<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4682
THOMAS & BETTS CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1326940
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) (Identification No.)
1555 Lynnfield Road, Memphis, Tennessee 38119
(Address of principal executive offices) (Zip Code)
(901) 682-7766
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock Par Value $ .50 19,669,166
(Title of each class) (Outstanding at July 30, 1995)
<PAGE>
THOMAS & BETTS CORPORATION
INDEX
Page
PART I. Financial Information:
Consolidated Balance Sheet
July 2, 1995 and January 1, 1995 3
Consolidated Statement of Earnings
Periods Ended July 2, 1995 and July 3, 1994 4
Consolidated Statement of Cash Flows
Periods Ended July 2, 1995 and July 3, 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II. Submission of Matters to a Vote of Security Holders 11
Other Information 12
Signatures 13
<PAGE>
PART I. FINANCIAL INFORMATION
THOMAS & BETTS CORPORATION
Consolidated Balance Sheet
(Thousands of Dollars)
<TABLE>
<CAPTION>
July 2, January 1,
1995 1995
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 38,317 $ 69,671
Marketable securities 77,321 52,569
Receivables, net 185,644 168,077
Inventories:
Finished goods 106,676 96,159
Work in process 30,300 33,663
Raw materials 81,652 68,600
218,628 198,422
Deferred income taxes 32,647 40,059
Prepaid expenses 5,099 5,195
Total Current Assets 557,656 533,993
Property, plant, and equipment, at cost 577,405 547,099
Less accumulated depreciation 280,207 271,574
Net property, plant and equipment 297,198 275,525
Intangible assets - net 321,325 323,228
Investments and other assets 73,626 75,466
TOTAL ASSETS $1,249,805 $1,208,212
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term bank borrowings $ 14,833 $ 15,355
Current maturities of long-term debt 5,342 3,304
Accounts payable 103,257 118,052
Accrued liabilities 105,408 116,875
Income taxes 13,372 15,779
Dividends payable 11,002 10,979
Total Current Liabilities 253,214 280,344
Long-term debt 364,050 319,519
Other long-term liabilities 41,756 40,408
Deferred income taxes 17,226 14,898
Shareholders' Equity:
Common stock 9,839 9,822
Additional paid-in capital 170,994 169,291
Retained earnings 386,526 373,011
Unrealized gain on marketable securities 1,478 867
Foreign currency translation adjustment 6,658 2,661
Cost of treasury stock (1,936) (2,609)
Total Shareholders' Equity 573,559 553,043
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,249,805 $1,208,212
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> THOMAS & BETTS CORPORATION
Consolidated Statement of Earnings
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $298,128 $261,707 $600,723 $509,969
Costs and expenses:
Cost of sales 194,048 172,794 396,048 339,780
Marketing, general and administrative 61,148 54,944 123,826 106,163
Research and development 6,011 5,309 11,495 10,365
Amortization of intangibles 2,474 2,911 4,952 5,824
263,681 235,958 536,321 462,132
Earnings from operations 34,447 25,749 64,402 47,837
Other expense - net 5,784 6,590 10,840 13,381
Earnings from continuing operations
before income taxes 28,663 19,159 53,562 34,456
Income taxes 9,827 6,387 18,051 11,420
Earnings from continuing operations 18,836 12,772 35,511 23,036
Earnings from discontinued operations
net of income tax expense of $2,094
for the quarter and $4,370 for the
six months ended July 3, 1994 - 3,328 - 6,941
Net earnings $ 18,836 $ 16,100 $ 35,511 $ 29,977
Per share data:
Earnings from continuing operations $ .96 $ .67 $ 1.81 $ 1.21
Earnings from discontinued operations - .17 - .36
Earnings per share $ .96 $ .84 $ 1.81 $ 1.57
Dividends declared per share $ .56 $ .56 $ 1.12 $ 1.12
Average shares outstanding 19,640 19,164 19,629 19,082
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
THOMAS & BETTS CORPORATION
Consolidated Statement of Cash Flows
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 2, July 3,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Earnings from continuing operations $ 35,511 $ 23,036
Adjustments:
Depreciation and amortization 28,276 25,840
Deferred income taxes 9,085 (47)
Changes in operating assets and liabilities:
Receivables (13,909) (26,528)
Inventories (16,448) (5,490)
Accounts payable (16,889) 14,256
Accrued liabilities (11,627) 1,150
Income taxes payable (2,641) 3,037
Cash from discontinued operations - 9,213
Other 2,258 (2,149)
Net cash provided by operating activities 13,616 42,318
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of businesses (3,452) (2,913)
Purchases of property, plant and equipment (41,362) (21,517)
Net investments in discontinued operations - (7,797)
Proceeds from sale of property, plant and
equipment 702 6,867
Marketable securities acquired (26,200) (10,725)
Proceeds from matured marketable securities 4,353 8,622
Other 141 -
Net cash used in investing activities (65,818) (27,463)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings with
original maturities less than 90 days 38,674 20,769
Proceeds from long-term debt and other
borrowings 8,224 3,400
Repayment of long-term debt and other
borrowings (6,802) (6,866)
Stock options exercised 1,041 994
Cash dividends paid (21,973) (21,299)
Net cash provided by (used in) financing activities 19,164 (3,002)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,684 (2,162)
Net increase (decrease) in cash and cash
equivalents (31,354) 9,691
Cash and cash equivalents at beginning of
period 69,671 72,509
Cash and cash equivalents at end of period $ 38,317 $ 82,200
Cash payments for interest $ 12,556 $ 14,918
Cash payments for taxes $ 10,407 $ 7,247
Common stock issued for acquisitions $ -0- $ 16,100
</TABLE>
<PAGE>
THOMAS & BETTS CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
1. In the opinion of Management, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary for the fair
presentation of the financial position as of July 2, 1995 and
January 1, 1995, and the results of operations and cash flows
for the periods ended July 2, 1995 and July 3, 1994.
2. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these consolidated financial
statements be read in conjunction with the financial
statements and notes thereto included in the Corporation's
Annual Report to Shareholders for the fiscal year ended
January 1, 1995. The results of operations for the periods ended
July 2, 1995 and July 3, 1994 are not necessarily
indicative of the operating results for the full year.
3. Earnings per share are computed by dividing net earnings by
the weighted average number of shares of common stock
outstanding during the reporting period. The effect on
earnings per share resulting from the assumed exercise of
outstanding stock options is not material.
4. Acquisitions: On February 6, 1995, the Corporation purchased
certain assets (primarily inventories and equipment) relating
to the manufacture, sale and distribution of the Anchor
Electric meter center business for $3.5 million in cash. On
July 25, 1995 E. K. Campbell Company, a custom industrial
heating and cooling manufacturer, was merged with and into
the Corporation. The Corporation issued approximately 14,000
shares of common stock in exchange for all E. K. Campbell
outstanding stock.
5. In March 1995, the Corporation renegotiated and increased its
revolving credit facility to $500 million from $280 million,
making these funds available for a term of five years from
the renegotiation date. 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 per share and may be increased provided the payout does
not exceed 50 percent of earnings.
<PAGE>
THOMAS & BETTS CORPORATION
Management's Discussion and Analysis of Results
of Operations and Financial Condition
RESULTS OF OPERATIONS
QUARTERLY COMPARISON
Thomas & Betts Corporation reported second quarter sales
from continuing operations that were 14 percent higher than
second quarter last year. Earnings from continuing operations
were 47 percent higher than the second quarter of last year, with
earnings per share from continuing operations increasing to $.96
from $.67 in 1994. Net earnings increased 17 percent with
earnings per share increasing to $.96 from $.84 last year.
All three business segments of the Corporation experienced
sales growth. Of the total consolidated sales increase of 14
percent, 11 percentage points came from increased volume and
acquisitions, 2 points from stronger foreign currency and 1
point from increased pricing.
Worldwide sales of Electrical Construction and Maintenance
Components rose 16 percent in the second quarter aided by
acquisitions as well as strong growth from existing products.
While the pace of growth slowed somewhat in April and May after a
strong first quarter, June saw a return to strong sales growth.
The electrical segment represents approximately half of the
Corporation's revenues.
Worldwide Electronic/OEM Components sales increased 18
percent, with excellent contributions from operations in all
three geographic sectors: North America, Europe and the Pacific
Region. This segment represents approximately one-fourth of
total revenues.
Other Products and Components yielded a 6 percent sales
increase. This segment, which serves utility, heating and
telecommunications markets, accounts for one-fourth of total
revenues.
Consolidated gross margin for the second quarter was 34.9
percent of sales compared to 34.0 percent last year. Improved
margins were the result of a better mix of sales, and
manufacturing cost reductions and restructuring savings.
Marketing, General and Administrative expense increased 11
percent, but as a percent of sales was down to 20.5 compared to
21.0 percent last year. Decreases in marketing and
administrative expenses as a percent of sales more than offset
increased restructuring-related shipping and warehousing
expenses.
Other expense-net was down $0.8 million primarily due to
reduced interest expense on lower borrowings. Earnings from the
Corporation's minority ownership of Leviton Manufacturing Co.,
Inc., accounted for on the equity basis, were not significant.
RESULTS OF OPERATIONS
YEAR-TO-DATE OPERATIONS
Net sales from continuing operations for the first six
months of 1995 were up 18 percent from 1994. Earnings from
continuing operations increased 54 percent from 1994. Earnings
per share from continuing operations were $1.81 per share
compared to $1.21 in 1994. Net earnings were up 18 percent from
1994 and earnings per share were $1.81 per share compared to
$1.57 in 1994.
All three business segments of the Corporation achieved
sales gains for the first six months of the year. Of the 18
percent increase in total sales, 16 percentage points came from
increased volume and acquisitions and 2 points from stronger
foreign currencies.
Worldwide sales of Electrical Construction and Maintenance
Components rose 23 percent reflecting strong growth in existing
products and the inclusion of acquisitions. Worldwide
Electronic/OEM Component sales grew 18 percent, with sales gains
in all three geographic sectors. The Other Products and
Components business segment yielded a 9 percent sales increase.
Consolidated gross margin was 34.1 percent of sales compared
to 33.4 percent last year. Margins continued to show improvement
due to manufacturing cost reductions and better sales mix partly
offset by recruiting and training costs of $2.6 million recorded
in the first quarter.
Marketing, general and administrative expense, at 20.6
percent of sales, was down from 20.8 percent last year, with the
marketing and administrative expense efficiencies as a percent of
sales more than offsetting the non-recurring increase in shipping
and warehousing expense resulting from implementation of
restructuring actions.
Amortization expense was down $0.9 million as certain
intangibles became fully amortized. Other expense-net was $2.5
million favorable due to lower interest expense on decreased net
borrowings and earnings from the Corporation's minority ownership
in Leviton Manufacturing Co., Inc.
The effective tax rate of 33.7 percent was up from 33.1
percent last year due to a lower relative tax benefit in Puerto
Rico on increased consolidated earnings.
The prior year's earnings from discontinued operations
reflect the earnings from the Corporation's former Vitramon
operation which was sold in July 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation believes it will continue to fund its
capital and operating needs with cash flows from operations,
augmented by borrowings available under its revolving credit
facility and from other sources. Total debt represented 40
percent of total capitalization (shareholders' equity and total
debt) at July 2, 1995, up from 38 percent at January 1, 1995, and
down from 46 percent at July 3, 1994.
Net cash flow from operating activities for the first six
months of 1995 was $14 million. Earnings from continuing
operations plus non-cash charges totaled $73 million. This was
offset by working capital needs, which included asset investment
required by sales growth, expenditures and inventory build
relating to ongoing restructuring activities, payment of year-end
performance incentives, a reduction in the amount of year-end
vendor payables, and working capital needs for the acquisition of
the Anchor Electric meter center business.
Capital spending year-to-date increased to $41 million,
reflecting expenditures related to restructuring projects,
capital investments for new products and expenditures for
manufacturing and service improvements.
RESTRUCTURING
Activities related to the $79 million restructuring charge
taken in the third quarter of 1994 are generally proceeding as
anticipated. Forecasted spending related to operations in
Mexico, however, has been delayed as a result of prior-period
uncertainties related to the peso devaluation and is now expected
to extend into fiscal year 1996.
During the second quarter, the Corporation incurred $7
million of previously accrued cash restructuring expenditures
primarily for severance and other employee benefits, and $6
million of non-cash charges to the restructuring reserve for
disposal of assets. Total charges applied to the restructuring
reserve to date are $16 million for cash spending activities and
$25 million for non-cash activities, leaving reserves of $23
million for cash and $15 million for non-cash activities.
Of the $23 million of reserve remaining to cover cash
restructuring activities, approximately $10 million for severance
and other employee benefits is expected to be spent during the
remainder of 1995 and approximately $13 million, primarily for
environmental clean up and carrying costs for closed facilities,
is expected to be spent in 1996 and thereafter. Reserves for
non-cash items have been accrued to provide for losses on the
disposition of plant, equipment and inventory at facilities to be
closed or realigned and to dispose of products to be
discontinued. Anticipated proceeds to be received from these
disposals are not expected to be significant. Of the remaining
$15 million of reserves for non-cash restructuring activities,
$11 million is expected to be incurred during the remainder of
1995 with the remaining $4 million forecasted for 1996. These
reserves are believed to be adequate for the purposes for which
they were established.
<PAGE>
PART II. OTHER INFORMATION
THOMAS & BETTS CORPORATION
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were voted upon at the Annual Meeting
of Shareholders held on May 3, 1995, and received the votes set
forth below:
1. Each of the following persons nominated was elected to
serve as director and received the number of votes set
opposite his or her name:
Nominees For Director For Withheld
Raymond B. Carey, Jr. 16,551,536 43,360
Ernest H. Drew 16,437,012 157,884
T. Kevin Dunnigan 16,549,605 45,291
Jeananne K. Hauswald 16,545,527 49,369
Thomas W. Jones 16,546,851 48,045
Robert A. Kenkel 16,545,875 49,021
Kenneth R. Masterson 16,545,966 48,930
Clyde R. Moore 16,550,123 44,773
J. David Parkinson 16,551,191 43,705
Ian M. Ross 16,547,782 47,114
William H. Waltrip 16,548,831 46,065
2. A proposal to ratify the appointment of KPMG Peat
Marwick as independent public accountants received
16,561,192 votes for and 16,971 votes against,
with 16,733 abstentions.
Additional details regarding the above are contained in the
1995 Annual Shareholders Meeting proxy material.
<PAGE>
PART II. OTHER INFORMATION
THOMAS & BETTS CORPORATION
Item 5. Other Information
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
For the
Six Months
Ended For the Years Ended
July 2, Jan. 1, Jan. 2, December 31
1995 1995 1994 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges(1) 3.9x .96x 2.6x 2.2x 4.3x 4.3x
<FN>
(1) The ratio of earnings to fixed charges represents the number
of times fixed charges are covered by earnings from
continuing operations. For purposes of computing this
ratio, earnings consist of earnings from continuing
operations before income taxes, plus fixed charges less
capitalized interest and less undistributed earnings from
less than 50 percent owned persons. Fixed charges consist
of interest expense and such portion of rental expense which
the Corporation estimates to be representative of the
interest factor attributable to such rental expense. See
Exhibit 12.
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
(12) Computation of Ratio of Earnings to Fixed
Charges.
<PAGE>
THOMAS & BETTS CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
THOMAS & BETTS CORPORATION
(Registrant)
DATE: August 16, 1995 /s/ Fred R. Jones
Fred R. Jones
Vice President-Finance and Treasurer
DATE: August 16, 1995 /s/ Jerry Kronenberg
Jerry Kronenberg
Vice President-General Counsel
<PAGE>
EXHIBIT 12
THOMAS & BETTS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Six Months
Ended For the Years Ended
July 2, Jan. 1, Jan. 2, December 31,
1995 1995 1994 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Earnings from
continuing operations
before income taxes $53,562 $ 494 $59,942 $52,983 $55,465 $56,122
Add:
Interest on
indebtedness 13,469 26,852 30,247 33,405 12,752 12,998
Amortization of
debt expense 679 1,133 1,062 2,538 - -
Portion of rents
representative of
the interest factor 3,730 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 (981) (1,863) - - - -
Earnings
as adjusted $70,459 $33,993 $98,262 $95,441 $71,657 $72,946
Fixed charges:
Interest on
indebtedness 13,469 26,852 30,247 33,405 12,752 12,998
Amortization of
debt expense 679 1,133 1,062 2,538 - -
Portion of rents
representative of
the interest factor 3,730 7,377 7,011 6,515 3,816 3,826
Total fixed charges $17,878 $35,362 $38,320 $42,458 $16,568 $16,824
Ratio of earnings
to fixed charges 3.9x .96x 2.6x 2.2x 4.3x 4.3x
<FN>
The ratio for the year-ended January 1, 1995 was .96x, inadequate to cover
fixed charges by $1.3 million. This was due to a provision for restructuring
operations of $79 million provided in the third quarter.</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-END> JUL-02-1995
<CASH> 38317
<SECURITIES> 77321
<RECEIVABLES> 185644
<ALLOWANCES> (14245)
<INVENTORY> 218628
<CURRENT-ASSETS> 557656
<PP&E> 577405
<DEPRECIATION> (280207)
<TOTAL-ASSETS> 1249805
<CURRENT-LIABILITIES> 253214
<BONDS> 364050
0
0
<COMMON> 9839
<OTHER-SE> 563720
<TOTAL-LIABILITY-AND-EQUITY> 1249805
<SALES> 600723
<TOTAL-REVENUES> 600723
<CGS> 396048
<TOTAL-COSTS> 140273
<OTHER-EXPENSES> 691
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13469)
<INCOME-PRETAX> 53562
<INCOME-TAX> 18051
<INCOME-CONTINUING> 35511
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35511
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.81
</TABLE>
