial
lighting products to the utility and telecommunications
industries. The Corporation is also a worldwide designer and
manufacturer of electronic connectors and flat cable, which are
sold primarily to OEMs in the automotive, computer, office
equipment, test equipment, instrumentation, industrial automation
and telecommunications industries.
The Corporation was established in 1898 as a sales agency
for electrical wires and raceways and was incorporated in New
Jersey in 1917, where it maintained its corporate headquarters
until relocated at the end of 1993 to Memphis, Tennessee, the
principal business site of the Corporation's operations. It has
expanded its business and product line through internal
development and acquisitions. The 1992 acquisition of FL
Industries Holdings, Inc., whose operating business was known as
American Electric, and ten other product line acquisitions since
then (four in 1994), represent a continuation of the
Corporation's strategy to expand its product line and markets
served and to enhance customer service. The Corporation acquired
American Electric for consideration totaling $436.8 million.
American Electric was a leading manufacturer of a broad range of
electrical products and accessories for industrial and
construction, utility and retail markets.
Since the beginning of 1994, the Corporation has
supplemented internal product development efforts with four
acquisitions: a circuit protection product line ($30 million in
annualized sales); a Canadian cable tray product package ($10
million in sales); Commander Electrical Products, Inc., a
Canadian manufacturer of electrical outlet boxes ($35 million in
sales); and Union non-metallic electrical outlet boxes ($20
million in sales). The Corporation also purchased a 29 percent
interest in privately held Leviton Manufacturing Co., Inc., the
largest U.S. manufacturer of wiring devices.
In the third quarter, the Corporation announced a major
effort to upgrade and streamline its operations. As a result, a
$79 million pre-tax restructuring charge for optimizing
operations was recorded. The funding for the acquisitions,
investment in Leviton and our initiative to improve operations
came in part from the sale of the Vitramon ceramic chip capacitor
division in July 1994.
The Corporation currently operates in three business
segments: Electrical Construction Components, Electronics/OEM
Components and Other Products and Components (principally
heaters, utility electrical components, transmission poles and
towers, and telecommunication components).
The Electrical Construction components are manufactured and
assembled at facilities located in the United States, Puerto
Rico, Canada, and Mexico and are sold primarily in North America.
The Electronics/OEM components are manufactured at facilities in
the United States, Europe, Mexico, Japan, and Singapore and are
sold in North America, Europe, and Asia. The Other Products are
manufactured in the U.S. and sold primarily in North America.
The Corporation's products are sold worldwide through
electrical and electronic distributors and directly to OEMs and
other end users. No one of the Corporation's end users or
distributors accounted for more than 4% of the Corporation's 1994
net sales.
The Corporation generally considers electrical construction
components to be those that connect, terminate, protect and
manage raceways, wires and cables for the distribution of
electrical power, and considers electronic/OEM components to be
those that carry electronic data, voice and video signals.
The Corporation's electrical components include fittings and
accessories for electrical raceways, crimp and mechanical
connectors for small wires and power cables, metal switch and
outlet boxes, wire fastening devices and markers, insulation
products, metal framing, and lighting fixtures. Acquisitions in
1994 added cable trays, circuit breakers, safety switches, meter
centers, non-metallic outlet boxes and additional metallic outlet
boxes to the Corporation's electrical product offering. The
Corporation's electrical components are used in industrial,
commercial and residential construction markets. The Corporation
also manufactures electrical components for retail consumer use.
The Corporation's electronic components include connectors
for use both inside equipment and for interconnecting equipment,
as well as related components used on printed circuit boards such
as electronic connectors. The Corporation manufactures
electronic components for the automotive, computer, office
equipment, test equipment, instrumentation, and industrial
automation industries.
The Corporation's Other Products and Components include
electrical components for the utility and heating, mechanical and
refrigeration ("HMR") markets, transmission and distribution
poles and lattice steel transmission towers, telecommunication
splice enclosures, connectors, and heaters and other components.
ELECTRICAL CONSTRUCTION COMPONENTS
The Corporation sells its electrical components to
industrial, commercial and residential construction customers.
The Corporation's electrical construction components market
includes industrial, commercial and residential construction and
renovation companies, electrical contractors, and maintenance and
repair operations. The Corporation has thousands of customers,
and no single end user, distributor or retailer accounted for
more than 4% of the Corporation's 1994 sales. Total Electrical
Construction Components sales were $526.5, $453.0, and $441.5
million and 49%, 47% and 47% of the Corporation's total sales for
1994, 1993 and 1992, respectively.
The Corporation designs, manufactures and markets thousands
of different electrical connectors, components and other products
for industrial, commercial and residential construction
applications, including (i) fittings and accessories for
electrical raceways; (ii) fastening products, such as plastic and
metallic ties for bundling wire and flexible tubing; (iii)
terminals for small wires and power cables; (iv) power
connectors, such as compression and mechanical connectors for
high current power and grounding applications; (v) indoor and
outdoor switch and outlet boxes, covers and accessories; (vi)
floor boxes; (vii) metal framing, used as structural supports for
conduits, cable trays, electrical enclosures and lighting
raceways; (viii) ground rods and clamps; (ix) products for
outdoor security, roadway and adverse and hazardous location
lighting; (x) circuit breakers, safety switches and meter
centers; and (xi) other products, including insulation products,
wire markers, multiple outlet centers and application tooling
products.
The Corporation markets its electrical components under
various brand names. These brand names and the related products
include THOMAS & BETTS and T&B electrical products and
electricians supplies products, TY-RAP and TY-FAST cable ties,
STA-KON terminals, STEEL CITY indoor switch and outlet boxes,
covers, floor boxes and conduit fittings, IBERVILLE outlet boxes,
covers, and rough-in fittings, PERFECT-LINE outdoor lampholders
and boxes and covers, BLACKBURN and COLOR-KEYED power connectors
and grounding devices, T&B wire connectors, tools and
accessories, KINDORF and SUPERSTRUT metal framing products,
AMERICAN ELECTRIC LIGHTING and HAZLUX lighting products, UNION
outlet boxes, THOMAS & BETTS and ZIMSCO circuit breakers, safety
switches and meter centers, T&B, CANSTRUT, and ELECTROTRAY cable
tray, ELECTRIPAK lighting and multiple outlet centers and certain
other electrical products.
In North America, the Corporation's components for
industrial, commercial and residential construction customers are
sold through electrical distributors and retail outlets such as
home centers and mass merchants. The Corporation has
relationships with over 2,000 national, regional and independent
distributors and buying groups with locations across North
America. The Corporation has a network of factory and independent
sales representatives who work with distributors, end users and
retail outlets to increase demand for its products.
The Corporation believes that it has strong relationships
with its distributors as a result of the breadth and quality of
its product line, innovative service programs, product
innovation, competitive pricing and brand name recognition among
its customers.
The Corporation also manufactures and distributes its
components internationally. Certain of the Corporation's
standard components are sold in countries where they conform to
the applicable local electrical requirements, while other
components are specially designed and manufactured to conform to
local standards. The Corporation also markets electrical
components through offshore sales agents and domestic exporters.
ELECTRONIC/OEM COMPONENTS
The Corporation is a worldwide designer, manufacturer and
marketer of electronic connectors, flexible interconnects, flat
cable, premises wiring management components and other
components. Total Electronic/OEM Components sales were $250.4,
$238.4 and $250.9 million and 23%, 25% and 27% of the
Corporation's total sales for 1994, 1993 and 1992, respectively.
The Corporation's electronic components are sold primarily
to OEMs in the automotive, information services, office
equipment, test equipment, instrumentation, industrial automation
and telecommunications businesses, commercial offices, with the
remainder of the components going to others such as electronic
distributors and contractors. No single end user or distributor
of the Corporation's electronic components accounted for more
than 3% of the Corporation's 1994 net sales.
The Corporation sells a variety of electronic/OEM components
including: (i) printed circuit connectors; (ii) IDC connectors
for mass termination of flat cables; (iii) custom engineered
connectors for automotive and professional electronics
applications; (iv) flexible interconnects, flat cables and
assemblies for automotive and other applications; (v) cable ties;
(vi) terminals; (vii) D-subminiature connectors, a broad group of
industry standard connectors; and (viii) modular voice and data
connectors, twinax and coax connectors, baluns, patch panels,
jack and wall plates and related components for use in mainframe-
to-terminal systems and personal computer-based local area
networks in commercial properties. These components are sold
under various brand names, including T&B electronic connectors,
ANSLEY IDC flat cable and connectors, FLEXSTRIP jumpers, TY-RAP
and TY-FAST cable ties and HOLMBERG D-subminiature and card edge
connectors, and NEVADA WESTERN, ARMIGER, OMNI and EPITOME
premises wiring brand names.
The Corporation, both in the United States and
internationally, designs and produces highly engineered
electronic components, including both standard components and
specifically designed components for end user applications. Many
of the components specifically designed for end user applications
are developed jointly with the customer. In certain instances,
the Corporation is the sole supplier for customer-specific
components which may also become standard components for similar
applications. Components sold to information service customers
enable them to use economical unshielded two-stick pair telephone
wiring instead of the more expensive alternatives.
In North America, the Corporation sells its standard
components through electronic distributors and direct, while
providing customer-specific components directly to major OEMs.
The Corporation sells through national, regional and local
distributors serving a large customer base.
The Corporation also manufactures and markets its
electronic/OEM components internationally, with design,
manufacturing and distribution capabilities in Europe and the
Pacific Region. In Europe, as in North America, electronic/OEM
components are sold primarily to automotive, computer, office
equipment, test equipment, instrumentation, industrial automation
and telecommunications markets and certain of the electronic
components are developed and manufactured for specific customer
applications.
There has been a trend on the part of OEM customers to
reduce their number of preferred suppliers, focusing on companies
that can meet quality and delivery standards and that have a
global presence, a broad product package, strong design
capability and competitive prices. The Corporation has achieved
a preferred supplier designation from many of its most important
OEM customers for electronic components and continues to seek
this preferred status from other accounts.
OTHER PRODUCTS AND COMPONENTS
The Corporation sells its other products and components,
comprised of heating products, transmission poles and towers,
telecommunication components and other components, through
distributors and end users. Total Other Products sales were
$299.2, $266.1 and $247.2 million and 28%, 28% and 26% of the
Corporation's total sales for 1994, 1993 and 1992, respectively.
Heating Products
The Corporation designs, manufactures and markets heating
products for nonresidential end uses such as commercial and
industrial buildings. There are thousands of customers for the
Corporation's heating products and no single end user or
distributor accounted for more than 1% of the Corporation's 1994
net sales.
Products include gas, oil and electric unit heaters, gas-
fired duct furnaces, indirect and direct gas-fired make-up air
heaters, and infrared heaters for the heating, ventilation and
air conditioning ("HVAC") marketplace under the REZNOR brand
name.
The Corporation's products are sold through HVAC,
mechanical, and refrigeration distributors in hundreds of
locations in North America. HVAC, mechanical and refrigeration
distributors are reducing their vendor base. The Corporation
believes that the broad array of its heating products and the
brand name recognition of REZNOR by its customers increase its
attractiveness to HVAC, mechanical, and refrigeration
distributors. The Corporation uses independent manufacturers'
representative organizations in connection with its heating sales
efforts in North America. REZNOR products are also marketed in
Europe and the Pacific Region.
Transmission and Distribution Poles and Towers
The Corporation designs, manufactures and markets
transmission and distribution poles and towers for North American
power and telecommunications companies. These products are
primarily sold to five types of end users: investor-owned
utilities; cooperatives, which purchase power from utilities and
manage its use; municipal utilities; cable television operating
companies; and telephone companies. The Corporation's utility
and telecommunications customer base includes over 300 different
companies and other entities. No single utility or
telecommunications end user accounted for more than 1% of the
Corporation's 1994 sales.
The Corporation's products include tubular steel
transmission and distribution poles and lattice steel
transmission towers. The Corporation manufactures and sells its
transmission towers and its transmission and distribution poles
under the LEHIGH, POWER STRUCTURES, MEYER, and THOMAS & BETTS
brand names. The Corporation believes that its sales of towers,
poles and related products are enhanced by its ability to design
and manufacture quality, customized products for specific
purposes or locations.
The Corporation's poles and towers are sold directly to end
users and are custom manufactured according to a particular
utility's specifications. Products must typically be pre-
approved by the end user. The Corporation utilizes
manufacturers' representative organizations throughout the United
States in conjunction with its direct sales force to gain
customer approvals. The Corporation also sells lattice towers
and steel poles internationally.
Telecommunication Components
The Corporation designs, manufactures, and markets T&B
aerial, pole, pedestal and buried splice enclosures, T&B
connectors, KOLD-N-KLOSE encapsulation and sheath repair systems,
TY-RAP cable ties, and specialty devices for cable television
companies and telephone operating companies. These components
are sold both directly to end users and through distributors. No
single end user or distributor of the Corporation's
telecommunication components accounted for more than 1% of the
Corporation's 1994 net sales.
Other Components
The Corporation designs, manufactures and markets flood,
roadway and security lighting fixtures; and connectors, grounding
systems, fastening and metal framing components for North
American power companies and HMR distributors. These products
are primarily sold to four markets: investor-owned utilities;
cooperatives, which purchase power from utilities and manage its
use; municipal utilities; and HMR distributors. No single
utility end user or distributor accounted for more than 1% of the
Corporation's 1994 sales.
The Corporation's other component products include BLACKBURN
high-voltage connectors and grounding systems, and AMERICAN
ELECTRIC LIGHTING roadway, security area lighting fixtures,
SUPERSTRUT metal framing and TY-RAP and TY-FAST cable ties.
The Corporation's other component products are sold both
directly to end users and through distributors. Direct sales
typically occur when products such as lighting fixtures are
custom manufactured according to a particular utility's
specifications. Otherwise products are usually sold through
distributors that specialize in selling to utilities or heating
contractors. The Corporation utilizes manufacturers'
representative organizations throughout the United States in
conjunction with its direct sales force to gain customer
approvals.
MANUFACTURING AND DISTRIBUTION
The Corporation employs advanced processes in order to
manufacture quality products. The Corporation's manufacturing
processes include high-speed stamping, precision molding,
machining, plating and automated assembly. The Corporation makes
extensive use of computer-aided design and computer-aided
manufacturing (CAD/CAM) software and equipment to link product
engineering with its factories.
The Corporation also utilizes other advanced equipment and
techniques in the manufacturing and distribution process,
including computer software for scheduling, material
requirements, shop floor control, capacity planning, and the
warehousing and shipment of products.
The Corporation believes that its products enjoy a
reputation for quality in the markets in which they are sold.
The Corporation has implemented quality control processes in its
design, manufacturing, delivery and other operations in order to
further improve product quality and the service level to
customers. These techniques include just-in-time manufacturing
programs for more efficient use of machine tools in manufacturing
different products, statistical process control, statistical
problem solving, and other processes related to the Corporation's
SIGNATURE SERVICE DMI (Distributor/Manufacturer Integration)
program.
From its origin as a delivery guarantee, SIGNATURE SERVICE
has evolved into a partnership for profitability that encompasses
purchasing incentives, extensive marketing support, training, and
service discounts. The number of distributor locations in the
DMI program grew to several hundred in 1994, and by the end of
1995, the Corporation expects about half of its sales to
electrical distributors will be to distributors in the SIGNATURE
SERVICE DMI program. The DMI program is capable of handling both
national and regional chains as well as the one-location
distributor. Portions of the SIGNATURE SERVICE DMI program are
being applied to another segment of the Corporation's business.
Electronic data interchange, for example, is already standard for
relationships with OEM's and electronic distributors, so DMI is
also appropriate as an enhancement in this segment.
The Corporation manufactures its products on a worldwide
basis, with manufacturing operations throughout North America, in
Europe and in the Pacific Rim.
The Corporation purchases a wide variety of raw materials
for the manufacture of its products, including metals such as
brass, copper, aluminum, zinc, steel plate, steel strip,
malleable iron castings, and resins. The Corporation's sources
of raw materials and component parts are well established and are
sufficiently numerous to avoid serious interruption of production
in the event that certain suppliers are unable to provide raw
materials and component parts.
RESEARCH AND DEVELOPMENT
The Corporation has research, development and engineering
capabilities in each of the three regions of the world in which
it operates in order to respond locally to its customers' needs
and technological requirements. The Corporation believes that it
has a reputation for innovation based upon its ability to develop
quality, new and/or improved products that meet the specific
application needs of its customers.
The Corporation allocates significant resources to its
research and development activities. The Corporation's research,
development and engineering expenditures for the creation and
application of new and improved products and processes, were
$20.8 million, $18.7 million and $17.4 million for 1994, 1993 and
1992, respectively.
The research and development activities of the Corporation
are focused on specific product areas. Certain of the
Corporation's recent new products and enhancements include
connectors and enclosures for construction markets, terminators
for high speed computer building wiring, special automotive
connectors, fine pitch connectors, a new cable tie line, outdoor
floodlights, gas-fired tubular infrared heaters and unit heaters
for European markets, and closures for telecom circuits.
PATENTS AND TRADEMARKS
The Corporation owns approximately 1,099 active patents
worldwide and has numerous patent applications currently pending.
The Corporation has over 200 trademarks, including THOMAS &
BETTS, T&B, TY-RAP, TY-FAST, STA-KON, ANSLEY, FLEXSTRIP,
BLACKBURN, STEEL CITY, KINDORF, HAZLUX, AMERICAN ELECTRIC
LIGHTING, COLOR-KEYED, SUPERSTRUT, PERFECT-LINE, REZNOR, ANCHOR
METALS, LEHIGH, MEYER, NEVADA WESTERN, ELECTRIPAK, WESTLINE,
HOLMBERG and ZINSCO. While the Corporation considers its patents
and trademarks (including trade dress) to be valuable assets, it
does not believe that its competitive position is dependent
solely on patent or trademark protection or that its operations
are dependent on any individual patent or trademark. The
Corporation does not consider any of its licenses, franchises or
concessions to be material to its business.
COMPETITION
The Corporation encounters competition in all areas of its
business. The Corporation competes primarily on the basis of
product quality, technology, price, performance and customer
service. There are many companies which manufacture a number of
products which compete with those of the Corporation. All of the
Corporation's products are in competition with products of other
manufacturers, some of which have greater financial and other
resources than the Corporation.
EMPLOYEES
As of January 1, 1995, the Corporation had approximately
7,400 full-time employees worldwide. As part of the
restructuring announced in the third quarter of 1994, a total of
approximately 350 salaried and 1,300 hourly jobs are expected to
be eliminated at facilities to be closed or reconfigured while
approximately 200 salaried and 1,250 hourly jobs are expected to
be added at current or newly-opened facilities.
(b) Financial Information About Industry Segments
The Corporation operates in three industry segments.
Financial information by industry segment follows:
<TABLE>
<CAPTION>
In thousands 1994 1993 1992
<S> <C> <C> <C>
Net Sales:
Electrical Construction Components $ 526,534 $ 453,022 $ 441,472
Electronic/OEM Components 250,419 238,363 250,893
Other Products and Components 299,212 266,124 247,183
Total 1,076,165 957,509 939,548
Earnings from Operations before Restructuring:
Electrical Construction Components (1) 84,960 75,440 77,961
Electronic/OEM Components 21,110 11,702 15,659
Other Products and Components (1) 26,644 24,268 23,683
General Corporate (29,137) (24,352) (15,956)
Total 103,577 (2) 87,058 101,347
Earnings from Operations:
Electrical Construction Components (1) 32,249 75,440 67,961
Electronic/OEM Components (2,027) 11,702 10,659
Other Products and Components (1) 24,813 24,268 23,683
General Corporate (30,469) (24,352) (15,956)
Total 24,566 (2) 87,058 86,347
Identifiable Assets:
Electrical Construction Components 474,655 386,416 363,100
Electronic/OEM Components 208,441 209,836 232,762
Other Products and Components 319,969 324,201 308,364
Discontinued Operations - 81,098 82,241
General Corporate 205,147 131,631 130,596
Total 1,208,212 1,133,182 1,117,063
Capital Expenditures:
Electrical Construction Components 29,053 14,221 19,881
Electronic/OEM Components 16,193 8,743 12,961
Other Products and Components 10,025 5,033 4,983
Discontinued Operations 7,797 10,511 9,202
General Corporate 3,838 47 407
Total 66,906 38,555 47,434
Depreciation and Amortization:
Electrical Construction Components 22,431 20,676 16,068
Electronic/OEM Components 16,621 15,234 18,082
Other Products and Components 12,459 11,993 11,399
Discontinued Operations 4,726 8,908 8,009
General Corporate 2,021 1,095 1,173
Total $ 58,258 $ 57,906 $ 54,731
<FN>
(1) Reflects the adoption of SFAS No. 109 "Accounting for Income Taxes"
in 1993 which increased depreciation expense in both 1993 and 1994
by $1,822 in Electrical Construction Components and $981 in Other
Products and Components.
(2) Includes a write down of $1,359 in Electrical Construction
Components, $2,475 in Other Products and Components and $6,798 in
General Corporate for previously vacated facilities.
</TABLE>
Results of operations for all years have been reclassified
to reflect Vitramon as a discontinued operation because of its
sale in July 1994.
Net sales comprise sales to unaffiliated customers;
intersegment sales are immaterial.
Segment earnings from operations consist of net sales less
cost of sales and operating expenses. General corporate expenses
have not been allocated to segments.
General corporate assets not allocated to segments are
principally cash and investments, and in 1994 includes the
Corporation's investment in Leviton Manufacturing Co., Inc..
(d) Financial Information About Foreign and Domestic Operations
and Export Sales
Information relating to operations in different geographic
areas is presented in both Exhibit 13 hereto and in the
Corporation's 1994 Annual Report to Shareholders on page 31,
which is incorporated herein by reference. The risks attendant
to these sales and profits are relatively small because the
operations are in foreign countries that have relatively stable
political systems. (See reference to peso devaluation in
Financial Review presented in Exhibit 13 hereto under Item 7 and
on page 18 of Annual Report, and reference to unhedged
liabilities in Note 1 to the Consolidated Financial Statements
under Foreign Exchange presented in Exhibit 13 hereto under Item
8 and on page 25 of Annual Report.) It is expected that the
international markets will continue to provide sales growth in
the future.
ITEM 2. PROPERTIES
The Corporation has total plant, office and warehouse space
of approximately 6,377,000 square feet which is located in 72
locations in 19 states, the Commonwealth of Puerto Rico and 15
foreign countries composed of 4,090,000 square feet of
manufacturing space and 1,514,000 square feet of office and
distribution space and 773,000 sq. ft. of idle space.
The following is a list of the Corporation's manufacturing
locations by primary segment as of January 1, 1995:
<TABLE>
<CAPTION>
Approximate area
No. of in square feet
Segment Location Facilities Leased Owned
<S> <C> <C> <C> <C>
Electrical Construction Components
Arkansas 1 245,000
California 1 36,320
Georgia 2 160,000 157,818
Mississippi 1 236,652
New Jersey 1 420,000
Ohio 1 39,680
Oklahoma 1 108,276
Pennsylvania 3 51,804 57,097
Puerto Rico 3 118,716 28,200
Tennessee 3 125,000 457,000
Canada 5 65,499 295,607
Mexico 2 206,434
Electronic/OEM Components
California 1 135,530
South Carolina 2 88,966
England 2 17,000 28,200
Luxembourg 1 26,544 43,246
Singapore 1 64,000
Japan 2 9,205 240,240
Other Products and Components
Pennsylvania 1 217,450
South Carolina 1 110,000
Texas 1 136,172
Wisconsin 1 164,360
</TABLE>
The Corporation leases its corporate and divisional
headquarters located in Memphis, Tennessee, which contain
approximately 85,000 sq. ft. Principal sales offices and
warehouses are located in 1,429,000 sq. ft. of property, over 90
percent of which is leased. In 1995, the Corporation expects to
add 440,000 sq. ft. of distribution space.
As part of the restructuring described in Item 1,
approximately 1.4 million sq. ft. of the manufacturing and
warehouse space is being closed in North America, Puerto Rico,
Europe and the Far East with most closures occurring in North
America. Within North America, the principal closure will be the
Corporation's 420,000 sq. ft. of manufacturing space in
Elizabeth, New Jersey. Also part of this effort is the addition
of 1.1 million sq. ft. of manufacturing and warehouse space in
North America, Puerto Rico and Europe, principally in North
America, 300,000 sq. ft. of which has already been added.
The Corporation has 773,000 sq. ft. of idle manufacturing
and office space primarily in Missouri, Alabama, Pennsylvania,
New Jersey and Michigan not included in the table above. In
1994, the Corporation recorded an $11 million operating charge to
provide for losses on leases and to reduce owned facilities to
their net realizable values.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is subject to federal, state and local
environmental laws and regulations, which govern the discharge of
pollutants into the air, soil and water, as well as the handling
and disposal of solid and hazardous wastes. The Corporation
believes that it is currently in substantial compliance with all
applicable environmental laws and regulations and that the costs
of maintaining or coming into compliance with such environmental
laws and regulations will not be material to the Corporation's
financial statements.
Owners and operators of sites containing hazardous
substances, as well as generators of hazardous substances, are
subject to broad liability under various federal and state
environmental laws and regulations, including liability for
cleanup costs and damages arising out of past disposal activity.
Such liability in many cases may be imposed regardless of fault
or the legality of the original disposal activity. The
Corporation is the owner or operator of various manufacturing
facilities currently being investigated or remediated, including
its closed facilities in Anniston, Alabama, and St. Louis,
Missouri, and its current facility in Hager City, Wisconsin. In
addition, the Corporation is investigating two manufacturing
plants which were sold by American Electric prior to its
acquisition by the Corporation, located in Medora, Indiana, and
Monroe, Louisiana, that may require site remediation.
The above facilities were purchased by American Electric
from other parties between the years 1985 and 1988. At the time
of these purchases, the sellers gave commitments for
indemnification for environmental liabilities that occurred prior
to the purchase of the facilities by American Electric. There
can be no assurances that such indemnities will be honored, but
the Corporation believes that the indemnities will be honored.
Subsequent to the Corporation's acquisition of American Electric,
the Corporation has entered into agreements with the sellers to
cooperate with each other in resolving obligations in connection
with the above-mentioned environmental issues.
In addition, in early February 1995, the Corporation
announced the closure of its Elizabeth, New Jersey, facility. As
part of this closure, the Corporation is required to investigate
and, if necessary, remediate contamination that may be identified
at that location in accordance with New Jersey law.
The Corporation has received notifications from the United
States Environmental Protection Agency ("EPA") or similar state
environmental regulatory agencies or private parties that the
Corporation, along with others, may be potentially responsible
for the remediation of twelve sites pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(the "Superfund" Act) or similar state environmental statutes.
Pursuant to an agreement with ITT Corporation (ITT), ITT has to
date assumed responsibility for its costs associated with pre-
June 1985 contamination at five of these sites. The Corporation
has assumed responsibility for its share of costs at six of these
sites. Both ITT and the Corporation are currently defendants in
a private cost-recovery action with respect to the one remaining
site. The Corporation believes that any recovery will not be
material.
The Corporation has also been served with an Administrative
Complaint by the EPA which alleges that the Surprenant Wire and
Cable facility in Clinton, Massachusetts, which was owned and
operated by American Electric from June 1985 until November 1988,
failed to comply with certain requirements of the Emergency
Planning and Community Right to Know Act for the 1987 reporting
year (In The Matter of FL Industries, Inc., EPA Region I Docket
No. EPCRA-I-92-1047, filed April 1, 1992). The EPA's complaint
seeks a penalty of $176,520. The Corporation is currently
contesting this matter to determine the extent of its liability,
if any.
The Corporation is not able to predict with certainty the
extent of its ultimate liability with respect to pending or
future environmental matters. However, the Corporation does not
believe that any such liability with respect to the
aforementioned environmental matters would have a material
adverse effect upon its financial statements.
The Corporation has been named as defendant in various
product liability and commercial legal actions arising from
normal business activities. Although the amount of any ultimate
liability with respect to such matters cannot be precisely
determined, the Corporation does not believe any such liability
would be material to its financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive Officers of the Registrant
<TABLE>
<CAPTION>
Date
Assumed
Present
Name Position Age Position
<S> <C> <C> <C>
T. Kevin Dunnigan (1) Chairman of the Board
and Chief Executive
Officer 57 January 1992
Clyde R. Moore President and Chief
Operating Officer 41 January 1994
Ronald P. Babcock (2) Vice President -
Finance and Treasurer
(Chief Financial
Officer) 59 January 1994
T. Roy Burton President - Electronics/OEM
Division 47 March 1994
Thomas A. Edmonds President -
Utility Division 45 March 1994
William A. Fredrick President -
Lighting Division 48 March 1994
Uberto Gamaggio President - European
Division 56 May 1993
Dominic J. Pileggi (3) President - Electrical
Components Division 43 March 1994
<FN>
(1) Chief Executive Officer since January 1985.
(2) Vice President - Finance (Chief Financial Officer) since May 1983.
(3) President - Electronics Division from August 1988 to February 1994.
</TABLE>
The above have been executive officers of the Corporation for at
least the last five years except the following:
Mr. Moore was President and Chief Operating Officer of FL
Industries, Inc. from 1990 to 1992 and President of its
American Electric Division from 1985 until its acquisition
by Thomas & Betts Corporation in 1992. He was President-
Electrical Division of the Corporation from 1992 to 1994.
Mr. Burton was Vice President and General Manager of Bendix
Connector Operations (1989 to 1992), Vice President-
Information Technology Operations (1992-93), and Vice
President-Aerospace Operations (1993-94) of Amphenol
Corporation.
Mr. Edmonds was President of Thomas & Betts Limited (Canada)
(1989 to 1991); Vice President-Corporate Planning (1991 to
1992) and President-European Division (1992 to 1993) of the
Corporation; Vice President-Utility Group of Thomas & Betts
Holdings, Inc. (1993 to 1994).
Mr. Fredrick was Vice President-Commercial and Industrial
Lighting Group of the American Electric Division of FL
Industries, Inc. (1988 to 1992) and Vice President and
General Manager-Commercial and Industrial Lighting Group of
Thomas & Betts Holdings, Inc. (1992 to 1994).
Mr. Gamaggio was Managing Director of Baumann GmbH,
Lichtenstein, from 1987 to 1993.
The executive officers were elected by the Board of Directors for
a term which expires on May 3, 1995, the date of the next
organizational meeting of the Board of Directors. Normally,
officers are elected for one-year terms or until their successors
have been elected. There exists no special arrangement or
understanding regarding election to executive office other than
that described herein. See Item 11 for information relating to
Directors.
PART II
ITEMS 5 THROUGH 8.
Information required by Items 5 through 8 of Form 10-K is
included in both Exhibit 13 hereto and in the Corporation's 1994
Annual Report to Shareholders which is incorporated herein by
reference as indicated below:
Annual Report
Item No. Page
5 20 & 33
6 34&35
7 18-20
8 21-33
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEMS 10, 11, 12 and 13
Registrant, on March 17, 1995 filed with the Securities and
Exchange Commission a definitive Proxy Statement. Information
required by Items 10, 11, 12 and 13 of Form 10-K, but not
provided herein, is included in the Proxy Statement and is
incorporated herein by reference. Certain of the information
required with respect to executive officers is also set forth in
Part I of this report under the heading "Executive Officers of
the Registrant."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Financial statements.
All financial statements as set forth under Item 8.
(2) Financial statement schedules.
Page
Number
II Valuation and Qualifying Accounts 20
Independent Auditors' Report on Financial
Statement Schedule 21
All other schedules are omitted as the required
information is inapplicable or the information is
presented in the financial statements or related notes.
(3) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
(12) Statements regarding Computation of Ratios (Ratio
of earnings to fixed changes)
(13) 1994 Annual Report to Shareholders
Excerpts from the 1994 Annual Report to
Shareholders are attached to the Form 10-K in
Exhibit 13. If you have not received the Annual
Report to Shareholders, you may obtain one by
writing to the Investor Relations Department of
the Corporation.
(21) Subsidiaries of Registrant
Place of
Name Incorporation
Blackburn Electric Canada Inc. Canada
Challenger Caribbean Corporation Delaware
FL Amelec, Inc. Texas
Amelec S.A. de C.V. Mexico
American Electric de Mexico, S.A. de C.V. Mexico
Thomas & Betts Caribe, Inc. Delaware
Thomas & Betts FSC, Inc. U. S. Virgin Islands
Thomas & Betts Industries Co., Ltd. Taiwan, R.O.C.
Thomas & Betts International, Inc. Delaware
Thomas & Betts Aktiebolag Sweden
Thomas & Betts France France
Thomas & Betts GmbH Germany
Thomas & Betts GmbH & Company Kommanditgesellschaft Germany
Thomas & Betts Holdings (U.K.) Limited United Kingdom
Thomas & Betts Limited United Kingdom
Thomas & Betts Manufacturing Limited United Kingdom
Thomas & Betts Hong Kong, Limited Hong Kong
Thomas & Betts Japan, Ltd. Japan
Thomas & Betts (Luxembourg) S.A. Luxembourg
Thomas & Betts de Mexico S.A. de C.V. Mexico
Thomas & Betts Pty. Limited Australia
Thomas & Betts (S.E. Asia) Pte. Ltd. Singapore
Thomas & Betts S.p.A. Italy
Thomas & Betts S.A. Spain
Thomas & Betts Limited Canada
T&B Commander Electrical Materials Inc. Ontario, Canada
Thomas & Betts (Ontario) Ltd. Canada
All subsidiaries are included in the consolidated financial
statements.
(23) Auditors' Consent
The following exhibits are omitted as they are incorporated
by reference as indicated.
(3) Restated Certificate of Incorporation and By-Laws
- See 1993 Form 10-K.
(4) Instruments defining the rights of security
holders, including indentures.
- Stock Purchase Agreement between Thomas & Betts
Corporation and Vishay Intertechnology, Inc.,
dated July 12, 1994 - See Form 8-K filed July
29, 1994.
- Indenture, dated as of January 15, 1992,
between the Corporation and Morgan Guaranty
Trust Company of New York, as Trustee - See
1991 Form 10-K.
- Specimen of the Corporation's $125,000,000
aggregate principal amount of 8 1/4% Notes due
January 15, 2004 - See 1991 Form 10-K.
- Form of Distribution Agreement for Medium-Term
Notes between the Corporation and Merrill Lynch
& Co., dated July 28, 1992 - See Form 8-K dated
July 28, 1992.
- First Supplemental Indenture, dated as of July
28, 1992, between the Corporation and Morgan
Guaranty Trust Company of New York, as Trustee
- See Form 8-K dated July 28, 1992.
(10) Material Contracts
- 1990 Stock Option Plan - See 1990 Form 10-K
- Agreement and Plan of Merger by and among FL
Industries Holdings, Inc. and the Shareholders
thereof, the Corporation and TBC Acquisition
Corp., dated as of November 13, 1991, as
amended and restated - See Form 8-K filed
November 19, 1991.
- Credit Agreement dated as of December 19, 1991
among the Corporation, the banks listed therein
and Morgan Guaranty Trust Company of New York
as agent - See Exhibit 2.2 to Company's
Amendment No. 1 to its Form S-3 Registration
Statement No. 33-44153, as filed January 7,
1992.
- Executive Officer Employment Agreement Form -
See 1992 Form 10-K
- 1985 Stock Option Plan - See 1992 Form 10-K
- Restricted Stock Plan for Nonemployee Directors
- See 1992 Form 10-K
- 1988 Restricted Stock Incentive Plan - See 1993
Form 10-K
- 1993 Management Stock Ownership Plan - See 1993
Form 10-K
- Thomas & Betts Corporation Executive Incentive
Plan - See 1994 Proxy Statement
(b) No report on Form 8-K was filed during the last quarter of
1994.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
THOMAS & BETTS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JANUARY 1, 1995, JANUARY 2, 1994 AND DECEMBER 31, 1992
(IN THOUSANDS)
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COST AND OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (DEDUCTIONS) OF PERIOD
<S> <C> <C> <C> <C> <C>
Year ended January 1, 1995:
Allowance for doubtful accounts
and cash discounts $ 5,292 $ 837(1) $ (57)(2) $ (1,516) (3) $ 4,556
Year ended January 2, 1994:
Allowance for doubtful accounts
and cash discounts $ 5,103 $ 1,291(1) $ 127 (2) $ (1,229) (3) $ 5,292
Year ended December 31, 1992:
Allowance for doubtful accounts
and cash discounts $ 4,068 $ 845(1) $ 826 (2) $ (636) (3) $ 5,103
<FN>
(1) Includes provision of $1,133 in 1994, $1,286 in 1993, and $934 in 1992 for doubtful accounts.
Remaining amounts represent net change in cash discount reserve and translation adjustments.
(2) Balance acquired in business acquisitions.
(3) Write-offs of uncollected accounts and divestiture of Vitramon balance of $655 in 1994.
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
The Shareholders and Board of Directors
Thomas & Betts Corporation:
Under date of February 2, 1995, we reported on the
consolidated balance sheets of Thomas & Betts Corporation and
subsidiaries as of January 1, 1995 and January 2, 1994 and the
related consolidated statements of earnings, cash flows, and
shareholders' equity for each of the years in the three-year
period ended January 1, 1995 as contained in the 1994 Annual
Report to Shareholders. These consolidated financial statements
and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1994. In connection with
our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement
schedule as listed in the accompanying index. This financial
statement schedule is the responsibility of the Corporation's
management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
In our opinion, the financial statement 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.
KPMG Peat Marwick LLP
Memphis, Tennessee
February 2, 1995
<PAGE>
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS
ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED.
<TABLE>
<CAPTION>
THOMAS & BETTS CORPORATION
Signature Title Date
<S> <C> <C>
/s/ T. Kevin Dunnigan Chairman of the Board, March 30, 1995
(T. Kevin Dunnigan) Chief Executive Officer
and Director
/s/ Clyde R. Moore President, Chief Operating March 30, 1995
(Clyde R. Moore) Officer and Director
/s/ Ronald P. Babcock Vice President - Finance and March 30, 1995
(Ronald P. Babcock) Treasurer (Chief Financial
Officer and Principal Accounting
Officer)
/s/ Jerry Kronenberg Vice President - General March 30, 1995
(Jerry Kronenberg) Counsel
/s/ Raymond B. Carey, Jr. Director March 31, 1995
(Raymond B. Carey, Jr.)
/s/ Ernest H. Drew Director March 31, 1995
(Ernest H. Drew)
Director March __, 1995
(Jeananne K. Hauswald)
/s/ Thomas W. Jones Director March 30, 1995
(Thomas W. Jones)
/s/ Robert A. Kenkel Director March 30, 1995
(Robert A. Kenkel)
/s/ Kenneth R. Masterson Director March 31, 1995
(Kenneth R. Masterson)
/s/ J. David Parkinson Director March 30, 1995
(J. David Parkinson)
/s/ Ian M. Ross Director March 30, 1995
(Ian M. Ross)
/s/ William H. Waltrip Director March 31, 1995
(William H. Waltrip)
</TABLE>
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
THOMAS & BETTS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
January 1, January 2, Year Ended December 31,
1995 1994 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations
before income taxes $ 494 $ 59,942 $ 52,983 $55,465 $56,122
Add:
Interest on indebtedness 26,852 30,247 33,405 12,752 12,998
Amortization of debt expense 1,133 1,062 2,538 0 0
Portion of rents representative of
the interest factor 7,377 7,011 6,515 3,816 3,826
Deduct:
Interest capitalized during the period - - - (376) -
Undistributed earnings from less than
50 percent owned persons (1,863) - - - -
Earnings as adjusted $ 33,993 $ 98,262 $ 95,441 $71,657 $72,946
Fixed charges:
Interest on indebtedness 26,852 $ 30,247 $ 33,405 $12,752 $12,998
Amortization of debt expense 1,133 1,062 2,538 0 0
Portion of rents representative of
the interest factor 7,377 7,011 6,515 3,816 3,826
Total fixed charges $ 35,362 $ 38,320 $ 42,458 $16,568 $16,824
Ratio of earnings to fixed charges .96x 2.6x 2.2x 4.3x 4.3x
</TABLE>
The ratio for the year ended January 1, 1995 was .96x, inadequate to cover
fixed charges by $1,369. This is due to a provision for restructured
operations of $79,011 provided in the third quarter.
<PAGE>
EXHIBIT 13
ANNUAL REPORT TO SHAREHOLDERS
PART I, ITEM 1 (page 31 of Annual Report)
9. Information Relating to Operations in Different
Geographic Areas
The Corporation is engaged in the design, manufacture, and
marketing of electrical and electronic connectors, components and
accessories. Operations are conducted in three principal areas:
Domestic, Europe and Other International locations. Transfers
between geographic areas are priced on a basis that yields an
appropriate rate of return based on assets employed, risk and
other factors.
<TABLE>
<CAPTION>
Financial Information Relating to Operations in Different Geographic
Areas
In thousands 1994 1993 1992
<S> <C> <C> <C>
Sales to Unaffiliated Customers:
Domestic $ 844,066 $761,053 $728,916
Europe 113,173 105,666 123,219
Other International 118,926 90,790 87,413
Total 1,076,165 $ 957,509 939,548
Sales or Transfers Between Geographic Areas:
Domestic 45,074 43,146 38,265
Europe 5,285 3,600 2,202
Other International 12,615 8,563 7,287
Total 62,974 55,309 47,754
*Earnings Before Income Taxes:
Domestic (6,789) 48,882 35,469
Europe (2,318) 923 3,468
Other International 11,178 12,307 13,863
Adjustments and eliminations (1,577) (2,170) 183
Earnings from continuing operations
before income taxes 494 59,942 52,983
Identifiable Assets:
Domestic 787,180 771,120 749,978
Europe 72,066 69,645 81,883
Other International 149,513 85,069 75,029
Corporate assets (principally
cash and investments) 205,147 131,631 130,596
Assets of discontinued operations - 81,098 82,241
Adjustments and eliminations (5,694) (5,381) (2,664)
Total $1,208,212 $1,133,182 $1,117,063
<FN>
* Fiscal 1994 Domestic, European, and other foreign earnings includes
a restructuring charge and write-down of previously vacated facilities
of $75.3, $12.2 and $2.2 million, respectively.
</TABLE>
<PAGE>
<PAGE>
PART II, ITEM 5 (pages 20 and 33-35 of Annual Report)
DIVIDENDS AND RELATED SECURITY HOLDER MATTERS
In 1994, the Corporation declared cash dividends of $2.24
per share or $43 million. These dividends represented 64 percent
of net earnings compared to 75 percent of net earnings in 1993.
Debt covenants permit the Corporation to continue paying
dividends at the current rate, with increases allowed only if the
dividend payout does not exceed 50 percent of earnings. Thomas &
Betts has paid dividends for 61 consecutive years. The
Corporation's common stock is traded on the New York Stock
Exchange. Thomas & Betts had 19,605,000 shares of common stock
outstanding at January 1, 1995, held by 3,978 shareholders of
record.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY REVIEW
Dollars in thousands
(except per share data) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
First Quarter
Net sales $248,262 $235,193 $231,439 $123,856 $128,304 $118,646
Gross profit 81,276 80,882 78,756 53,003 56,595 54,565
Earnings (loss) from continuing
operations 10,264 10,040 (2,427)(2) 11,608 12,416 13,789
Net Earnings 13,877 14,848(1) 132 (2) 14,294 15,500 15,440
Earnings (loss) per share -
continuing operations .54 .53 (.13)(2) .68 .73 .81
Earnings per share .73 .79(1) .01 (2) .84 .91 .91
Cash dividends declared per share .56 .56 .56 .53 .50 .46
Market price range 68-58 1/8 71 3/8 - 63 65 1/4 - 55 1/4 56 1/2 - 45 57 3/8 - 47 3/4 53 1/4 - 46
Second Quarter
Net sales $261,707 $234,061 $238,283 $117,571 $129,201 $119,627
Gross profit 88,913 79,871 83,253 49,549 55,873 55,002
Earnings (loss) from continuing
operations 12,772 9,362 13,157 10,255 11,924 13,093
Net Earnings 16,100 12,235 15,026 12,275 15,006 14,114
Earnings (loss) per share -
continuing operations .67 .50 .70 .60 .70 .77
Earnings per share .84 .65 .80 .72 .88 .83
Cash dividends declared per share .56 .56 .56 .56 .53 .50
Market price range 65 7/8-61 1/4 72-62 62 1/4-54 3/4 60 7/8-52 1/2 61 1/2-52 54 1/4-46
Third Quarter
Net sales $277,407 $240,918 $237,823 $113,346 $124,935 $113,365
Gross profit 92,747 82,128 86,598 47,435 55,004 51,939
Earnings (loss) from continuing
operations (40,715) 10,816 14,193 9,215 1,003(3) 11,286
Net Earnings 18,277 (4) 13,201 16,842 10,700 5,096(3) 12,084
Earnings (loss) per share -
continuing operations (2.11) .57 .76 .54 .06(3) .66
Earnings per share .94 (4) .70 .90 .63 .30(3) .71
Cash dividends declared per share .56 .56 .56 .56 .53 .50
Market price range 68 1/4-60 7/8 64 7/8-59 5/8 69-59 1/2 55 3/4-50 3/8 56-40 3/4 55 3/4-48 3/4
Fourth Quarter
Net sales $288,789 $247,337 $232,003 $116,785 $124,220 $118,843
Gross profit 102,365 86,051 85,424 46,655 52,847 51,224
Earnings (loss) from continuing
operations 19,566 13,371 15,657 9,434 11,467 10,397
Net Earnings 19,566 16,255 18,923 11,181 12,798 12,097
Earnings (loss) per share -
continuing operations 1.00 .71 .84 .56 .67 .62
Earnings per share 1.00 .86 1.01 .65 .75 .71
Cash dividends declared per share .56 .56 .56 .56 .53 .50
Market price range 71 1/4-65 1/8 62 5/8-57 69-62 1/4 58 1/8-50 5/8 47 1/4-40 1/4 52-47 1/8
<FN>
Restated to reflect Vitramon Division as a discontinued operation (sold July, 1994).
Includes the results of American Electric from January 2, 1992 (date acquired).
Per share amounts based on average shares outstanding in each quarter.
(1) Includes a one-time gain of $1,628 ($.09 per share) for the cumulative effect of change in accounting for income taxes.
(2) Includes a pre-tax charge of $15,000 ($.59 per share) for restructured operations.
(3) Includes a pre-tax charge of $9,000 ($.43 per share) for consolidating manufacturing facilities and reducing operating
expenses.
(4) Includes a pre-tax gain from the sale of Vitramon of $99,075, a pre-tax charge of $79,011 for restructuring, and a pre-
tax operating write-down of $10,632 for previously vacated facilities.
</TABLE>
<PAGE>
<PAGE>
PART II, ITEM 6 (pages 34-35 of Annual Report)
<TABLE>
<CAPTION>
ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA
Thomas & Betts Corporation
Dollars and shares in thousands
(except per share data) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Operational Data
Net sales $1,076,165 $ 957,509 $ 939,548 $471,558 $506,660 $470,481
Costs and expenses:
Cost of sales 710,864 628,577 605,517 274,916 286,341 257,751
Marketing, general and administrative 229,897 211,430 201,818 118,028 124,553 120,441
Research and development 20,787 18,664 17,368 12,499 16,613 16,764
Amortization of intangibles 11,040 11,780 13,498 4,154 4,106 3,075
Provision for restructured operations 79,011 - 15,000 - 9,000 -
1,051,599 870,451 853,201 409,597 440,613 398,031
Earnings from operations 24,566 87,058 86,347 61,961 66,047 72,450
Other income (expense)--net (24,072) (27,116) (33,364) (6,496) (9,925) (1,590)
Earnings from continuing operations
before income taxes 494 59,942 52,983 55,465 56,122 70,860
Income taxes (1,393) 16,353 12,403 14,953 19,312 22,295
Earnings from continuing operations
before cumulative effect of change
in accounting for income taxes 1,887 43,589 40,580 40,512 36,810 48,565
Percent of sales 0.2% 4.6% 4.3% 8.6% 7.3% 10.3%
Earnings from discontinued operations
net of income tax expense 7,350 11,322 10,343 7,938 11,590 5,170
Gain on sale of discontinued operations,
net of income tax expense of $40,492 58,583 - - - - -
Earnings before cumulative effect of
change in accounting for income tax 67,820 54,911 50,923 48,450 48,400 53,735
Cumulative effect of change in accounting
for income taxes - 1,628 - - - -
Net earnings $ 67,820 (1)$ 56,539 $ 50,923 $ 48,450 $ 48,400 $ 53,735
Percent of sales 6.3% 5.9% 5.4% 10.3% 9.6% 11.4%
Return on average shareholders' equity 13.1% 12.0% 12.3% 13.6% 14.1% 16.5%
Financial Position (at year end):
Current assets $ 533,993 $ 489,091 $ 463,463 $334,889 $337,136 $331,636
Current liabilities $ 280,344 $ 205,465 $ 198,659 $152,426 $167,103 $158,895
Working capital $ 253,649 $ 283,626 $ 264,804 $182,463 $170,033 $172,741
Current ratio 1.9 to 1 2.4 to 1 2.3 to 1 2.2 to 1 2.0 to 1 2.1 to 1
Property, plant and equipment--net $ 275,525 $ 296,004 $ 296,138 $213,400 $206,283 $188,747
Long-term debt $ 319,519 $ 393,502 $ 420,345 $ 68,270 $ 48,763 $ 57,579
Shareholders' equity $ 553,043 $ 480,832 $ 463,062 $363,394 $350,590 $335,534
Total assets $1,208,212 $1,133,182 $1,117,063 $599,672 $585,527 $564,309
Common Stock Data:
Cash dividends declared $ 43,406 $ 42,220 $ 41,948 $ 37,708 $ 35,601 $ 33,330
Percent of net earnings 64% 75% 82% 78% 74% 62%
Per share:
Continuing operations $ .10 $ 2.31 $ 2.17 $ 2.38 $ 2.16 $ 2.86
Net earnings $ 3.51 (1)$ 3.00 $ 2.72 $ 2.84 $ 2.84 $ 3.16
Cash dividends declared $ 2.24 $ 2.24 $ 2.24 $ 2.21 $ 2.09 $ 1.96
Shareholders' equity $ 28.65 $ 25.48 $ 24.68 $ 21.27 $ 20.62 $ 19.72
Market price range 71 1/4-58 1/8 72 - 57 69 - 54 3/4 60 7/8 - 45 61 1/2-40 1/4 55 3/4-46
Other Data:
Capital expenditures $ 66,906 $ 38,555 $ 47,434 $ 40,292 $ 47,874 $ 44,901
Depreciation $ 46,558 $ 46,126 $ 41,233 $ 30,993 $ 30,782 $ 25,558
Employees 7,400 8,000 7,600 4,700 4,900 5,000
Average shares outstanding 19,304 18,837 18,717 17,053 17,030 16,998
<PAGE>
<PAGE>
<CAPTION>
ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA (continued)
Thomas & Betts Corporation
Dollars and shares in thousands
(except per share data) 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C>
Operational Data
Net sales $446,899 $380,773 $347,400 $318,000 $322,400
Costs and expenses:
Cost of sales 233,194 187,358 169,290 158,921 157,896
Marketing, general and administrative 118,257 110,806 99,795 90,591 85,418
Research and development 15,929 17,082 16,589 17,574 16,990
Amortization of intangibles 2,627 283 273 269 257
Provision for restructured operations - 4,995 - - -
370,007 320,524 285,947 267,355 260,561
Earnings from operations 76,892 60,249 61,453 50,645 61,839
Other income (expense)--net (889) 5,870 1,869 2,336 2,306
Earnings from continuing operations
before income taxes 76,003 66,119 63,322 52,981 64,145
Income taxes 24,267 23,229 25,322 19,581 25,145
Earnings from continuing operations
before cumulative effect of change in
accounting for income taxes 51,736 42,890 38,000 33,400 39,000
Percent of sales 11.6% 11.3% 10.9% 10.5% 12.1%
Earnings from discontinued operations
net of income tax expense 6,914 5,610 2,215 862 711
Gain on sale of discontinued operations,
net of income tax expense of $40,492 - - - - -
Earnings before cumulative effect of
change in accounting for income tax 58,650 48,500 40,215 34,262 39,711
Cumulative effect of change in accounting
for income taxes - - - - -
Net earnings $ 58,650 $ 48,500 $ 40,215 $ 34,262 $ 39,711
Percent of sales 13.1% 12.7% 11.6% 10.8% 12.3%
Return on average shareholders' equity 19.4% 17.8% 16.3% 15.0% 18.8%
Financial Position (at year end):
Current assets $294,675 $259,808 $240,843 $209,659 $212,012
Current liabilities $124,335 $ 88,582 $ 80,721 $ 65,626 $ 67,607
Working capital $170,340 $171,226 $160,122 $144,033 $144,405
Current ratio 2.4 to 1 2.9 to 1 3.0 to 1 3.2 to 1 3.1 to 1
Property, plant and equipment--net $165,630 $141,936 $114,358 $100,905 $ 82,446
Long-term debt $ 40,590 $ 19,441 $ 16,281 $ 13,625 $ 12,679
Shareholders' equity $314,819 $288,577 $257,627 $234,969 $220,483
Total assets $492,942 $410,087 $363,453 $319,827 $303,326
Common Stock Data:
Cash dividends declared $ 30,536 $ 26,739 $ 23,073 $ 20,665 $ 18,738
Percent of net earnings 52% 55% 57% 60% 47%
Per share:
Continuing operations $ 3.05 $ 2.54 $ 2.27 $ 2.00 $ 2.33
Net earnings $ 3.46 $ 2.88 $ 2.40 $ 2.05 $ 2.38
Cash dividends declared $ 1.80 $ 1.64 $ 1.48 $ 1.33 $ 1.21
Shareholders' equity $ 18.57 $ 17.07 $ 15.34 $ 14.08 $ 13.21
Market price range 60 3/4-45 3/8 67 3/4-41 1/2 49 3/4-37 43 1/4-33 1/2 38-28 1/4
Other Data:
Capital expenditures $ 53,899 $ 43,071 $ 27,832 $ 32,656 $ 19,779
Depreciation $ 24,156 $ 21,561 $ 16,764 $ 15,138 $ 14,513
Employees 4,700 4,200 4,100 3,900 3,900
Average shares outstanding 16,953 16,865 16,747 16,689 16,712
<FN>
Notes:
Includes results of American Electric from January 2, 1992 (date acquired).
Restated to include the results of Vitramon Division as a discontinued operation (sold July, 1994).
(1) Includes a pre-tax gain from the sale of Vitramon of $99,075, a pre-tax charge $79,011 for restructuring, and a pre-
tax operating write-down of $10,632 for previously vacated facilities.
/TABLE
<PAGE>
<PAGE>
PART II, ITEM 7 (pages 18, 19 and 20 of Annual Report)
FINANCIAL REVIEW
1994 vs. 1993
Net sales from continuing operations for the year 1994 were a
record $1.076 billion, up 12 percent from $958 million in 1993.
Net earnings for 1994 were up 20 percent to a record $67.8
million or $3.51 per share compared to $56.5 million, or $3.00
per share in 1993. Net earnings for 1994 included a pre-tax gain
of $99 million from the sale of Vitramon operations (which has
been accounted for as a discontinued operation), a $79 million
restructuring charge, and other facilities related operating
charges of $11 million. These actions all occurred in the third
quarter and were offsetting on an after-tax basis. Earnings from
continuing operations for 1994 were $1.9 million or $0.10 per
share compared to $43.6 million or $2.31 per share in 1993, with
1994 results including the restructuring and facilities related
operating charges and excluding the gain from the sale of
Vitramon.
The 12 percent increase in sales for 1994 was primarily the
result of additional sales volume, with overall pricing and
currency effects not being significant. Of the total volume
increase, half was attributable to 1994 business acquisitions.
North American electrical sales for 1994 were up 14 percent
over 1993, with half of the increase due to acquisitions.
Continued strength throughout the year in most electrical
markets, particularly the construction market, was a major factor
in the increase in sales of core products. Demand for heating
products was also strong, while sales to utility, lighting and
consumer markets were flat to down slightly from last year.
Electronics sales for 1994 were up 7 percent over 1993, with
strong results in the fourth quarter. Gains were experienced in
all North American markets and were due to increased volume,
while net gains in the Pacific Region were primarily due to
currency translation.
European sales improved for the first time in several years,
as the economy there began to recover. Sales were up 7 percent
over the prior year, with 14 percent volume growth and slightly
stronger currency offsetting the effects of lower pricing. Total
international sales from continuing operations represented 22
percent of consolidated sales in 1994 and 21 percent in 1993.
Consolidated gross margin on continuing operations was 33.9
percent, down from 34.4 percent in 1993 due to a $3.8 million
facilities related charge taken in the third quarter. Otherwise,
gross margin as a percent of sales would have remained the same
as 1993, with the positive effect of cost reductions in
Electronics and improved overhead absorption in Europe offsetting
certain price reductions made in non-U.S. markets. The
Corporation expects that increases in base commodity prices for
materials used in production will rise in 1995 to levels well
above those experienced in the past two years; however, these
increases are expected to be recovered through higher selling
prices and productivity improvements.
Marketing, general and administrative expenses for the year
included a $6.8 million facilities related charge taken in the
third quarter of 1994. Including that charge, these expenses
were 21.4 percent of sales compared to 22.1 percent in 1993, and
without the charge were 20.7 percent of sales. The reduction was
the result of administrative cost savings achieved in part by
consolidating headquarters and office operations into Memphis,
Tennessee. Research and development expense increased 11 percent
and represented 1.9 percent of sales in both 1994 and 1993.
Other expense was reduced by $3 million, due principally to
lower net interest expense on reduced borrowings made possible in
part by the sale of Vitramon. Partially offsetting lower net
interest expense was a $1.5 million foreign currency exchange
loss recorded in the fourth quarter on the Corporation's Mexico
operations as a result of the peso devaluation.
The Corporation's effective tax rate on continuing
operations for 1994 was a negative 282.0 percent compared to 27.3
percent for 1993. The negative tax rate in 1994 results
primarily from the tax benefits associated from continuing
operations (as Vitramon had no Puerto Rico operations). In
absolute dollar terms, however, this benefit decreased in 1994
compared to 1993 due to recent tax law changes. No further
significant reduction of Puerto Rican tax benefits are expected
to occur as a result of these changes. The effective tax rate on
earnings from discontinued operations exceeded the statutory tax
rate primarily due to higher tax rates which applied to
Vitramon's foreign operations. The effective tax rate on the
gain from the sale of discontinued operations exceeded the
statutory rate primarily as the result of state taxes on the
gain.
The Corporation's return on sales from continuing operations
was 0.2 percent in 1994 compared to 4.6 percent in 1993. Net
earnings as a percent of sales were 6.3 percent in 1994 and 5.9
percent in 1993. Return on average shareholders' equity was 13.1
percent compared to 12.0 percent in 1993.
1993 vs. 1992
Net sales for the year 1993 were $958 million, up 2 percent from
1992. Net earnings in 1993 of $56.5 million or $3.00 per share
increased 11 percent from 1992. Net earnings in 1993 included a
one-time gain of $1.6 million or $0.09 per share for the adoption
of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." Earnings from continuing
operations in 1993 were $43.6 million, up 7 percent from 1992.
Earnings in 1992 included a pre-tax restructuring charge of $15
million, equal to $.59 per share, incurred primarily to combine
the operations of American Electric and the domestic Electrical
operations of the Corporation into one consolidated operation
headquartered in Memphis, Tennessee. Without these two items,
earnings from continuing operations in 1993 would have been down
16 percent.
Economic conditions remained weak in North America and grew
weaker in Europe and the Pacific Region. However, the
Corporation's overall volume in 1993 was up about 3 percent from
1992, with average selling prices remaining unchanged, and a 1
percent unfavorable net effect of exchange rate changes.
Electrical sales for 1993 were up 4 percent over 1992, due
primarily to growth in sales to construction and utility markets.
Electronics sales, including Pacific Region results, were up 5
percent in 1993 compared to 1992, with volume growth achieved
despite weak economic conditions. European sales were down 14
percent in 1993 with lower sales volumes due to poor economic
conditions in Europe and the double digit unfavorable impact of
weaker currencies.
Gross profit margin in 1993 was 34.4 percent, down from 35.6
percent in 1992. Lower margin resulted primarily from unabsorbed
overhead related to weakness in European and certain North
American markets, competitive pricing pressure, and increased
depreciation expense due to adoption of SFAS No. 109. Marketing,
general and administrative expense represented 22.1 percent of
sales in 1993 compared to 21.5 percent in 1992; expense dollars
increased 5 percent year over year. Research and development
expense represented 1.9 percent of sales in 1993, up from 1.8
percent in 1992.
Other expense in 1993 decreased $6.2 million compared to
1992 due to reduced interest expense, gain on sale of idle
property, and the absence of one-time bank service charges
incurred in 1992 in connection with the acquisition of American
Electric. The Corporation's effective tax rate on continuing
operations for 1993 was 27.3 percent, compared to 23.4 percent
for 1992. The 1993 higher rate was due mainly to the alternative
minimum tax credit carry forwards taken in 1992 and lower
relative tax exempt income in 1993. The effective tax rate on
earnings from discontinued operations exceeded the statutory tax
rate primarily due to higher tax rates which applied to
Vitramon's foreign operations. The Corporation's return on sales
from continuing operations was 4.6 percent in 1993 compared to
4.3 percent in 1992 (5.5 percent without the restructuring
charge). Return on average shareholders' equity was 12.0 percent
in 1993 compared to 12.3 percent in 1992.
Liquidity and Capital Resources
The Corporation's consolidated balance sheet account activity in
1994 was significant due to the disposition of Vitramon (see Note
4 to the consolidated financial statements), the establishment of
restructuring reserves, and the acquisitions made during the
year. Net changes in the operating assets and liabilities in the
1994 Consolidated Statement of Cash Flows have been adjusted to
show only the changes associated with continuing operations.
Receivables increased in line with the 1994 sales growth and to
support acquired product lines. Inventories also grew to support
increased business activity. While anticipated facility
restructurings called for some temporary increases in inventory,
it also allowed for $7.6 million in inventory disposals. The
higher level of payables at year-end reflects increased fourth
quarter manufacturing activity, including increases to support
acquired product lines, and an improvement in vendor terms. The
increase in deferred taxes is due principally to future tax
benefits associated with the restructuring and facilities related
charges.
In the three years 1992 through 1994, the Corporation
generated $350 million in cash from operating activities. 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,
anticipated increases in the facility, and from other sources.
In 1992, the Corporation established a $175 million medium-
term note program providing for the issuance of notes with
maturities ranging from 9 months to 30 years. To date, the
Corporation has not issued any notes pursuant to this program.
Restructuring
In the third quarter of 1994, after a thorough review of its
operations and changing market conditions, the Corporation
initiated several major actions to optimize operations and
improve future profitability. The approved actions resulted in a
$79 million restructuring charge, recorded in the third quarter,
to consolidate and realign manufacturing facilities, operations
and service processes, to provide for the discontinuance of
certain products, and to reduce its overhead structure. The
restructuring will impact the Corporation's operations in North
America (82% of the total charge), Europe (15%), and the Far East
(3%) and will include the closure of approximately 1.4 million
square feet of production and warehouse capacity. Concurrently,
the Corporation will add approximately 1.1 million square feet of
production and warehouse capacity.
The $79 million for restructuring includes non-cash charges
of $40 million related principally to impairment of carrying
values of plant, equipment, and inventory which will no longer be
used and which relate to facilities to be closed or realigned and
products to be discontinued. Approximately $25 million of the
non-cash charges is for property and equipment and $15 million
for inventories. In the fourth quarter of 1994, the Corporation
disposed of $16 million of these assets, $8 million of equipment
and $8 million of inventory. Of the $39 million of cash
charges, approximately $16 million has been provided for
severance benefits and other employee termination costs, $14
million for on-going carrying costs and environmental clean-up of
facilities to be closed, and $9 million for other related costs.
In the fourth quarter of 1994, $3.5 million of cash was spent,
principally for personnel relocation. An additional $22.5
million is expected to be spent of 1995 and $13 million of
spending related to environmental clean-up and carrying costs for
closed facilities is expected to be spent after 1995.
Capital spending of $25 million for projects relating to the
restructuring effort and $6 million of cash implementation
expenses are planned over the next two years. The Corporation
believes that these actions will result in depreciation,
amortization, labor and overhead savings of approximately $8
million in 1995 and over $20 million annually in subsequent
years.
In 1992, the Corporation provided $15 million for
restructuring operations, primarily to combine the operations of
American Electric (acquired January, 1992) and the domestic
Electrical operations of the Corporation into one consolidated
operation and to consolidate certain other unrelated facilities.
These actions have been completed and no significant unspent
amounts or obligations remain.
Divestitures
In July, the Corporation sold its multilayer ceramic chip
capacitor subsidiary, Vitramon, Incorporated, for $184 million in
cash ($144.7 million after tax payments) and realized a $58.6
million after-tax gain. The results of this discontinued
operation are more fully described in Note 4 to the consolidated
financial statements.
Acquisitions and Investments
During 1994, the Corporation made four acquisitions. Three were
purchases from Eaton Corporation involving primarily inventories
and equipment. In January certain circuit protection products
were purchased; in August, Commander Electrical Products, Inc.,
a Canadian metal outlet box and fittings business was purchased;
and in November a U.S. non-metallic electrical outlet box
business was purchased. Separately, in February the Corporation
purchased certain assets from Anford Inc. in Canada relating to
the manufacture and sale of cable tray. The total purchase price
of these acquisitions was $72.8 million. The Corporation has
also agreed to purchase the assets of Anchor Electric in the
first quarter of 1995 for approximately $3 million.
In August of 1994, the Corporation completed the purchase of
a minority interest (approximately 29%) in Leviton Manufacturing
Co., Inc., the leading U.S. manufacturer of wiring devices, for
cash of $25.6 million and common stock having a market value of
$25 million.
In January 1992, the Corporation acquired FL Industries
Holdings, Inc. ("American Electric") for $436.8 million,
consisting of $89.6 million (1,564,434 shares) of newly issued
common stock, $17.1 million in cash and $330.1 million to retire
certain long-term debt.
Other acquisitions accounted for as purchase transactions in
1993 and 1992 totaled $3 million and $13 million, respectively.
Capital Spending
Capital expenditures for continuing operations in 1994 totaled
$59 million, compared to $28 million in 1993 and $38 million in
1992. The largest portion of 1993 and 1994 capital funds was
used to expand manufacturing capacity, reduce costs, produce new
products, and increase efficiency in keeping with the
Corporation's strategic focus on core businesses and product
lines. In 1994, the Corporation began refurbishment of a newly
leased manufacturing facility in Jonesboro, Arkansas, completed a
second expansion of its Mississippi warehouse facility, completed
the refurbishment and equipment upgrade initiated in 1993 at a
newly leased facility in Nevada to provide additional warehouse
capacity in the West, and began construction of a new northeast
warehouse facility outside Montreal Canada. In 1992, the
Corporation completed the first expansion of its principal
warehouse facility in Mississippi, and completed a new
manufacturing facility in Singapore.
Environmental Matters
The Corporation believes it is substantially in compliance with
all applicable environmental laws and regulations. The
Corporation believes the costs of maintaining or coming into
compliance with such laws and regulations will not be material to
the Corporation's financial statements.
With the acquisition of American Electric in 1992, the
Corporation became the owner of certain manufacturing facilities
that were being remediated or could potentially require
remediation. As part of the acquisition, reserves were provided
and arrangements made with third parties to cover the costs of
compliance and remediation. In 1994 an additional $7 million was
provided for potential environmental remediation of a planned
facility closing, and recorded as part of the restructuring. The
Corporation paid $684,000, $862,000 and $240,000 for remediation
and corrective matters for the years 1994, 1993 and 1992,
respectively, with payments for Superfund related matters being
less than $150,000 in any year. It is the Corporation's policy
to accrue future remediation expenses to the extent known and
determinable.
Other Matters
The Corporation has a policy of managing its foreign currency and
interest rate risk by entering into foreign exchange contracts
and interest rate swap and cap agreements as explained in Note 1
of the consolidated financial statements and does not trade in
these instruments for speculative purposes.
The Corporation maintains a portfolio of marketable
securities and cash equivalents in Puerto Rico, which at year-end
1994 was valued at $102 million. Although these investments
represent currently available funds, a portion of these are held
to obtain favorable, partially tax-exempt status on earnings
generated in Puerto Rico.
In the first quarter of 1994, the Corporation adopted
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," and No.
112, "Employer's Accounting for Postemployment Benefits." In the
first quarter of 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes," and No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The effects of adopting these
Standards were not significant.
Dividends and Related Security Holder Matters
In 1994, the Corporation declared cash dividends of $2.24 per
share or $43 million. These dividends represented 64 percent of
net earnings compared to 75 percent of net earnings in 1993.
Debt covenants permit the Corporation to continue paying
dividends at the current rate, with increases allowed only if the
dividend payout does not exceed 50 percent of earnings. Thomas &
Betts has paid dividends for 61 consecutive years. The
Corporation's common stock is traded on the New York Stock
Exchange. Thomas & Betts had 19,605,000 shares of common stock
outstanding at January 1, 1995, held by 3,978 shareholders of
record.<PAGE>
<PAGE>
PART II, ITEM 8 (pages 18 through 29 of Annual Report)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
Thomas & Betts Corporation
January 1, January 2,
In thousands 1995 1994
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 69,671 $ 72,509
Marketable securities 52,569 31,543
Receivables, less allowance for
doubtful accounts and cash
discounts of $4,556 in 1994
and $5,292 in 1993 168,077 165,162
Inventory 198,422 200,302
Deferred income taxes 40,059 13,884
Prepaid expenses 5,195 5,691
Total Current Assets 533,993 489,091
Property, Plant and Equipment
Land 9,549 13,274
Buildings 110,435 137,558
Machinery and equipment 427,115 420,443
547,099 571,275
Less accumulated depreciation 271,574 275,271
275,525 296,004
Intangible Assets-Net 323,228 311,059
Investments and Other Assets 75,466 37,028
Total Assets $1,208,212 $1,133,182
Liabilities and Shareholders' Equity
Current Liabilities
Short-term bank borrowings $ 15,355 $ 20,539
Current maturities of long-term debt 3,304 7,358
Accounts payable 118,052 81,571
Accrued liabilities 116,875 78,637
Income taxes 15,779 6,791
Dividends payable 10,979 10,569
Total Current Liabilities 280,344 205,465
Long-Term Liabilities
Long-term debt 319,519 393,502
Other long-term liabilities 40,408 28,615
Deferred income taxes 14,898 24,768
Shareholders' Equity
Common stock 9,822 9,463
Additional paid-in capital 169,291 125,400
Retained earnings 373,011 348,597
Unrealized gain on marketable securities 867 -
Foreign currency translation adjustment 2,661 961
Cost of treasury stock (2,609) (3,589)
Total Shareholders' Equity 553,043 480,832
Total Liabilities and Shareholders' Equity $1,208,212 $1,133,182
<FN>
See Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF EARNINGS
Thomas & Betts Corporation
In thousands
(except per share data) 1994 1993 1992
<S> <C> <C> <C>
Net Sales $1,076,165 $957,509 $939,548
Costs and Expenses
Cost of sales 710,864 628,577 605,517
Marketing, general and administrative 229,897 211,430 201,818
Research and development 20,787 18,664 17,368
Amortization of intangibles 11,040 11,780 13,498
Provision for restructured operations 79,011 - 15,000
1,051,599 870,451 853,201
Earnings from operations 24,566 87,058 86,347
Other expense-net 24,072 27,116 33,364
Earnings from continuing operations
before income taxes 494 59,942 52,983
Income taxes (benefit) (1,393) 16,353 12,403
Earnings from continuing operations
before cumulative effect of change
in accounting for income taxes 1,887 43,589 40,580
Earnings from discontinued operations,
net of income tax expense of
$4,628 for 1994, $7,180 for 1993
and $6,429 for 1992 7,350 11,322 10,343
Gain on sale of discontinued
operations, net of income tax
expense of $40,492 58,583 - -
Earnings before cumulative effect
of change in accounting for
income taxes 67,820 54,911 50,923
Cumulative effect of change in
accounting for income taxes - 1,628 -
Net Earnings $ 67,820 $ 56,539 $ 50,923
Share Data
Earnings from continuing operations
before cumulative effect of change
in accounting for income taxes $0.10 $2.31 $2.17
Earnings from discontinued operations 0.38 0.60 0.55
Gain on sale of discontinued operations 3.03 - -
Earnings before cumulative effect
of change in accounting for
income taxes 3.51 2.91 2.72
Cumulative effect of change in
accounting for income taxes - 0.09 -
Earnings per share $3.51 $3.00 $2.72
Cash dividends declared per share $2.24 $2.24 $ 2.24
Average shares outstanding 19,304 18,837 18,717
<FN>
See Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
Thomas & Betts Corporation
In thousands 1994 1993 1992
<S> <C> <C> <C>
Cash Flows From Operating Activities
Earnings from continuing operations $ 1,887 $ 43,589 $ 40,580
Adjustments:
Depreciation and amortization 53,532 48,998 46,722
Provision for restructured operations 79,011 - -
Provision for facilities related operating charges 10,632 - -
Deferred income taxes (38,498) 6,108 (1,103)
Changes in operating assets and liabilities, net:
Receivables (13,617) (18,791) 1,888
Inventories (20,740) (5,321) 6,529
Accounts payable 38,637 17,286 5,890
Accrued liabilities 2,095 419 (8,139)
Income taxes payable 7,934 3,643 (4,069)
Cash from discontinued operations 7,606 18,766 16,068
Other 1,751 (6,132) 6,565
Net cash provided by operating activities 130,230 108,565 110,931
Cash Flows From Investing Activities
Proceeds from sale of Vitramon, net of tax 144,700 - -
Purchases of and investments in businesses (84,084) - (357,793)
Purchases of property, plant and equipment (59,109) (28,044) (38,232)
Net investments in discontinued operations (7,781) (10,473) (9,111)
Proceeds from sale of property, plant and equipment 6,057 10,481 28,824 (1)
Marketable securities acquired (30,509) (22,486) (37,131)
Proceeds from matured marketable securities 19,292 50,219 12,065
Other 1,733 (1,280) (1,299)
Net cash provided by (used in) investing activities (9,701) (1,583) (402,677)
Cash Flows From Financing Activities
Increase (decrease) in borrowings with original
maturities less than 90 days (9,543) 2,181 (5,046)
Proceeds from long-term debt and other borrowings 43,998 27,447 455,928
Repayment of long-term debt and other borrowings (119,942) (70,295) (140,213)
Stock options exercised 4,116 4,082 3,232
Cash dividends paid (42,996) (42,158) (41,007)
Net cash provided by (used in) financing activities (124,367) (78,743) 272,894
Effect of Exchange Rate Changes on Cash 1,000 2,506 893
Net increase (decrease) in cash and cash equivalents (2,838) 30,745 (17,959)
Cash and cash equivalents - beginning of year 72,509 41,764 59,723
Cash and cash equivalents - end of year $ 69,671 $ 72,509 $ 41,764
Cash payments for interest $ 27,027 $ 29,900 $ 27,575
Cash payments for taxes $ 70,561 $ 14,024 $ 25,447
Common stock issued for acquisitions $ 39,283 - $ 89,037
<FN>
(1) Includes $22.7 million received for the sale and partial leaseback of the Corporation's
principal executive office facility.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Thomas & Betts Corporation
Unrecognized
Gain
Additional (Loss) on Cumulative
In thousands Common Stock Paid-In Retained Marketable Translation Treasury Stock
(except per share data) Shares Amount Capital Earnings Securities Adjustment Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 17,092 $ 8,547 $ 24,198 $ 325,303 $ - $ 5,905 (11) $ (559)
Net earnings - - - 50,923 - - - -
Dividends declared ($2.24 per share) - - - (41,948) - - - -
Stock options and
Business acquisitions 1,564 782 88,255 - - - - -
Translation adjustments, net of
taxes of $1,468 - - - - - (2,851) - -
Balance at December 31, 1992 18,806 9,403 119,050 334,278 - 3,054 (43) (2,723)
Net earnings - - - 56,539 - - - -
Dividends declared ($2.24 per share) - - - (42,220) - - - -
Stock options and incentive awards 120 60 6,350 - - - (10) (866)
Translation adjustments, net of
taxes of $1,059 - - - - - (2,093) - -
Balance at January 2, 1994 18,926 9,463 125,400 348,597 - 961 (53) (3,589)
Net earnings - - - 67,820 - - - -
Unrealized gain upon adoption of SFAS
115, net of taxes of $839 - - - - 1,556 - - -
Change since adoption, net of
taxes of ($344) - - - - (689) - - -
Dividends declared ($2.24 per share) - - - (43,406) - - - -
Stock options and incentive awards 95 47 4,920 - - - 14 980
Business acquisition and investments 623 312 38,971 - - - - -
Translation adjustments, net of
taxes of $915 - - - - - 1,700 (1) - -
Balance at January 1, 1995 $ 19,644 $9,822 $169,291 $373,011 $ 867 $ 2,661 (39) $(2,609)
Preferred Stock: Authorized 500,000 shares without par value. To date none of these shares have been issued.
Common Stock: Authorized 40,000,000 shares, par value $.50 per share.
<FN>
(1) Net of $1,950 transferred to gain on sale of investments in foreign entities.
See Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the
Corporation and its domestic and foreign subsidiaries, all wholly
owned. All significant intercompany balances and transactions
have been eliminated in consolidation. The Corporation uses the
equity method of accounting for its 29 percent ownership interest
in Leviton Manufacturing Co., Inc.
Fiscal Year
Beginning in 1993 the Corporation prospectively changed its
financial reporting year from a calendar year to a fiscal year
consisting of 52 and 53 weeks ending on the Sunday closest to the
end of the calendar year. Results for 1994 and 1993 are for the
52 weeks ended January 1, 1995 and January 2, 1994, respectively.
Marketable Securities
Effective January 3, 1994, the Corporation adopted the Statement
of Financial Accounting Standards No. 115, and changed from
accounting for its marketable securities on an amortized cost
basis to a fair market value basis. See Note 7.
Foreign Exchange
The Corporation becomes exposed to exchange rate risk when its
U.S. and non-U.S. subsidiaries enter into transactions
denominated in currencies other than their functional currency.
The Corporation enters into foreign exchange contracts to hedge,
where possible, this risk. As exchange rates change, gains and
losses recorded on the exposed transactions are offset by those
on the hedging contracts. Both the exposed transactions and the
hedging contracts are marked to market monthly with gains and
losses included in earnings. A high correlation is maintained
between the transactions and the hedges to minimize currency
risk, and the high creditworthiness of the counterparties to the
hedging contracts (financial institutions having at least an A
credit rating) minimizes non-performance risk. The Corporation
does not enter into foreign exchange contracts for trading
purposes.
At January 1, 1995 and January 2, 1994, the Corporation had
outstanding contracts to sell $69.5 million and $36.4 million,
respectively, of principally Canadian and European currencies for
U.S. dollars and to buy the equivalent of $4.6 million and $5.6
million, respectively, of European currencies, all maturing
within 90 days. Additional contracts were held to sell 1.8
million pounds sterling at January 1, 1995 and January 2, 1994
and to buy 1.8 million pounds sterling at January 1, 1995, all
maturing in November 1995.
At January 1, 1995 the Corporation's Mexico operations had
an unhedged liability of 3.8 million U.S. dollars and Singapore
operations had an unhedged liability of 300 million Japanese yen.
Inventories
Inventories are stated at lower of cost or market. Cost is
determined using the last-in, first-out (LIFO) method for most
domestic inventories, and the first-in, first-out (FIFO) method
for other inventories.
Inventories valued using the LIFO method represented
approximately 73 percent of total inventories at January 1, 1995
and 60 percent at January 2, 1994. The LIFO values of
inventories held at January 1, 1995 approximated their current
values.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures
for maintenance and repair are charged to costs and expenses as
incurred. Significant renewals and betterments that extend the
lives of assets are capitalized. Depreciation is computed
principally on the straight-line method over the estimated useful
lives of the assets which range principally from 10 to 30 years
for land improvements, 10 to 45 years for buildings, and 3 to 15
years for machinery and equipment.
Intangible Assets
Intangible assets consist principally of the excess of cost over
the fair value of net assets acquired in business combinations
accounted for as purchases. These assets are being amortized on
a straight-line basis over periods of 15 to 40 years. The
recoverability of goodwill is re-evaluated when business events
and circumstances warrant based on projections of related
undiscounted operating earnings.
As of January 1, 1995 and January 2, 1994 accumulated
amortization of intangible assets was $40,510,000 and
$29,336,000, respectively.
A reclassification of amortization of intangibles has been
made in all prior years' financial statements to conform to the
1994 presentation. This reclassification had no effect on
earnings in any year.
Income Taxes
Effective January 1, 1993, the Corporation changed from the
deferred method of accounting for income taxes under APB Opinion
No. 11, to the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." Prior
years' financial statements have not been restated. SFAS 109
requires the asset and liability method of accounting for income
taxes. This method recognizes the expected future tax
consequences of temporary differences between the book and tax
bases of assets and liabilities.
Deferred taxes are not provided on undistributed net
earnings of foreign subsidiaries, approximately $13,000,000 at
January 1, 1995, to the extent that those earnings are expected
to be permanently reinvested in the subsidiaries. It is
estimated that taxes ultimately payable on the distribution of
these earnings would not be significant.
Interest Rate Swaps
The Corporation enters into interest rate swap and cap agreements
to reduce the impact of changes in interest rates on a portion of
its floating rate debt. The differential to be paid or received
under these agreements is accrued monthly consistent with the
terms of the agreements and market interest rates. These
agreements are with financial institutions having at least an A
credit rating, which minimizes non-performance risk.
Earnings per Share
Earnings per share is computed by dividing earnings by the
weighted average shares of common stock outstanding during the
year. The effect on earnings per share resulting from the
assumed exercise of outstanding options is not material.
Cash Flow Information
Cash equivalents consist of investments with maturities at date
of purchase of less than 90 days that have a low risk of change
in value due to interest rate changes. Foreign currency cash
flows have been converted to U.S. dollars at appropriately
weighted average exchange rates or the exchange rates in effect
at the time of the cash flows, where determinable.
2. Acquisitions
In 1994, the Corporation made three separate purchases of assets
from Eaton Corporation, primarily inventories and equipment. On
January 31, 1994, the Corporation purchased certain circuit
protection products in exchange for 223,716 shares of its common
stock with a market value of $14.3 million; on August 11, 1994,
it purchased all the stock of Commander Electrical Products,
Inc., a Canadian metal outlet box and fittings business for $51.2
million in cash; and on November 30, 1994, it purchased a U.S.
non-metallic electrical outlet box business for $4.4 million in
cash. Separately, on February 18, 1994, the Corporation
purchased certain assets from Anford Inc. in Canada relating to
the manufacture and sale of cable tray, for $2.9 million in cash.
All of these acquisitions were accounted for using the purchase
method of accounting, and therefore, the accompanying financial
statements include the results of these businesses since the
dates of acquisition. These businesses represented approximately
$54 million of sales reported by the Corporation in 1994.
On August 10, 1994, the Corporation completed the purchase
of a minority interest (approximately 29%) in Leviton
Manufacturing Co., Inc., the leading U.S. manufacturer of wiring
devices, for common stock with a market value of $25.0 million
and cash of $25.6 million. This investment is being accounted
for using the equity method of accounting.
On January 2, 1992, the Corporation acquired FL Industries
Holdings, Inc. ("American Electric") for $436.8 million,
consisting of $89.6 million (1,564,434 shares) of newly issued
common stock, $17.1 million in cash and $330.1 million to retire
certain long-term debt. The acquisition was accounted for using
the purchase method of accounting. Other acquisitions accounted
for as purchase transactions in 1993 and 1992 totaled $3 million
and $13 million, respectively.
3. Restructuring
In the third quarter of 1994, after a thorough review of its
operations and changing market conditions, the Corporation
initiated several major actions to optimize operations and improve
future profitability. The approved actions resulted in a $79
million restructuring charge, recorded in the third quarter, to
consolidate and realign manufacturing facilities, operations and
service processes, to provide for the discontinuance of certain
products, and to reduce its overhead structure. The restructuring
will impact the Corporation's operations in North America (82% of
the total charge), Europe (15%), and the Far East (3%) and will
include the closure of approximately 1.4 million square feet of
production and warehouse capacity. Concurrently, the Corporation
will add approximately 1.1 million square feet of production and
warehouse capacity.
The $79 million for restructuring includes non-cash charges of
$40 million related principally to impairment of carrying values of
plant, equipment, and inventory which will no longer be used and
which relate to facilities to be closed or realigned and products
to be discontinued. Approximately $25 million of the non-cash
charges is for property and equipment and $15 million for
inventories. In the fourth quarter of 1994, the Corporation
disposed of $16 million of these assets, $8 million of equipment
and $8 million of inventory. Of the $39 million of cash charges,
approximately $16 million has been provided for severance benefits
and other employee termination costs, $14 million for on-going
carrying costs and environmental clean-up of facilities to be
closed, and $9 million for other related costs. In the fourth
quarter of 1994, $3.5 million of cash was spent, principally for
personnel relocation. An additional $22.5 million is expected to
be spent in 1995 and $13 million of spending related to
environmental clean-up and carrying costs for closed facilities is
expected to be spent after 1995.
In 1992, the Corporation provided $15 million for
restructuring operations, primarily to combine the operations of
American Electric (acquired January 1992) and the domestic
Electrical operations of the Corporation into one consolidated
operation and to consolidate certain other unrelated facilities.
These actions have been completed and no significant unspent
amounts or obligations remain.
4. Discontinued Operations
In July 1994, the Corporation sold its multilayer ceramic chip
capacitor subsidiary, Vitramon, Incorporated, for $184 million in
cash ($145 million after tax payments) and realized a $58.6 million
gain after tax.
Summary operating results of discontinued operations,
excluding the above gain, are as follow:
<TABLE>
<CAPTION>
In thousands 1994 1993 1992
<S> <C> <C> <C>
Net sales $ 73,043 $118,394 $111,528
Gross Profit 22,947 36,882 33,904
Earnings before income taxes 11,978 18,502 16,772
Income taxes 4,628 7,180 6,429
Net earnings from
discontinued operations $ 7,350 $ 11,322 $ 10,343
</TABLE>
The net assets of Vitramon are included in the January 2, 1994
Consolidated Balance Sheet and are summarized as follows:
<TABLE>
<CAPTION>
In thousands
<S> <C>
Current assets $37,354
Property, plant and equipment - net 42,799
Other assets 945
Current liabilities (10,710)
Deferred income taxes (1,376)
Other long-term liabilities (1,233)
Net assets $67,779
</TABLE>
<PAGE>
5. Income Taxes
The total pre-tax income and tax expense recorded by the
Corporation in 1994, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
Pre-Tax Tax Tax
In thousands Income Expense Rate
<S> <C> <C> <C>
1994
Continuing operations $ 494 $(1,393) (282.0)%
Discontinued operations 11,978 4,628 38.6
Sale of discontinued operations 99,075 40,492 40.9
Total 111,547 43,727 39.2
1993
Continuing operations 59,942 16,353 27.3
Discontinued operations 18,502 7,180 38.8
Total 78,444 23,533 30.0
1992
Continuing operations 52,983 12,403 23.4
Discontinued operations 16,772 6,429 38.3
Total $69,755 $18,832 27.0 %
</TABLE>
The components of earnings from continuing operations before
income taxes are as follows:
<TABLE>
<CAPTION>
In thousands 1994 1993 1992
<S> <C> <C> <C>
Domestic $(1,301) $54,036 $44,834
Foreign 1,795 5,906 8,149
Total $ 494 $59,942 $52,983
</TABLE>
The components of income tax expense on continuing operations
are as follows:
<TABLE>
<CAPTION>
In thousands 1994 1993 1992
<S> <C> <C> <C>
Current
Federal $28,962 $ 5,759 $8,259
Foreign 4,225 2,783 4,394
State and local 2,098 1,957 627
Total current 35,285 10,499 13,280
Deferred
Federal (36,599) 5,561 (1,519)
Foreign (79) 293 642
Total deferred (36,678) 5,854 (877)
Income taxes (benefit) $(1,393) $16,353 $12,403
</TABLE>
<PAGE>
The reconciliation between the Federal statutory tax rate and
the Corporation's effective tax rate on continuing operations is as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 34.0%
Increase (reduction)
resulting from:
State tax--net of Federal
tax benefit 331.6 2.1 .8
Partially tax-exempt income (1,312.8) (18.0) (18.3)
Goodwill and other deductions 594.6 4.7 8.5
Losses providing no current
tax benefit - - 3.5
Taxes in excess of the U.S.
tax rate on foreign earnings - .8 .7
Alternative Minimum Tax - - (5.0)
Change in valuation allowance 24.7 1.4 -
Other 44.9 1.3 (.8)
Effective tax rate (282.0)% 27.3% 23.4%
</TABLE>
The components of the Corporation's net deferred tax asset
(liability) were:
<TABLE>
<CAPTION>
January 1, January 2,
In thousands 1995 1994
<S> <C> <C>
Deferred tax assets:
Restructuring reserves $22,794 $ -
Accrued employee benefits 12,494 8,241
Other accruals 15,862 11,435
Asset reserves 10,414 11,768
Foreign tax credits and loss carry forwards 8,969 10,602
Other 5,601 166
Valuation allowance (8,524) (10,602)
Net deferred tax assets 67,610 31,610
Deferred tax liabilities:
Property, plant and equipment (26,009) (30,859)
Pension benefits ( 4,174) (4,166)
Unremitted earnings of foreign subsidiaries ( 3,522) (3,375)
Other ( 8,744) (4,094)
Total deferred tax liabilities (42,449) (42,494)
Net deferred tax assest (liability) $25,161 $(10,884)
</TABLE>
The net change in the valuation allowance for deferred tax
assets was a decrease of $2,078,000. The change resulted from an
increase of $122,000 relating to loss carry forwards recorded and
recovered in 1994 on continuing operations. Additionally, there
was a decrease of $2,200,000 related to discontinued operations.
Of the $8,969,000 of foreign tax credits and carry forwards
available, $204,000 will expire in 1997, and $1,189,000 will expire
in 1998.
Effective January 1, 1993, the Corporation adopted the
provisions of SFAS No. 109 "Accounting for Income Taxes." Prior
years were not restated. The cumulative effect of this change was
a credit to earnings of $1,628,000 in 1993. Under SFAS No. 109,
the value of certain assets and liabilities acquired in the January
2, 1992 acquisition of American Electric was adjusted to reflect
gross fair values rather than the net of tax values previously
recorded. This revaluation increases depreciation expense by $2.8
million each year and decreases tax expense by an offsetting amount
over the lives of the assets.
6. Long-Term Debt
The Corporation's long-term debt at January 1, 1995 and January 2,
1994 is as follows:
<TABLE>
<CAPTION>
January 1, January 2,
In thousands 1995 1994
<S> <C> <C>
Revolving credit facility with
a weighted average interest
rate at January 1, 1995 of 6.18% (1) $ 85,000 $ 55,000
Other borrowings with
a weighted average interest
rate at January 1, 1995 of 6.78% (1) (2) 37,700 126,000
Notes payable:
5.10%, due February 23, 1996 20,000 20,000
8.25%, due January 2004 124,307 124,230
International borrowings with
a weighted average interest
rate at January 1, 1995, of 6.37%
due through 2005 31,910 45,676
Industrial revenue bonds with a
weighted average interest rate
at January 1, 1995 of 5.74%,
due from 2001-2005 18,405 22,505
Other 5,501 7,449
322,823 400,860
Less current portion 3,304 7,358
$319,519 $393,502
<FN>
(1) Several interest rate swaps and caps act to the benefit of the
Corporation if interest rates increase. The Corporation
receives interest on $25 million at the one-month LIBOR rate
in exchange for 7.092% through April 1997; interest on $25
million at the three-month LIBOR rate in exchange for 3.985%
through September 1995; and interest on $25 million at the
six-month LIBOR rate in exchange for 4.485% through December
1996.
(2) Committed credit available under the revolving credit facility
provides the ability to refinance this debt on a long-term
basis.
</TABLE>
Principal payments on long-term debt due in the five years
subsequent to January 1, 1995, are $3,304,000, $36,127,000,
$122,964,000, $255,000 and $1,969,000, respectively.
In May 1993, the Corporation renegotiated its revolving term
credit facility. The facility was voluntarily reduced in size from
$300 million to $280 million. This revised facility makes funds
available for a term of four years from the renegotiation date.
The Corporation has the option, at the time of drawing funds under
the facility, of selecting an interest rate based on a number of
benchmarks including LIBOR, the certificate of deposit rate and the
prime rate of Morgan Guaranty Trust Company. This credit facility
includes covenants, among which are limitations on the amount of
future indebtedness and the maintenance of certain financial
ratios. Dividends are permitted to continue at the current rate
and may be increased, provided the dividend payout does not exceed
50 percent of earnings.
7. Fair Value of Financial Instruments
The estimated fair values of the Corporation's financial
instruments are as follow:
<TABLE>
<CAPTION> 1994 1993
Carrying Fair Carrying Fair
In thousands Amount Value Amount Value
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 69,671 $ 69,671 $ 72,509 $ 72,509
Marketable securities 52,569 52,569 31,543 34,343
Long-term debt (319,519) (314,814) (393,502) (405,602)
Interest rate swaps - 380 - (4,200)
Foreign currency contracts $ (290) $ (290) $ (312) $ (312)
</TABLE>
The fair value of marketable securities was based on quoted
market prices. The fair value of long-term debt was based on
quoted market prices or on the current market rates available to
the Corporation for debt of the same remaining maturity. The fair
value of interest rate swap and cap agreements was based on the
current payments required to settle the agreements. Foreign
currency contracts are recorded at fair value, adjusted to reflect
changes in exchange rates.
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 $2.4 million, with an offsetting decrease
of $0.8 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 January 1, 1995 were:
<TABLE>
<CAPTION>
Amortized Gross Gross Fair
Cost Unrealized Unrealized Market
In thousands Basis Gains Losses Value
<S> <C> <C> <C> <C>
Equity $ 1,268 $1,177 $ - $ 2,445
Mortgage-backed 49,739 1,797 (1,612) 49,924
Other 200 - - 200
Total $51,207 $2,974 $(1,612) 52,569
</TABLE>
There were no sales of available-for-sale securities during
the year. The mortgage-backed securities held at January 1, 1995
have contractual maturities ranging from one to twenty-six years,
with two-thirds maturing after ten years.
8. Stock Option and Incentive Plans
The Corporation has stock option plans that provide for the
purchase of the Corporation's common stock by key employees of the
Corporation and its subsidiaries. Under the 1980, 1985 and 1990
stock option plans, no further options may be granted and remaining
options outstanding are exercisable at various dates until 1999.
In 1993, the shareholders of the Corporation approved the
Management Stock Ownership Plan (MSOP). This plan provides that
for each calendar year up to 1-1/4% of the issued and outstanding
Common Stock of the Corporation shall be available for issuance as
grants or awards. This plan provides for granting stock options at
a price equal to the fair market value on the date of grant, with a
term not to exceed ten years.
Following is a summary of the option transactions for the
years 1992, 1993 and 1994:
<TABLE>
<CAPTION>
Average
Per Share
Shares Option Price
<S> <C> <C>
Balance at December 31, 1991 590,124 $50.54
Granted 147,300 59.94
Exercised (149,678) 43.23
Terminated (36,694) 57.44
Balance at December 31, 1992 551,052 54.58
Granted 151,625 69.55
Exercised (120,133) 51.81
Terminated (8,975) 66.41
Balance at January 2, 1994 573,569 58.94
Granted 290,125 64.53
Exercised (94,945) 55.39
Terminated (48,675) 65.29
Balance at January 1, 1995 720,074 61.15
Exercisable at
January 1, 1995 449,849 $59.11
</TABLE>
At January 1, 1995, a total of 1,525,883 shares was reserved
for issuance under stock options already granted or available for
future grant.
The Corporation's MSOP and, prior to 1994, the 1988 Restricted
Stock Incentive Plan, provided for the issuance of common stock as
incentive compensation to key employees. The awards are subject to
certain restrictions, including one that provides for full vesting
if the recipient remains in the employ of the Corporation three
years after receipt of the award. The value of the awards is
deductible by the Corporation as compensation expense. Shares plus
cash payments for federal and state taxes awarded under these plans
were 28,166 shares plus $899,000 in 1994, 19,077 shares plus
$460,000 in 1993, and 17,315 shares plus $354,000 in 1992.
The Corporation has a Restricted Stock Plan for Nonemployee
Directors, under which each director receives 100 restricted shares
of common stock annually for a full year of service. These shares
remain restricted during the director's term. Shares issued under
this plan were 800 shares in 1994, 942 shares in 1993 and 1,000
shares in 1992.
9. Postretirement Benefits
The Corporation and its subsidiaries have several noncontributory
pension plans covering substantially all employees. These plans
generally provide pension benefits that are based on compensation
levels and years of service. Annual contributions to the plans are
made according to the established laws and regulations of the
applicable countries. Plan assets are primarily invested in equity
securities, fixed income securities, cash equivalents and real
estate.
Net periodic pension cost for 1994, 1993 and 1992 for the
Corporation's defined benefit pension plans for continuing
operations included the following components:
<TABLE>
<CAPTION>
In thousands 1994 1993 1992
<S> <C> <C> <C>
Service cost--benefits earned during
the period $ 5,150 $ 4,852 $ 4,797
Interest cost on projected benefit
obligation 9,617 9,119 8,821
Actual return on assets (2,346) ( 9,971) (9,438)
Net amortization and deferral (10,345) (2,398) (2,365)
Net periodic pension cost $ 2,076 $ 1,602 $ 1,815
</TABLE>
Assumptions used in developing the net periodic pension cost
were:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S.Plans
1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Discount rate 7.5% 8.0% 8.5% 7.6% 8.2% 8.7%
Rate of increase in
compensation level 5.0% 5.5% 6.0% 5.1% 6.0% 6.6%
Expected long-term rate of
return on plan assets 8.5% 8.5% 8.5% 8.6% 8.9% 9.3%
</TABLE>
Non-U.S. rates are weighted averages.
The following table sets forth the funded status of the
Corporation's defined benefit plans as of December 1, 1994 and 1993
and amounts recognized in the Corporation's balance sheet:
<TABLE>
<CAPTION>
January 1, January 2,
In thousands 1995 1994
<S> <C> <C>
Actuarial present value of projected
benefits based on employment service
to date and present pay levels:
Vested employees $117,842 $119,800
Non-vested employees 4,302 5,216
Accumulated benefit obligation 122,144 125,016
Additional amounts related to
projected pay increases 10,145 10,359
Projected benefit obligation 132,289 135,375
Plan assets at fair value 136,592 147,278
Plan assets in excess of projected
benefit obligation 4,303 11,903
Unrecognized transition assets (7,698) (9,270)
Unrecognized net (gain), loss 5,231 (1,916)
Unrecognized prior service cost 1,732 2,635
Prepaid pension cost (included in
other assets in the balance sheet) $ 3,568 $ 3,352
</TABLE>
The above table includes plans with accumulated benefit
obligations exceeding plan assets by $231,000 at January 1, 1995
and $3,258,000 at January 2, 1994.
The present value of projected benefits for U.S. plans for
December 1, 1994 was determined using a discount rate of 8.0% and
an assumed rate of increase in compensation of 5.5%.
In 1993, the Corporation implemented a non-qualified
supplemental pension plan covering certain key executives, which
provides for benefit payments in addition to those subject to the
limitations of income tax regulations. The projected benefit
obligation relating to this unfunded plan was $10,845,000 at
January 1, 1995 and $7,695,000 at January 2, 1994. Pension expense
for this plan was $2,096,000 in 1994 and $1,284,000 in 1993.
The Corporation also sponsors defined contribution 401(K)
savings plans for its U.S. employees where the Corporation's
contributions are based on a percentage of employee contributions.
The cost of these plans for continuing operations was $2,700,000 in
1994, $2,400,000 in 1993, and $2,100,000 in 1992.
Other pension costs for continuing operations, primarily for
non-U.S. defined contribution plans and plans of insignificant
size, amounted to $650,000 in 1994, $675,000 in 1993, and $625,000
in 1992.
Effective January 1, 1993, the Corporation adopted the
provisions of SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This Statement
required changing from a cash to an accrual basis in accounting for
retiree health and life insurance costs.
The Corporation provides certain health care and life
insurance benefits to retired employees and certain active
employees who meet age and length of service requirements. The
Corporation is recognizing the estimated liability for these
benefits over the lives of the individuals covered. Adoption of
this Standard did not have a significant effect on earnings and
cash flows when compared to the "pay-as-you-go" method previously
used. The Corporation is not funding this liability.
The net periodic cost for postretirement health care and life
insurance benefits for continuing operations in 1994 and 1993
includes the following components:
<TABLE>
<CAPTION>
In Thousands 1994 1993
<S> <C> <C>
Service cost-benefits earned during the period $ 135 $ 36
Interest cost on accumulated benefit 1,582 1,127
Net amortization 1,066 1,009
Net cost $2,783 $2,172
</TABLE>
The following table shows the Corporation's accumulated
postretirement benefit obligation in total and the amount
recognized in the balance sheet at January 1, 1995 and January 2,
1994:
<PAGE>
<TABLE>
<CAPTION>
In thousands 1994 1993
<S> <C> <C>
Retirees $ 18,756 $ 18,545
Fully eligible active participants 661 525
Other active participants 1,832 2,171
Total 21,249 21,241
Unrecognized transition liability (17,945) (19,236)
Unrecognized net loss (1,045) (1,766)
Unrecognized prior service cost (244) -
Accrued postretirement benefit costs $ 2,015 $ 239
</TABLE>
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 8.0% in 1994 and
7.5% in 1993. An increase in the cost of covered health care
benefits of 14% for employees under age 65 and 10% for those over
65 was assumed for the first fiscal year and the rate was assumed
to decrease incrementally to 6.0% after fifteen years and to remain
at that level thereafter. A 1% increase in the health care cost
trend rate would increase the accumulated postretirement benefit
obligation by $1.2 million at January 1, 1995 and the net periodic
cost by $0.1 million for the year then ended.
Prior to adoption of SFAS No. 106, postretirement health care
and life insurance benefits paid were $2.1 million in 1992.
10. Commitments
The Corporation and its subsidiaries are parties to various leases
relating to plants, warehouses, office facilities, automobiles, and
other equipment, principally data processing. All leases expire
prior to the year 2022. Real estate taxes, insurance, and
maintenance expenses are normally obligations of the Corporation.
It is expected that in the normal course of business the majority
of the leases will be renewed or replaced by other leases. The
Corporation has certain capitalized leases consisting principally
of leases for buildings and equipment. Following is a summary of
assets capitalized under long-term leases:
<TABLE>
<CAPTION>
January 1, January 2,
In thousands 1995 1994
<S> <C> <C>
Buildings $ 7,192 $ 7,192
Machinery and equipment 5,747 5,574
Total 12,939 12,766
Less accumulated depreciation (4,865) (3,494)
Assets under capital leases, net $ 8,074 $ 9,272
</TABLE>
Future minimum payments under capital and noncancelable
operating leases of continuing operations consisted of the
following at January 1, 1995:
<TABLE>
<CAPTION>
In thousands Capital Operating
<S> <C> <C>
1995 $1,564 $15,895
1996 1,018 7,661
1997 728 5,640
1998 694 4,448
1999 566 4,134
Thereafter 4,837 21,806
Total minimum lease payments 9,407 $59,584
Less amounts representing interest 3,108
Present value of future minimum lease payments $6,299
</TABLE>
Rent expense for operating leases of continuing operations was
$22,130,000 in 1994 $21,033,000 in 1993, and $19,546,000 in 1992.
11. Other Financial Data
Other expense--net for continuing operations consists of the
following:
<TABLE>
<CAPTION>
In thousands 1994 1993 1992
<S> <C> <C> <C>
Investment income $ 6,103 $ 4,840 $ 5,874
Interest expense (26,852) (30,247) (33,405)
Net currency losses (2,829) (782) (1,354)
Other (494) (927) (4,479)
$(24,072) $(27,116) $(33,364)
</TABLE>
Accrued liabilities include salaries, fringe benefits, and
other compensation amounting to $27,039,000 in 1994 and
$24,124,000 in 1993.
Inventories consisted of the following:
<TABLE>
<CAPTION>
January 1, January 2,
In thousands 1995 1994
<S> <C> <C>
Finished goods $ 96,159 $ 97,795
Work in process 33,663 34,389
Raw materials 68,600 68,118
$198,422 $200,302
</TABLE>
12. Information Relating to Operations in Different Geographic
Areas
The Corporation is engaged in the design, manufacture, and
marketing of electrical and electronic connectors, components and
accessories. Operations are conducted in three principal areas:
Domestic, Europe and Other International locations. Transfers
between geographic areas are priced on a basis that yields an
appropriate rate of return based on assets employed, risk and other
factors.<PAGE>
<TABLE>
<CAPTION>
Financial Information Relating to Operations in Different
Geographic Areas
In thousands 1994 1993 1992
<S> <C> <C> <C>
Sales to Unaffiliated Customers:
Domestic $844,066 $761,053 $ 728,916
Europe 113,173 105,666 123,219
Other International 118,926 90,790 87,413
Total $1,076,165 $957,509 939,548
Sales or Transfers Between
Geographic Areas:
Domestic 45,074 43,146 38,265
Europe 5,285 3,600 2,202
Other International 12,615 8,563 7,287
Total 62,974 55,309 47,754
*Earnings Before Income Taxes:
Domestic (6,789) 48,882 35,469
Europe (2,318) 923 3,468
Other International 11,178 12,307 13,863
Adjustments and eliminations (1,577) (2,170) 183
Earnings from continuing operations
before income taxes 494 59,942 52,983
Identifiable Assets:
Domestic 787,180 771,120 749,978
Europe 72,066 69,645 81,883
Other International 149,513 85,069 75,029
Corporate assets (principally
cash and investments) 205,147 131,631 130,596
Assets of discontinued operations - 81,098 82,241
Adjustments and eliminations (5,694) (5,381) (2,664)
Total $1,208,212 $1,133,182 $1,117,063
<FN>
*Fiscal 1994 Domestic, European, and other foreign earnings
includes a restructuring charge and write-down of previously-
vacated facilities of $75.3, $12.2 and $2.2 million respectively.
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors
Thomas & Betts Corporation:
We consent to incorporation by reference in the Registration
Statements (No. 33-1403 and No. 33-1404) on Form S-8 and in the
Registration Statement (No. 33-44153) on Form S-3 of Thomas & Betts
Corporation of our reports dated February 2, 1995, relating to the
consolidated balance sheets of Thomas & Betts Corporation and
subsidiaries as of January 1, 1995 and January 2, 1994 and the
related consolidated statements of earnings, shareholders' equity,
and cash flows, and related schedules for each of the years in the
three-year period ended January 1, 1995 which reports appear or are
incorporated by reference in the January 1, 1995 annual report on
Form 10-K of Thomas & Betts Corporation.
KPMG Peat Marwick LLP
Memphis, Tennessee
March 30, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the
consolidated balance sheet of Thomas &
Betts Corporation and subsidiaries as of
January 1, 1995, and the related
consolidated statement of earnings for the
year ended January 1, 1995, and is
qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-1-1995
<PERIOD-END> JAN-1-1995
<CASH> 69671
<SECURITIES> 52569
<RECEIVABLES> 172633
<ALLOWANCES> (4556)
<INVENTORY> 198422
<CURRENT-ASSETS> 533993
<PP&E> 547099
<DEPRECIATION> (271574)
<TOTAL-ASSETS> 1208212
<CURRENT-LIABILITIES> 280344
<BONDS> 319519
0
0
<COMMON> 9822
<OTHER-SE> 543221
<TOTAL-LIABILITY-AND-EQUITY> 1208212
<SALES> 1076165
<TOTAL-REVENUES> 1076165
<CGS> 710864
<TOTAL-COSTS> 250684
<OTHER-EXPENSES> 90051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (26852)
<INCOME-PRETAX> 494
<INCOME-TAX> (1393)
<INCOME-CONTINUING> 1887
<DISCONTINUED> 65933
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67820
<EPS-PRIMARY> 3.51
<EPS-DILUTED> 0
</TABLE>
