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 December 29, 1996
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)
Tennessee 22-1326940
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
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, No Par Value 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. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 14, 1997: $2,482,249,157.
(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 March 10, 1997
Common Stock, No Par Value 53,726,110 Shares
DOCUMENTS OR PARTS THEREOF INCORPORATED BY REFERENCE
Form 10-K Part Into Which the
Document or Part Thereof Document is Incorporated
1996 Annual Report to Shareholders Part I, Item 1
Part II, Items 5-8
Part IV, Items 14(a)(1)
1997 Proxy Statement Part III, Items 10-13
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 and its subsidiaries (the
"Corporation") design, manufacture and market, on a global basis,
electrical and electronic connectors and components as well as
other related products and accessories, with manufacturing
facilities and marketing activities in North America, Europe and
the Far East. The Corporation's products are sold worldwide
through electrical, electronic and HVAC distributors, mass
merchandisers, catalogs and home centers, and directly to
original equipment manufacturer ("OEM") markets. No one of the
Corporation's end users or distributors accounted for more than
6% of the Corporation's 1996 net sales. The Corporation is a
worldwide designer and manufacturer of a broad range of
electromechanical components and subsystems that provide
solutions for the automotive, communication and information
industries in North America, Europe and the Far East. The
Corporation is also one of the largest manufacturers in North
America 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 roadway lighting products to the
utility and telecommunications industries and of products and
components to the heating, mechanical and refrigeration markets
in North America and Europe.
The Corporation operates in three business segments.
Electrical Construction and Maintenance Components are sold
primarily in North America, and manufactured and assembled at
facilities located in the United States, Puerto Rico, Canada and
Mexico. Electronic/OEM Components are sold in North America,
Europe and the Far East, and manufactured at facilities in the
United States, Europe, Mexico, Japan and Singapore. Other
Products and Components principally heaters, heating/ventilation
systems, components for transmission and distribution of electric
power, utility poles and transmission towers, and telecommunications
products are sold primarily in North America and Europe, and
manufactured in the United States, Europe and Mexico.
Thomas & Betts' objective is to continue to achieve profitable
growth by offering its distributors and its OEM and end-user
customers a broad family of high-quality products and
state-of-the-art distribution services and by maintaining
leadership positions in the markets that it serves. Its strategy
for achieving this objective consists of the following elements:
- designing continuous improvements and making customer-
specific modifications in widely used products allowing
value to be added to mature product lines;
- selectively acquiring product lines that complement the
Corporation's existing product lines allowing the
Corporation to reduce significantly the time required to
bring new products to its markets;
- expanding the use and features of the Corporation's state-
of-the-art Distributor/Manufacturer Integration ("DMI")
system allowing the Corporation to provide its distributors
with an inventory and distribution management system that
achieves significant transaction cost savings for both the
Corporation and its distributors; and
- globally locating and coordinating manufacturing facilities
and marketing personnel allowing the Corporation to achieve
low-cost manufacturing and to provide worldwide service to
those of its OEM customers with globally dispersed
operations.
Selective acquisitions have been made to broaden Thomas &
Betts' business worldwide. In 1992, the Corporation acquired
American Electric, a leading manufacturer of a broad range of
electrical products and accessories. As a result of this
acquisition the Corporation's sales approximately doubled
(excluding the impact of the Augat pooling). Since the
acquisition of American Electric, the Corporation has made
numerous acquisitions involving complementary product lines. The
most recent was the merger with Augat Inc. ("Augat"), the
Corporation's largest-ever acquisition, completed on December 11,
1996. The Augat transaction has been accounted for as a pooling
of interests; as a result, all financial information which
follows has been restated to reflect the combined results of the
Corporation and Augat for all periods presented. Augat is a
worldwide manufacturer of electronic connectors and devices used
in markets such as telecommunications, automotive, information
processing and cable television. This acquisition places Thomas
& Betts among the world's five largest electronic connector
manufacturers and evens the balance between the Corporation's
electronic and electrical businesses, providing a critical mass
in higher-growth markets. Augat's sales in 1996 were $577
million. Other recent acquisitions include: the $212.5 million
acquisition of Amerace Corporation, a manufacturer of electrical
components for utility and industrial markets, in January 1996;
the $51.2 million acquisition of Commander Electrical Products,
Inc., a Canadian manufacturer of electrical outlet boxes, in
August 1994; and the $35.0 million acquisition of Catamount
Manufacturing Co., a manufacturer of cable ties, in October 1995.
In addition, in August 1994, the Corporation completed the
purchase, for $50.6 million, of a 29% interest in Leviton
Manufacturing Co., Inc., a private company that is the largest
U.S. manufacturer of wiring devices.
The Corporation was established in 1898 as a sales agency for
electrical wires and raceways, was incorporated in New Jersey in
1917 and reincorporated in Tennessee in May, 1996. The
Corporation's executive offices are located at 1555 Lynnfield
Road, Memphis, Tennessee 38119, telephone number (901)682-7766.
Electrical Construction and Maintenance Components ("Electrical")
The Corporation's Electrical Construction and Maintenance
Components' markets include industrial, commercial and
residential construction and renovation companies, electrical
contractors and telecommunications businesses, and maintenance,
repair and overhaul operations ("MRO") customers. Total
Electrical Construction and Maintenance Components sales were
$627.3, $580.0 and $493.7 million, or 32%, 33% and 31% of the
Corporation's total sales for 1996, 1995 and 1994, 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, cable tray and application tooling products.
The Corporation markets its electrical components under
various brand names. These brand names and the related products
include THOMAS & BETTS, T&B and CATAMOUNT electrical products and
electricians' supply products; TY-RAP, TY-FAST and CATAMOUNT
cable ties; STEEL CITY, BOWERS, COMMANDER and UNION switch and
outlet boxes, covers and conduit fittings; STA-KON terminals;
STEEL CITY floor boxes and wire management systems; BLACKBURN and
COLOR-KEYED power connectors and grounding devices; T&B
Electricians' Supplies, wire connectors, tools and accessories;
LIQUID TITE connectors, KINDORF and SUPERSTRUT metal framing
products; AMERICAN ELECTRIC LIGHTING and HAZLUX lighting
products; THOMAS & BETTS and ZINSCO circuit breakers, safety
switches and meter centers; T&B, CANSTRUT and ELECTROTRAY cable
tray; E-Z-CODE wire markers; ANCHOR and MICROLECTRIC meter
sockets; RUSSELLSTOLL, MAX-GARD and EVER-LOK interconnect
components and systems; AGASTAT electro-mechanical and solid-
state devices for timers and relays; BUCHANAN terminal blocks and
connectors; TAYLOR wiring duct; and VALON electrical maintenance
products.
In North America, the Corporation's components for
industrial, commercial and residential construction and
industrial MRO 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 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 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 has thousands of customers, and no
single end user, distributor or retailer accounted for more than
7% of the Corporation's Electrical Construction and Maintenance
Components' segment 1996 net sales.
The Corporation also manufactures and distributes its
components outside the United States. Certain of the
Corporation's standard components are sold in countries where
they conform to the applicable local electrical requirements,
while other components are specifically designed and manufactured
to conform to local standards. The Corporation also markets
electrical components through offshore sales agents and domestic
exporters.
Electronic/OEM Components ("Electronic")
The Corporation's electronic components are sold primarily
to OEMs in the automotive, information services, office
equipment, industrial electronics, test equipment, computer-aided
engineering and manufacturing systems, instrumentation, medical
electronics markets, and additional applications in aerospace,
telecommunications and broadband communications - including CATV
- - businesses. No single end user or distributor of the
Corporation's electronic components accounted for more than 14%
of the Corporation's Electronic/OEM Components segment 1996 net
sales. Total Electronic/OEM Components sales were $920.7, $832.7
and $786.3 million, or 46%, 48% and 50% of the Corporation's
total sales for 1996, 1995 and 1994, respectively, and reflect
the inclusion of Augat's sales in all years under pooling-of-
interests accounting.
The Corporation's electronic/OEM components include: (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; (viii) custom and standard switches, printed circuit
board sockets and terminal blocks; and (ix) 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 THOMAS & BETTS customer-
specific interconnects and components, and backplane,
input/output, fiber optic and printed circuit board connectors;
ANSLEY flat cable and connectors; FLEXSTRIP flexible
interconnects; TY-RAP, TY-FAST and CATAMOUNT cable ties; HOLMBERG
D-subminiature and card edge connectors; NEVADA WESTERN, ARMIGER
and EPITOME premises wiring brand names; RUSSELLSTOLL, MAX-GARD
and EVER-LOK interconnect components and systems; MIPCO power
connectors; FEEDRAIL trolley busway electrification systems;
AGASTAT electro-mechanical and solid-state devices for timers and
relays; ALL-LAN interconnection system; and BUCHANAN terminal
blocks and connectors. The merger with Augat added AUGAT
sockets; ALCOSWITCH switches; ASTER fiber couplers and
connectors; ELASTOMERIC TECHNOLOGIES connectors; LRC connectors,
adapters and accessories; PHOTON laser transmitters and optical
nodes; TELZON cross-connection devices; and RDI terminal blocks.
In North America, the Corporation sells its standard
components through electronic distributors and directly to end
users, and provides 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 Far
East. In Europe and the Far East, 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 Corporation's electronic components are developed and
manufactured for specific customer applications.
There has been a trend on the part of OEM customers to reduce
the number of their 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 ("Other")
The Corporation sells its other products and components,
comprised of heating products, utility poles and transmission
towers, telecommunication components and other components,
through distributors and directly to end users. No single end
user or distributor accounted for more than 3% of the
Corporation's Other Products and Components segment 1996 net
sales. Total Other Products and Components sales were $437.1,
$320.7 and $293.7 million, or 22%, 19% and 19% of the
Corporation's total sales for 1996, 1995 and 1994, respectively.
Heating Products
The Corporation designs, manufactures and markets heating and
ventilation products for commercial and industrial buildings.
Products include gas, oil and electric unit heaters, gas-fired
duct furnaces, indirect and direct gas-fired make-up air heaters,
infrared heaters, and evaporative cooling and heat recovery
products for the heating, ventilation and air conditioning
("HVAC") marketplace under the REZNOR and E.K. CAMPBELL brand
names. The Corporation's products are sold through HVAC,
mechanical and refrigeration distributors in over 2,000 locations
throughout North America and Europe.
Transmission Poles and Towers
The Corporation designs, manufactures and markets transmission
and distribution poles and towers for North American power and
telecommunications companies and for export. These products are
primarily sold to five types of end users: investor-owned
utilities; cooperatives, which purchase power from utilities and
manage its distribution to end users; municipal utilities; cable
television operating companies; and telephone companies. 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, MEYER
and THOMAS & BETTS brand names.
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, TY-
FAST and CATAMOUNT cable ties; and DELTEC specialty devices for
cable television companies and telephone operating companies.
These components are sold both directly to end users and through
distributors.
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 heating, mechanical and
refrigeration ("HMR") product distributors. These products are
primarily sold to four markets: investor-owned utilities,
cooperatives, municipal utilities and HMR distributors. The
Corporation's other component products include BLACKBURN power
connectors and grounding systems; AMERICAN ELECTRIC LIGHTING
roadway, security and area lighting fixtures; SUPERSTRUT metal
framing; TY-RAP, TY-FAST and CATAMOUNT cable ties; ANCHOR meter
sockets; INTERNATIONAL ENERGY SAVER evaporative cooling and
energy recovery equipment; and ELASTIMOLD power connectors.
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 program.
From its origin as a delivery guarantee, the SIGNATURE
SERVICE/DMI program has evolved into a partnership for
profitability that encompasses purchasing incentives, extensive
marketing support, training and service discounts. The
Corporation believes its DMI process is now the benchmark in the
industry on how business through electronic commerce should be
conducted. In 1996, participation in the DMI program increased
54% over the previous year. The DMI advanced partnership
includes customer-cost-reduction processes such as automatic
stock replenishment, advanced distributor inventory modeling,
automatic receiving, price synchronization, invoice balancing and
summary billing. The program also provides rights to return
merchandise, which is prevalent in the electrical industry.
Combining these business process redefinitions with a leading
effort in electronic commerce such as extensive use of industry-
standard Electronic Data Interchange ("EDI") has made the DMI
partnership a success for the Corporation as well as its
participating distributors.
The Corporation manufactures its products on a worldwide
basis, with manufacturing operations throughout North America, in
Europe and in the Far East.
The Corporation purchases a wide variety of raw materials for
the manufacture of its products, including metals such as brass,
copper, aluminum, steel plate, steel strip and malleable iron
castings, and resins and rubber compounds. 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
$47.2, $44.1 and $40.5 million for 1996, 1995 and 1994,
respectively.
The research and development activities of the Corporation are
focused on complementary product areas and specific high growth
markets. Certain of the Corporation's recent new products and
enhancements introduced in the marketplace or under design
include high-speed data communications systems; high-density
interconnect sockets; storage device interconnects; broadened
cable tray products for the communications market; expanded
automotive products offering; a mini hand-held label printer; new
hazardous-location lighting products; an improved electric switch
box design; a quick-lock conduit fitting; improved reflector
lenses for roadway lighting; improved wire nut design; and a new
light-duty pole design.
PATENTS AND TRADEMARKS
The Corporation owns approximately 1,780 active patent
registrations and applications worldwide. The Corporation has
over 230 trademarks, including THOMAS & BETTS, T&B, SIGNATURE
SERVICE, DMI, 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, WESTLINE, HOLMBERG,
ZINSCO, E.K. CAMPBELL, BOWERS, AGASTAT, ALL-LAN, BUCHANAN,
FEEDRAIL, MIPCO, RUSSELLSTOLL, CATAMOUNT, and ELASTIMOLD.
Trademarks added with the Augat merger include AUGAT, SNAP-N-
SEAL, HOLTITE, FLIC, ALCO, and PHOTON. 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 December 29, 1996, the Corporation had approximately
14,700 full-time employees worldwide.
SEASONALITY
The Corporation's businesses are not seasonal.
ENVIRONMENTAL
See Item 3, Legal Proceedings.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information regarding business segments is presented in Item 1
(a) and (c) above, Exhibit 13 hereto and in the Corporation's 1996
Annual Report to Shareholders on page 36, which is incorporated
herein by reference.
(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 1996 Annual Report to Shareholders on page 36,
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. It is expected that the international markets
will continue to provide sales growth in the future. Export
sales originating in the U.S. were $26.7, $24.0 and $20.8 million
for 1996, 1995 and 1994, respectively.
ITEM 2. PROPERTIES
The Corporation has total plant, office and distribution
space of approximately 9,744,000 sq. ft. in 138 locations in 24
states, the Commonwealth of Puerto Rico and 16 other countries.
This space is composed of 6,297,000 sq. ft. of manufacturing
space, 2,503,000 sq. ft. of office and distribution space and
944,000 sq. ft. of idle space.
The following table lists the Corporation's manufacturing
locations by primary segment as of December 29, 1996:
Approximate Area
No. Of In Sq. Ft.
Segment Location Facilities Leased Owned
Electrical Construction
and Maintenance Components
Arkansas 1 246,000
California 2 249,000
Georgia 2 180,000 160,000
Massachusetts 1 116,000
Mississippi 1 237,000
Oklahoma 1 108,000
Pennsylvania 1 52,000
Puerto Rico 4 112,000 28,000
Tennessee 2 457,000
Texas 1 36,000
Canada 5 34,000 305,000
Mexico 5 320,000
Electronic/OEM Components
California 1 120,000
Florida 1 65,000
Maine 1 92,000
Massachusetts 3 22,000 52,000
Michigan 4 110,000 230,000
New York 2 113,000 75,000
Pennsylvania 2 30,000
South Carolina 3 89,000
Washington 1 106,000
Canada 1 20,000
England 4 37,000 69,000
Hungary 1 215,000
Japan 1 9,000 247,000
Luxembourg 1 27,000 43,000
Mexico 3 661,000
Singapore 3 24,000 63,000
Switzerland 1 188,000
Other Products and Components
Kansas 1 43,000
New Jersey 1 168,000
New Mexico 1 100,000
Pennsylvania 1 227,000
South Carolina 1 105,000
Texas 1 136,000
Wisconsin 1 171,000
The Corporation leases approximately 115,000 sq. ft. of
space in Memphis, Tennessee for its corporate and divisional
headquarters. Principal sales offices and distribution facilities
are located in 2,388,000 sq. ft. of property, approximately one-
half of which is leased.
The Corporation has 944,000 sq. ft. of idle manufacturing
and office space primarily in Alabama, Pennsylvania, New Jersey,
Massachusetts, Nevada and Texas, not included in the above table.
In 1996, the Corporation recorded a $6 million special charge
related to certain of these facilities 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 or former owner of various
manufacturing facilities currently being evaluated for the
presence of contamination or remediated, including closed
facilities in Anniston, Alabama; Elizabeth, New Jersey;
Pittsburgh, Pennsylvania; and St. Louis, Missouri; and its
currently operated facilities in Hager City, Wisconsin; and
Lancaster, South Carolina. In addition, the Corporation is
evaluating 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.
All but two of the above facilities (Elizabeth and
Lancaster) were purchased by American Electric from other parties
between the years 1985 and 1988. With respect to all but one of
those former American Electric facilities (Pittsburgh), at the
time of those purchases by American Electric the sellers
committed to indemnify American Electric 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 are reliable. Subsequent to the Corporation's
acquisition of American Electric, the Corporation entered into
agreements with the sellers to cooperate with each other in
resolving obligations in connection with the above-mentioned
environmental issues.
In October 1996, the Corporation donated its former facility
located in St. Louis, Missouri, to a charitable organization.
That organization has assumed full liability for the
environmental evaluation and remediation of the facility, and has
committed, both to the Corporation and to the State of Missouri,
to conduct and complete all legally required remediation. That
obligation has been co-assumed by a professional concern engaged
in environmental remediation, and which is working with the
charity to remediate and re-develop the facility. The charity
has also purchased an environmental insurance policy which limits
the extent of any liability associated with the assessment and
remediation of the facility, and has made the Corporation a
direct beneficiary of that insurance.
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 currently 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 the Asset Purchase Agreement dated June
28, 1985 between American Electric and ITT Corporation ("ITT"),
ITT has to date assumed responsibility for costs associated with
contamination prior to June 1985 at four of these sites. The
Corporation has assumed responsibility for its share of costs at
the remaining eight sites. The Corporation has resolved its
liabilities (largely through de minimis settlements) at
additional sites not identified herein.
In January 1996 the Corporation acquired Amerace
Corporation. Pursuant to the various environmental laws and
regulations described above, Amerace is evaluating or
remediating, or may have liability associated with contamination
at four facilities formerly owned or operated by Amerace (located
in Butler, New Jersey; Richland, Michigan; Tenafly, New Jersey;
and Union, New Jersey); and at one facility currently owned and
operated by Amerace located in Hackettstown, New Jersey. In
addition, Amerace has received notifications from the EPA or from
similar state environmental regulatory agencies or private
parties that Amerace, along with others, may currently be
potentially responsible for its share of the costs relating to
the remediation of nine sites pursuant to the Superfund Act, or
similar state environmental statutes.
In December 1996 the Corporation acquired Augat Inc.
Pursuant to the various environmental laws and regulations
described above, Augat is evaluating or remediating, or may have
liability associated with contamination at five facilities
currently owned or operated by Augat (located in Canton,
Massachusetts; Horseheads, New York; Mashpee, Massachusetts; and
at two facilities in Montgomery, Alabama). In addition, Augat
has received notifications from the EPA or from similar state
environmental regulatory agencies or private parties that Augat,
along with others, may currently be potentially responsible for
its share of the costs relating to the remediation of five sites
pursuant to the Superfund Act or similar state environmental
statutes.
The Corporation is not able to predict with certainty the
extent of its ultimate liability with respect to any pending or
future environmental matters. However, the Corporation does not
believe that any such liability with respect to the
aforementioned environmental matters will be material to 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
will be material to its financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Shareholders of the Corporation was
held on December 11, 1996, pursuant to due notice, to vote upon
the Agreement and Plan of Merger (the "Merger Agreement"), among
Augat Inc., a Massachusetts corporation, the Corporation and EG
Acquisitions Corp., a Delaware corporation and a wholly owned
subsidiary of the Corporation, dated as of October 7, 1996, and
to approve the transactions contemplated by the Merger Agreement.
The result of the vote was 33,050,974 votes for and 44,610 votes
against, with 154,292 abstentions and no broker non-votes.
Executive Officers of the Registrant
Date Assumed
Name Position Age Present Position
T. Kevin Dunnigan Chairman of the Board 59 January 1992
and Chief Executive
Officer
Clyde R. Moore President and Chief 43 January 1994
Operating Officer
Fred R. Jones Vice President- 49 August 1995
Finance and Treasurer
(Chief Financial Officer)
T. Roy Burton President- 49 March 1994
Electronics/OEM Division
William A. Fredrick President-Special 50 March 1994
Markets Division
Gregory M. Langston President-Utility 41 April 1995
Division
Dick R. McCullough President-Mechanical 43 November 1995
Products Division
W. Neil Parker President-Electrical 54 February 1996
Components Division
Gary R. Stevenson Vice President- 44 January 1994
Operations
Mr. Dunnigan has been Chief Executive Officer since 1985.
Mr. Moore previously was President and Chief Operating
Officer of FL Industries, Inc. (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 (1992 to
1994).
Mr. Jones previously was President of ABB Financial
Services, Inc. (1990 to 1992) and Senior Vice President and
Chief Financial Officer of Joy Technologies, Inc. (1992 to
1995).
Mr. Burton previously was Vice President and General Manager
of Bendix Connector Operations (1989 to 1992), Vice
President-Information Technology Operations (1992 to 1993),
and Vice President-Aerospace Operations (1993 to 1994) of
Amphenol Corporation.
Mr. Fredrick previously 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. Langston previously was Managing Director of Square D
Australia (1989 to 1990), Managing Director of Square D Asia
Pacific (1991 to 1992), President of Square D de Mexico
(1992) and President of Groupe Schneider Mexico (1992 to
1995).
Mr. McCullough previously was Commercial Marketing Director
of Lennox Industries (1990 to 1991), Director of Marketing
(1991 to 1993) and Vice President and General Manager (1993
to 1995) of the Corporation's Mechanical Products Division.
Mr. Parker previously was Vice President of General Electric
Canada (1983 to 1992), President of Thomas & Betts Limited
(1992 to 1996), and President-Thomas & Betts Canada (1995 to
1996). He is also currently Chief Executive Officer of
Thomas & Betts Limited (1996 to present).
Mr. Stevenson previously was Vice President-Operations of
the American Electric Division of FL Industries, Inc. (1989
to 1992) and Vice President-Operations of Thomas & Betts
Holdings, Inc. (1992 to 1994).
The executive officers were elected by the Board of Directors for
a term which expires on May 7, 1997, 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 1996
Annual Report to Shareholders, portions of which are incorporated
herein by reference as indicated below:
Item No. Pages
5 23 & 38
6 39
7 19 - 23
8 24 - 38
Forward-Looking Statements
Certain statements in this Form 10-K and in written and oral
statements made by the Corporation ("T&B") may constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words "believe," "expect" and
"anticipate" and similar expressions identify forward-looking
statements. Although these statements reflect the Corporation's
current views with respect to future events and financial
performance, they are subject to many uncertainties and factors
relating to the Corporation's operations and business environment
which may cause the actual results of the Corporation to be
materially different from any future results expressed or implied
by such forward-looking statements.
Examples of such uncertainties include, but are not limited
to: changes in customer demand for various T&B products that
could affect its overall product mix, margins, plant utilization
levels and asset valuations; economic slowdown in the U.S.
(contrary to T&B's expectations of continued economic growth
throughout 1997) or economic slowdowns in T&B's major offshore
markets, including Canada, Western Europe (particularly Germany
and the U.K.), Japan and Taiwan; effects of significant changes
in monetary and fiscal policies in the U.S. and abroad which
could result in currency fluctuations, including fluctuations in
the Canadian dollar, German mark and Japanese yen; inflationary
pressures which could raise interest rates and consequently T&B's
cost of funds; unforeseen difficulties in completing identified
restructuring actions initiated in 1996 in connection with the
Augat merger, including disposal of idle facilities, geographic
shifts of production locations and closure of redundant
administrative facilities; availability and pricing of
commodities and materials needed for production of T&B's
products, including steel, copper, zinc, aluminum and plastic
resins; increased downward pressure on selling prices for T&B's
products; unforeseen difficulties arising from the integration of
acquired businesses with T&B's operations; changes in financial
results and consequently in equity income from T&B's equity
investments in Taiwan, Japan, Belgium and the U.S.; changes in
environmental regulations and policies that could impact
projections of remediation expenses; significant changes in
governmental policies domestically and abroad that could create
trade restrictions, patent enforcement issues, tax rate changes
and changes in tax treatment of such items as tax credits,
withholding taxes, transfer pricing and other income and expense
recognition for tax purposes, including changes in taxation on
income generated in Puerto Rico.
The Corporation does not, by making any forward-looking
statements, undertake any obligation to update them (whether as a
result of new information, future events or otherwise).
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 20, 1997 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.
All schedules are omitted as the required information
is inapplicable, immaterial or the information is
presented in the financial statements or related notes.
(3) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
(10) Material Contracts
- Agreement with T. Kevin Dunnigan dated February 5, 1997.
(12) Statements regarding computation of ratios (ratio
of earnings to fixed charges)
(13) 1996 Annual Report to Shareholders
Excerpts from the 1996 Annual Report to
Shareholders are attached to the Form 10-K in
Exhibit 13. The Annual Report to Shareholders
may be obtained by writing to the Investor
Relations Department at Corporate Headquarters.
Excerpts are also available on the Corporation's
World Wide Web Site www.tnb.com.
(21) Subsidiaries of registrant
(23.1)Accountants' Consent
(23.2)Accountants' Consent
(24) Power of Attorney
(27) Financial Data Schedule (for SEC use only)
(99) Independent Auditors' Report on Augat Inc.
The following exhibits are omitted as they are
incorporated by reference as indicated.
(2) The Agreement and Plan of Merger, attached as
Exhibit A to the Articles of Merger referenced in
Exhibit 3(i) below - See Form 8-B filed May 2,
1996.
(3)(i)The Charter of the Registrant and Articles of
Merger of Thomas & Betts Corporation, a New
Jersey corporation, with and into Thomas & Betts
Tennessee, Inc., a Tennessee corporation,
amending the Charter effective May 2, 1996 to
change the name of Thomas & Betts Tennessee,
Inc., to Thomas & Betts Corporation - See Form
8-B filed May 2, 1996.
(3)(ii)The Bylaws of the Registrant - See Form 8-B
filed May 2, 1996.
(4) Instruments defining the rights of security
holders, including indentures.
- Supplemental Indenture, dated May 2, 1996,
relating to the Indenture dated January 15,
1992 - See Form 8-B filed May 2, 1996.
- Specimen of the Corporation's $150,000,000
aggregate principal amount of 6-1/2% Senior
Notes due January 15, 2006 - See Form S-4
filed February 13, 1996.
- Stock Purchase Agreement between Thomas &
Betts Corporation and Vishay Intertechnology,
Inc., dated July 12, 1994 - See Form 8-K
filed July 29, 1994.
- 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
First Trust of New York, National
Association, as Trustee, successor trustee
to Morgan Guaranty Trust Company of New York
- See Form 8-K dated July 28, 1992.
- Indenture, dated as of January 15, 1992,
between the Corporation and First Trust of
New York, National Association, as Trustee,
successor trustee to Morgan Guaranty Trust
Company of New York - 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.
(10) Material Contracts
- Merger Agreement among Augat Inc., Thomas &
Betts Corporation and EG Acquisitions Corp.,
dated October 7, 1996 - See Form 8-K filed
October 7, 1996.
- Credit Agreement dated as of March 29, 1995
among the Corporation, the banks listed
therein and Morgan Guaranty Trust Company of
New York, as agent - See 1995 Form 10-K.
- Amendment No. 1 dated as of December 8, 1995
to edit Agreement among the Corporation, the
banks listed therein and Morgan Guaranty
Trust Company of New York, as agent - See
1995 Form 10-K.
- Amendment No. 2, dated May 2, 1996, to the
Credit Agreement dated as of March 29, 1995
- See Form 8-B filed May 2, 1996.
- 1990 Stock Option Plan - See 1995 Form 10-K.
- Stock Purchase Agreement between Eagle
Industrial Products Corporation and the
Corporation, dated November 1, 1995
regarding the purchase by the Corporation of
the stock of Amerace Corporation - See Form
8-K dated January 17, 1996 and Form 8-K/A
filed January 22, 1996.
- Thomas & Betts Corporation Executive
Incentive Plan -See 1994 Proxy Statement.
- 1993 Management Stock Ownership Plan - See
1993 Form 10-K.
- Executive Officer Employment Agreement Form
- See 1992 Form 10-K.
- 1985 Stock Option Plan - See 1992 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 filed November 19, 1991.
(b) The following reports were filed on Form 8-K during the last
quarter of 1996 and to date:
(1) Form 8-K, dated October 7, 1996, reporting the
Agreement and Plan of Merger between the Corporation
and Augat Inc.
(2) Form 8-K, dated December 20, 1996, reporting the
merger between the Corporation and Augat Inc.
(3) Form 8-K, dated February 25, 1997, setting forth
financial information on combined sales and net
income of the Corporation and Augat Inc. for 30
days of post-acquisition operations from December
30, 1996 through January 28, 1997.
SIGNATURES
PURSUANT TO THE REQUIREMENTS TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED
THIS FORM 10-K ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
THOMAS & BETTS CORPORATION
Signature Title Date
*/s/T. Kevin Dunnigan Chairman of the Board, March 21, 1997
(T. Kevin Dunnigan) Chief Executive Officer
and Director
/s/Clyde R. Moore President, Chief March 21, 1997
(Clyde R. Moore) Operating Officer and
Director
/s/Fred R. Jones Vice President-Finance March 21, 1997
(Fred R. Jones) and Treasurer
/s/Jerry Kronenberg Vice President-General March 21, 1997
(Jerry Kronenberg) Counsel
*/s/Raymond B. Carey, Jr. Director March 21, 1997
(Raymond B. Carey, Jr.)
*/s/Ernest H. Drew Director March 21, 1997
(Ernest H. Drew)
*/s/Jeananne K. Hauswald Director March 21, 1997
(Jeananne K. Hauswald)
*/s/Thomas W. Jones Director March 21, 1997
(Thomas W. Jones)
*/s/Robert A. Kenkel Director March 21, 1997
(Robert A. Kenkel)
*/s/John N. Lemasters Director March 21, 1997
(John N. Lemasters)
*/s/Kenneth R. Masterson Director March 21, 1997
(Kenneth R. Masterson)
*/s/Thomas C. McDermott Director March 21, 1997
(Thomas C. McDermott)
*/s/J. David Parkinson Director March 21, 1997
(J. David Parkinson)
*/s/Jean-Paul Richard Director March 21, 1997
(Jean-Paul Richard)
*/s/Ian M. Ross Director March 21, 1997
(Ian M. Ross)
*/s/William H. Waltrip Director March 21, 1997
(William H. Waltrip)
* By: /s/Jerry Kronenberg
Jerry Kronenberg, Attorney-in-fact
AGREEMENT
This Agreement, made and entered on February 5, 1997, is by
and between THOMAS & BETTS CORPORATION, a Tennessee corporation
("T&B"), and T. KEVIN DUNNIGAN, who currently resides at 8683
Players Fairway, Memphis, Tennessee ("Dunnigan"):
RECITALS
Dunnigan is currently serving as Chairman of the Board and
Chief Executive Officer of T&B;
Dunnigan plans to retire as an employee of T&B effective May
7, 1997 (the "Retirement Date");
T&B desires to secure the continuing services of Dunnigan as
Chairman of the Board following the Retirement Date;
To facilitate an orderly succession in executive and policy-
making positions within T&B, T&B and Dunnigan consider it
advisable that Dunnigan continue to make his services available
to T&B, as provided in this Agreement; and
T&B and Dunnigan consider it advisable that Dunnigan be
compensated for his services to T&B as provided in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises,
covenants and agreements set forth below, the parties agree as
follows.
1. RETIREMENT OF DUNNIGAN; PRIOR CONTRACTS ARE TERMINATED.
Dunnigan shall retire from employment with T&B as of the
Retirement Date. Effective on that Date, all existing employment
agreements between Dunnigan and T&B, whether written or oral and
irrespective of stated expiration dates, shall be terminated and
cease to have any effect, other than for any cash or benefits
which are payable to Dunnigan prior to the Retirement Date but
which remain unpaid. Included among such terminated contracts is
the Employment Agreement between T&B and Dunnigan dated September
2, 1987, as amended November 6, 1995, providing for employment
after a change of control of T&B.
2. RETIREMENT AWARDS, PAYMENTS AND BENEFITS.
In consideration and recognition of Dunnigan's long and
valued services to T&B as employee, executive officer, President,
Chief Executive Officer and Chairman of the Board, T&B agrees to
make the following awards of stock options and restricted stock
to Dunnigan at that time in 1997 when T&B grants stock options
and restricted stock awards to its executive officers and
employees, and shall make such additional awards and provide such
other benefits to Dunnigan as are set forth below:
(a) Stock Options. T&B will grant to Dunnigan stock
options to purchase 52,340 shares of T&B common stock of which
26,170 shares represent the grant that would be made to him in
fiscal 1997 as Chief Executive Officer (the "Normal Grant") and
26,170 shares represent a grant pursuant to this Agreement in
recognition of his retirement. No other stock option grants will
be made to Dunnigan during the term of this Agreement.
(b) Restricted Stock Award. T&B will grant to
Dunnigan a restricted stock award of 28,182 shares of T&B common
stock of which 14,091 shares represent the Normal Grant and
14,091 shares represent a grant pursuant to this Agreement in
recognition of his retirement. The shares granted in this
restricted stock award shall vest in accordance with the terms of
T&B's "1993 Management Stock Ownership Plan," except that no
portion of this award shall fail to vest in the future on the
basis that at the scheduled time for such vesting Dunnigan is no
longer an employee of T&B. However, should Dunnigan violate the
provisions of either Section 5(a) or 5(b) below, resulting in
material injury to T&B, at a time when restrictions on this award
have not yet been released, such award shall not vest and the
restricted shares shall be forfeited and revert to T&B. No other
restricted stock awards will be made to Dunnigan during the term
of this Agreement.
(c) Special Stock Award. T&B will grant to Dunnigan a
one-time, special stock award of 32,302 shares of T&B common
stock. Dunnigan's rights in the shares of the special stock
award shall vest when granted; however, the shares shall be held
in escrow and released to Dunnigan in three substantially equal
installments on May 7, 1998, May 7, 1999 and May 7, 2000,
respectively. This award is subject to the condition that should
Dunnigan breach the provisions of either Section 5(a) or 5(b)
below, resulting in material injury to T&B, then any deferred
installments of this award that remain in escrow shall be
forfeited and shall revert to T&B.
(d) Bonus. T&B shall pay Dunnigan an incentive cash
bonus in March 1998, determined in accordance with T&B's
practice, as if Dunnigan had served as the Chief Executive
Officer of T&B for the entire fiscal year 1997. No other cash
bonus will be paid to Dunnigan during the term of this Agreement.
(e) Change of Control; Death; Documentation. T&B and
Dunnigan shall execute applicable documentation for the stock
options, restricted stock award and special stock award granted
Dunnigan in Sections 2(a), 2(b) and 2(c), in accordance with
standard T&B practice; provided, however, such documents shall
include provisions such that if Dunnigan dies or if there is a
change in control of T&B before May 7, 2000, any unvested stock
options shall become immediately exercisable, and all
restrictions on the restricted stock award shall immediately
lapse.
(f) Definition of Change in Control. For purposes of
Section 2(e) of this Agreement, a "change in control" of T&B
shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"); provided that, without limitation, such a change in
control shall be deemed to have occurred if:
(i) any person or group of persons is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of T&B
representing twenty-five percent (25%) or more of the combined
voting power of T&B's then outstanding voting securities; or
(ii) individuals who, at the date hereof
constitute all the members of the Board of Directors, shall cease
for any reason to constitute at least a majority of the
Directors, unless the election of each Director who was not a
Director on the date hereof was approved by a vote of at least
seventy-five percent (75%) of the Directors then still in office
who were Directors on the date hereof; or
(iii) there shall be consummated (A) any
consolidation or merger of T&B in which T&B is not the continuing
or surviving corporation or pursuant to which shares of T&B
common stock would be converted into cash, securities or other
property, other than a merger of T&B in which the holders of the
T&B common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of T&B; or
(iv) the stockholders of T&B approve a plan or
proposal for the liquidation or dissolution of T&B.
(g) Executive Retirement Plan. Pursuant to Section
1.11 of the T&B Executive Retirement Plan, Dunnigan shall be
granted such additional months of age to be treated as having
retired at age 60, so that he will become entitled as of the
Retirement Date to benefits attributable to a retirement age of
60 years.
(h) Other Retiree Benefits. As of May 7, 1997,
Dunnigan shall be entitled to all standard benefits, perquisites
and executive benefits which T&B provides for retiring senior
corporate executives, including, but not limited to, Major
Medical coverage for him and his wife for as long as either
lives.
3. DUNNIGAN'S POST-RETIREMENT SERVICE AS CHAIRMAN OF THE
BOARD OF DIRECTORS OF T&B.
(a) Term. The Board of Directors agrees to elect
Dunnigan to the office of Chairman of the Board, and Dunnigan
agrees to perform such services for T&B in accordance with the
terms and provisions of this Agreement for the period ("Term")
which commences on May 7, 1997 and ends on the earliest of: (i)
May 6, 2000; (ii) the termination date of this Agreement in
accordance with Section 5 hereof, or (iii) the date of Dunnigan's
death.
(b) Duties.
(1) Title; Assignment of Duties. During the
Term, Dunnigan shall serve as Chairman of the Board of T&B.
Dunnigan's duties shall include, but are not limited to, the
direction of the affairs of the Board of Directors of T&B, as
well as the performance of all duties customarily performed by a
person holding the office of Chairman of the Board and any other
duties assigned Dunnigan by the Board of Directors. Dunnigan's
duties shall also include the performance of projects requested
by T&B's Chief Executive Officer, which shall be appropriate to
Dunnigan's experience and senior corporate executive status.
(2) Dunnigan's obligations. In the performance
of his duties, Dunnigan shall:
(i) devote his knowledge, skill, attention
and energies to the performance of his duties, faithfully,
competently, diligently and to the best of his ability;
(ii) comply with all T&B policies and rules
and regulations from time to time adopted; and
(iii) refrain from, directly or indirectly,
engaging in, rendering any service to, or undertaking any
employment with respect to any other business, profession,
occupation or endeavor for any person, firm, corporation,
association or other entity, without the prior consent of the
Board of Directors of T&B, as reflected in the minutes of the
meetings of the Board or any of its committees;
provided, however, nothing in this Section 2(b) shall be
construed as preventing Dunnigan either from investing his assets
in such a form or manner as shall not require any services on his
part in the operation of the affairs of any entity in which such
investment is made, or from serving as a director of any other
company, as long as such activities do not interfere with the
performance of Dunnigan's duties under this Agreement.
(c) Compensation, Benefits and Expenses. During
the Term of this Agreement, T&B shall compensate and reimburse
Dunnigan as follows:
(i) Fee. T&B shall pay to Dunnigan, in
consideration of his services as Chairman of its Board, a
Chairman's fee of no less than $500,000 per year, payable in
twenty-four (24) substantially equal installments. The Board of
Directors of T&B may, in its discretion, from time to time
increase the fee. Except for this fee, and the benefits
described below, Dunnigan shall receive no additional fees, stock
awards, retirement benefits or other compensation for serving as
a member of the Board or of a committee of the Board.
(ii) T&B Benefits. During the Term, T&B shall
provide Dunnigan and his "dependents" (as that term may be
defined under the applicable T&B benefit plan(s)) all benefits
provided other T&B retired senior corporate executives and their
dependents.
(iii) Perquisites. During the Term, T&B will
continue to pay membership fees arising from Dunnigan's
membership in the TPC Southwind Golf Club, Memphis, Tennessee,
which he uses for T&B business purposes. Until May 6, 2000, T&B
will continue to provide Dunnigan an automobile allowance
according to existing practice.
(iv) Office. During the Term, T&B shall
provide Dunnigan with an office in the executive section of T&B's
headquarters building and with secretarial support.
(v) Expenses. Dunnigan shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred
by him during the Term (in accordance with the policies and
procedures established for T&B senior executive officers) in
performing services hereunder.
4. TERMINATION; DISABILITY; DEATH.
(a) Termination by T&B. The Board of Directors of T&B
may terminate this Agreement and may remove Dunnigan as a
director for cause. For the purpose of this Agreement, the Board
shall have "cause" to terminate this Agreement upon (i) the
willful failure by Dunnigan to substantially perform his duties
hereunder (including, under the circumstances set forth in
subsection (c) below, for Dunnigan's incapacity due to physical
or mental disability); or (ii) the willful engaging by Dunnigan
in gross misconduct materially injurious to T&B; or (iii) the
willful violation by Dunnigan of the provisions of Sections 3(b)
and 5 hereof, provided that such a violation results in material
injury to T&B.
For the purpose of this Section 4(a), no act or
failure to act on Dunnigan's part shall be considered "willful"
unless done or omitted to be done by him not in good faith and
without a reasonable belief that his action or omission was in
the best interests of T&B. Notwithstanding the foregoing, this
Agreement shall not be deemed to have been terminated for cause
unless and until there shall have been delivered to Dunnigan a
copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board
excluding Dunnigan, at a meeting of the Board called and held for
that purpose (after reasonable notice to Dunnigan and an
opportunity for him, together with his counsel, to be heard
before the Board), finding that, in the good faith opinion of the
Board, Dunnigan was guilty of conduct set forth above in clause
(i), (ii) or (iii) of the first sentence of this subsection (a)
above, and specifying the particulars thereof in detail.
If Dunnigan's service on the Board should be
terminated for cause, T&B shall pay him all fees due through the
end of the month of his termination and shall have no further
obligations to Dunnigan under the post-retirement provisions of
this Agreement.
(b) Termination by Dunnigan. Dunnigan may terminate
his membership on T&B's Board of Directors by giving sixty (60)
days' advance written notice to T&B of his intention to
terminate. If the basis for that decision is T&B's breach of a
material provision of this Agreement or the termination of
Dunnigan without affording him the notice and hearing required by
subsection (a) above, then Dunnigan shall continue to receive the
compensation and benefits due under this Agreement until the
breach has been cured and/or all procedural requirements for
Dunnigan's termination have been observed. If Dunnigan should
terminate his Board membership for any other reason, such an
action shall result in Dunnigan's loss of all entitlement to fees
and other benefits accruing to him by virtue of his service as
non-employee Chairman of the Board. However, Dunnigan shall not
forfeit those stock options, special stock award, restricted
stock award and other benefits set forth in Section 2(a) through
(i), all of which were granted to him as entitlements in
connection with his retirement as an employee and executive
officer of T&B. Following any such termination by Dunnigan, he
shall continue to be bound by the restrictions set forth in
Sections 5(a) and 5(b) below.
(c) Disability.
(i)Definition; Termination. Dunnigan's service
as Chairman hereunder shall be terminated if, as a result of his
physical or mental disability, he shall not have been performing
his duties and obligations hereunder on a regular basis for a
period of at least six (6) consecutive months, and within thirty
(30) days after written notice of termination is given by the
Board (which may occur before or after the end of such six-month
period) he shall not have returned to the performance of his
duties and obligations hereunder on a regular basis nor stated a
reasonably early time when he would do so.
(ii) Amounts Due Upon Becoming Disabled. For any
period during the Term in which Dunnigan fails to perform his
duties hereunder as a result of physical or mental disability, he
shall continue to receive his full fee at the rate then in
effect, reduced by the amounts, if any, paid to him under T&B's
disability benefit plan, any other disability plan and under the
Social Security disability insurance program.
(d) Death. If Dunnigan's services as Chairman of
T&B's Board of Directors should be terminated by his death during
the Term, then T&B shall pay Dunnigan's estate as follows:
(i) Dunnigan's estate shall receive his full
contractual benefits under this Agreement through the end of the
month next following the date of his death. Following this date,
all the benefits described in Section 3(c) above, at subsections
(i), (iii), (iv) and (v), shall terminate. The benefits
described in Section 3(c)(ii) shall survive Dunnigan's death,
however, and inure to the benefit of a living spouse and
dependents, if any.
(ii) As set forth in Section 2(e) above, upon
Dunnigan's death during the Term, all his then outstanding stock
options shall become immediately exercisable, and any outstanding
restricted shares will immediately vest and their restrictions
lapse. Upon appropriate official request, these options and
shares will be transferred to the persons or beneficiaries of
Dunnigan's choice, as more fully set forth in Section 8(b),
below.
5. COVENANTS AS TO CONFIDENTIAL INFORMATION AND
COMPETITIVE CONDUCT.
(a) Unauthorized Disclosure. During the Term and
afterward, Dunnigan shall not, without the consent of the Board
as reflected in the minutes of the meetings of the Board or any
of its committees, disclose to any person -- other than an
employee of T&B, or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by
Dunnigan of his duties on behalf of T&B, or as may be required by
a court or governmental agency with appropriate authority -- any
material confidential information obtained by him, either while
employed by T&B or during the Term, with respect to any of T&B's
(and its subsidiaries') plans, strategies, products,
improvements, formulas, designs or styles, processes, customers,
methods of distribution or methods of manufacture, the disclosure
of which he knows could be materially damaging to T&B; provided,
however, that confidential information shall not include any
information known generally to the public (other than as a result
of unauthorized disclosure by Dunnigan) or any information of a
type not otherwise considered confidential by persons engaged in
the same business or a business similar to that conducted by T&B.
(b) Restrictive Covenant During the Term. Dunnigan
shall not, directly or indirectly, render services to, or invest
in, or loan funds to, any person, firm, corporation, association
or other entity which competes, directly or indirectly, with any
T&B business, without the prior consent of the Board as reflected
in the minutes of the meetings of the Board or any of its
committees. This restriction shall not apply to investments in
funds, such as an S&P 500 Index fund, which may include some
companies in competition with T&B, but for which Dunnigan has no
specific power of direction.
(c) T&B Remedies. In the event of an actual or
threatened breach by Dunnigan of the provisions of this Section
5, T&B shall be entitled to terminate this Agreement as provided
in Section 4 and to seek immediate injunctive relief restraining
Dunnigan from conduct in breach or threatened breach of the
covenants contained in this Section 5. Nothing herein shall be
construed as prohibiting T&B from pursuing any other remedies
available to it for such breach or threatened breach, including
the recovery of damages.
6. ARBITRATION. Any dispute or controversy arising under
or in connection with this Agreement (except as provided in
Section 5(c) as to injunctive relief) shall be settled by
arbitration in Memphis, Tennessee in accordance with the rules of
the American Arbitration Association then in effect, unless the
parties mutually agree otherwise in writing. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
7. WAIVER OF BREACH. No waiver by either party hereto of
any breach by the other party of any condition or provision of
this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions
at the same, or at any prior or subsequent, time.
8. SUCCESSORS: BINDING AGREEMENT.
(a) Obligations of T&B's Successor. T&B shall require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all, or substantially all or a
majority of the business and/or assets of T&B, by agreement in
form and substance satisfactory to Dunnigan, expressly to assume
and agree to perform this Agreement in the same manner and to the
same extent that T&B would be required to perform it if no such
succession had taken place.
(b) Rights of Dunnigan's Successors. This Agreement
and all rights of Dunnigan hereunder shall inure to the benefit
of, and be enforceable by, Dunnigan's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Dunnigan should die
while any amounts would still be due and payable to him hereunder
if he had continued to live, all such amounts, unless otherwise
provided for herein, shall be paid in accordance with the terms
of this Agreement to Dunnigan's devisee, legatee or other
designee or, if there be no such devisee, legatee or other
designee, to Dunnigan's estate. Dunnigan shall designate to T&B
the appropriate person(s) to contact upon his death (or
disability), and shall notify T&B in writing of any changes in
designation.
(c) Assignment. Neither this Agreement nor any rights
or obligations hereunder may be assigned by Dunnigan. T&B may
assign this Agreement and its rights and obligations hereunder
without the consent of Dunnigan, subject to the provisions in
subsection (a) above.
9. NOTICE. All notices and all other communications
required or provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when mailed by United
States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Dunnigan:
T. Kevin Dunnigan
8683 Players Fairway
Memphis, Tennessee 38125
If to T&B:
Thomas & Betts Corporation
1555 Lynnfield Road
Memphis, Tennessee 38119
Attention: President
or to such other address as either party may have furnished to
the other in writing at the addresses provided above, except that
notices of change of address shall be effective only upon
receipt.
10. MISCELLANEOUS PROVISIONS.
(a) Governing Law. This Agreement shall be governed
by and construed under the laws of the State of Tennessee,
excepting its choice of law provisions. If, under such law, any
portion of this Agreement is at any time deemed to be in
conflict with any applicable statute, rule, regulations or
ordinance, such portion shall be deemed to be modified or altered to conform
thereto or, if that is not possible, to be omitted from this
Agreement; the invalidity of any such portion shall not affect
the force, effect, validity and enforceability of the remaining
portions of this Agreement.
(b) Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience
of reference only and shall not constitute a part of this
Agreement.
(c) Amendments. The provisions of this Agreement
may not be amended, modified, repealed, waived, extended or
discharged except by an agreement in writing signed by the party
against whom enforcement of any amendment, modification, repeal,
waiver, extension or discharge is sought. No person, other than
pursuant to a resolution of the Board of Directors of T&B, shall
have authority on behalf of T&B to agree to amend, modify,
repeal, waive, extend or discharge any provision of this
Agreement or anything in reference thereto.IN WITNESS WHEREOF,
T&B has caused this Agreement to be executed and its corporate
seal to be affixed and attested by its authorized officer, and
Dunnigan has executed this Agreement, as of the 5th day of
February, 1997.
THOMAS & BETTS CORPORATION
By:/s/Jerry Kronenberg
Attest:
By:/s/Janice H. Way
/s/T. Kevin Dunnigan
T. KEVIN DUNNIGAN
EXHIBIT 12
THOMAS & BETTS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
For The Years Ended
December 29, December 31, January 1, January 2, December 31,
1996 1995 1995 1994 1992
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations
before income taxes $ 90,878 $128,930 $ 40,194 $ 83,542 $ 62,738
Add:
Interest on indebtedness 49,410 32,474 31,064 34,840 38,410
Amortization of debt expense 1,335 1,496 1,373 1,231 2,564
Portion of rents representative
of the interest factor 11,399 10,766 9,766 9,266 8,421
Deduct:Interest capitalized and
undistributed earnings from less
than 50 percent owned persons ( 8,642) ( 2,848) ( 1,863) - -
Earnings as adjusted $144,380 $170,818 $ 80,534 $128,879 $112,133
Fixed charges:
Interest on indebtedness 49,410 $ 32,474 $ 31,064 $ 34,840 $ 38,410
Amortization of debt expense 1,335 1,496 1,373 1,231 2,564
Portion of rents representative of
the interest factor 11,399 10,766 9,766 9,266 8,421
Total fixed charges $ 62,144 $ 44,736 $ 42,203 $ 45,337 $ 49,395
Ratio of earnings to fixed charges 2.3x 3.8x 1.9x 2.8x 2.3x
</TABLE>
FINANCIAL HIGHLIGHTS
Thomas & Betts Corporation
In thousands
(except per share data) 1996 1995
Net sales $1,985,145 $1,733,368
Special charges(1) $ 97,067 $ 23,000
Net earnings (after special charges) $ 59,868 $ 88,502
Net earnings per common share $ 1.13 $ 1.69
Cash dividends declared per
common share $ 1.12 $ 1.12
Average shares outstanding 53,059 52,494
Shareholders' equity $ 868,382 $ 850,312
Capital expenditures $ 107,807 $ 131,442
Employees 14,700 12,600
Shareholders of record 5,611 5,494
As a result of the merger of Thomas & Betts Corporation and Augat
Inc. on December 11, 1996, accounted for as a pooling of
interests, all Financial Highlights except dividends per share
include the combined amounts of both companies for all periods
presented.
1996 1996 1995 1995
Before After Before After
Special Special Special Special
Charges Charges Charges Charges
Net sales (in millions) $1,985 $1,985 $1,733 $1,733
Net earnings (in millions)(2) $125.5 $ 59.9 $103.8 $ 88.5
Earnings per share(2) $ 2.36 $ 1.13 $ 1.98 $ 1.69
Return on average
shareholders' equity(2) 13.9% 7.0% 12.5% 10.8%
(1) Special charges of $97.1 million pretax in 1996 consisted of
merger costs, restructuring costs and other charges. Augat
special charges of $23.0 million pretax in 1995 consisted of
restructuring costs and other charges. Excluding these
charges, earnings per share would have been $2.36 in 1996
and $1.98 in 1995. See Notes 3 and 4 to Consolidated
Financial Statements.
(2) Special charges in 1995 and 1996 reduced net earnings,
earnings per share and return on average shareholders'
equity as shown.
FINANCIAL REVIEW
1996 vs. 1995
The Corporation's 1996 financial results reflect two significant
acquisitions. First, the financial results of Amerace
Corporation ("Amerace"), a January 2, 1996 acquisition accounted
for as a purchase, are included effectively for all of 1996.
Second, the merger with Augat Inc. ("Augat"), the Corporation's
largest-ever acquisition, occurred in December 1996. The
financial results of the Corporation and Augat have been combined
for all periods presented as called for under pooling of
interests accounting. In conjunction with the Augat merger, the
Corporation recorded special charges of $97.1 million pretax for
merger costs, restructuring costs and other charges.
Sales for 1996 were a record $1,985.1 million, 15 percent
above 1995 sales of $1,733.4 million, with sales from new
acquisitions coupled with expansion of existing businesses
providing the growth. Overall, price increases and currency
effects were not significant in either 1996 or 1995.
Approximately one-quarter of the Corporation's sales in both 1996
and 1995 were made to customers outside the U.S.
Net earnings for 1996 of $59.9 million, or $1.13 per share,
were below the 1995 level of $88.5 million, or $1.69 per share,
due to the special charges of $97.1 million recorded in the
fourth quarter. Excluding the after-tax impact of the special
charges ($65.6 million in 1996 and $15.3 million in 1995), net
earnings would have been $125.5 million in 1996, or $2.36 per
share, an increase of 21 percent from $103.8 million, or $1.98
per share, in 1995. This increase resulted from the additional
sales volume generated by acquisitions as well as existing
businesses, lower commodity costs and cost reductions from prior-
years' restructuring initiatives.
Sales and earnings from operations, excluding special
charges, improved in all three of the Corporation's business
segments.
Electrical Construction and Maintenance Components' segment
sales increased 8 percent to $627.3 million in 1996. Higher
volumes of existing and new products in industrial, commercial
and residential markets contributed most of the growth. Earnings
from operations, excluding special charges, improved 11 percent
on the higher sales volume.
Electronic/OEM Components' segment sales increased 11
percent to $920.7 million in 1996, reflecting increased
penetration of domestic professional electronics markets together
with acquisitions and new product launches in OEM electronics.
Earnings from operations, excluding special charges, rose 14
percent as a result of the higher sales volume and cost
reductions from prior-years' restructuring initiatives.
The Other Products and Components' segment sales increased
36 percent to $437.1 million in 1996, primarily driven by sales
from the Amerace acquisition and aided by gains from existing
utility and telecommunications products. Earnings from
operations, excluding special charges, grew 59 percent as a
result of higher sales volume, higher-margin product sales and
lower commodity costs.
Consolidated gross margin of 29.6 percent in 1996 was
slightly improved from the 1995 gross margin of 29.5 percent.
Excluding the special charges of $13.8 million in 1996 and $2.5
million in 1995, gross margin improved to 30.3 percent from 29.7
percent, reflecting restructuring-related cost savings and lower
commodity costs.
Marketing, general and administrative expenses were 17.1
percent of sales in 1996. Excluding special charges of $19.7
million in 1996 and $1.8 million in 1995, these expenses were
16.1 percent of sales in 1996, a modest improvement from 16.3
percent in 1995, as a result of the administrative efficiencies
realized from integration of acquired businesses into the
Corporation. Research and development expenses increased 7
percent in 1996 and constituted 2.4 percent of sales.
Amortization expense increased by $4.0 million in 1996 versus
1995 primarily due to additional amortization of goodwill
resulting from the acquisition of Amerace at the beginning of the
year.
The 1996 merger expense included legal and financial
advisory fees and change-of-control payments. The provision for
restructured operations in 1996 and 1995 is described more fully
under Restructuring.
Other expense for 1996 increased by $14.5 million versus
1995. The increase was the result of higher interest expense on
increased debt from the acquisition of Amerace and the Augat
merger's special charges, partially offset by higher income from
equity investees, primarily from joint ventures acquired in the
Amerace purchase.
The effective tax rate of 34.1 percent for 1996 was 2.7
points higher than the 1995 tax rate primarily due to the impact
of non-deductible merger expenses in 1996.
The Corporation's net earnings as a percent of sales
declined to 3.0 percent in 1996 because of the special charges.
Excluding special charges in both years, return on sales would
have improved to 6.3 percent in 1996 compared to 6.0 percent in
1995.
1995 vs. 1994
Sales in 1995 rose 10 percent to a record $1,733.4 million
compared to 1994 sales of $1,573.6 million. Sales growth came
equally from expansion of existing businesses and acquisitions.
Overall, price increases and currency effects were not
significant in either 1995 or 1994. Total sales outside the U.S.
represented approximately one-quarter of consolidated sales in
both 1995 and 1994.
The impact of additional sales volume and savings realized
from the Corporation's restructuring initiatives announced in the
third quarter of 1994 were offset by the restructuring charge
recorded by Augat in 1995, resulting in net earnings of $88.5
million, or $1.69 per share, for 1995, down 6 percent from $94.0
million, or $1.85 per share, recorded in 1994. Excluding the
special charges, 1995 net earnings would have been $103.8
million, or $1.98 per share, up 10 percent from 1994.
All three of the Corporation's business segments contributed
year-over-year improvements in sales and earnings from operations
excluding special charges.
Electrical Construction and Maintenance Components' segment
sales increased 17 percent to $580.0 million in 1995, with solid
growth generated from existing products as well as from newly
acquired businesses. Industrial, commercial and residential
construction and renovation activity was particularly strong in
the first half of the year. Savings related to the 1994
restructuring in this segment were offset in part by higher
commodity costs and a less favorable product sales mix than in
the prior year, but 1995 earnings from operations still achieved
10 percent growth compared to 1994 earnings excluding special
charges.
Electronic/OEM Components' segment sales increased 6 percent
to $832.7 million in 1995, with one-half of the increase derived
from sales growth in existing products and expansion of the
customer base and the remainder primarily from strengthening
currencies in Europe and the Far East. Higher demand in the
automotive, computer, industrial automation and
telecommunications markets drove volume gains in all regions -
North America, Europe and the Far East. Volume gains, coupled
with restructuring-related cost savings, produced 13 percent
higher earnings from operations in 1995 compared to 1994,
excluding special charges in both years.
The Other Products and Components' segment sales increased 9
percent to $320.7 million in 1995, with two-thirds of the
increase from existing products and markets and one-third from
acquisitions. Demand for heating products continued strong in
1995 while demand for utility and telecommunication products and
components improved versus the prior year, resulting in 18
percent earnings from operations growth in 1995 compared to 1994,
excluding special charges.
Consolidated gross margin improved to 29.5 percent in 1995
versus 28.9 percent in 1994. The 1994 margin included $3.8
million of special facilities-related charges while the 1995
margin benefited from restructuring-related cost reductions in
North America and Europe that more than offset higher commodity
costs.
Marketing, general and administrative expenses were 16.3
percent of sales in 1995 excluding special charges, essentially
unchanged from 16.2 percent in 1994. Research and development
expenses increased by 9 percent in 1995 and constituted 2.5
percent of sales. Amortization expense declined $1.0 million in
1995 due to intangibles that became fully amortized during 1994.
Other expense for 1995 declined $3.2 million from 1994
principally as a result of prior-year currency exchange losses,
primarily in Mexico, that did not recur in 1995, and a gain on
the sale of certain assets of the Electripak business.
The effective tax rate of 31.4 percent for 1995 was below
the U.S. statutory tax rate primarily due to tax benefits derived
from the Corporation's operations in Puerto Rico. The 1995 rate
exceeds the 1994 rate of 30.1 percent because of the significant
impact that the restructuring charge had on pretax earnings from
continuing operations in 1994.
The Corporation's net earnings as a percent of sales
declined to 5.1 percent in 1995 due to Augat's special charges.
Excluding special charges, 1995 return on sales would have been
6.0 percent, equal to the 1994 rate.
Liquidity and Capital Resources
Net cash flow from operating activities for the years 1994, 1995
and 1996 was $414.0 million. Earnings from continuing operations
plus depreciation and amortization for these three years totaled
$416.5 million. These funds were used for working capital needed
to support sales growth, expenditures relating to restructuring
activities, capital projects, business acquisitions and dividend
payments. Working capital needs included higher levels of
accounts receivable relating to higher sales volume, increased
inventory levels to support sales growth and spending for
restructuring initiatives. These working capital needs were
partially offset by higher payables due to increased purchases
and higher taxes payable due to higher pre-restructuring taxable
income.
In January 1996, the Corporation issued $150.0 million of
10-year 6.50 percent senior notes. The net proceeds from the sale
of these securities were used to reduce January 1996 borrowings
under the Corporation's credit facility incurred to finance the
acquisition of Amerace.
The Corporation has access to funds made available under a
$500 million, five-year revolving credit facility. At December
29, 1996, $205 million of borrowings under the facility were
outstanding. The Corporation continues to fund its capital and
operating needs with cash flows from operations augmented by
borrowing under this revolving credit facility and from other
sources.
Mergers, Acquisitions and Investments
Augat Inc.
On December 11, 1996 Augat Inc. was merged with a subsidiary of
the Corporation. Approximately 12.8 million shares of the
Corporation's common stock were exchanged for all of the
outstanding common stock of Augat. Augat is a worldwide
manufacturer of electronic connectors and devices used in markets
such as telecommunications, automotive, information processing
and cable television.
Amerace
On January 2, 1996 the Corporation acquired all the outstanding
stock of Amerace Corporation for $212.5 million in cash. Amerace
is a manufacturer of electrical products for utility and
industrial markets. Its most significant products are
underground power and distribution connectors sold under the
Elastimold brand name. Excluding its Hendrix Wire and Cable
business, which was sold by the Corporation in May 1996, Amerace
generated 1996 sales of $147.0 million. The cash purchase price
was financed in part by use of the Corporation's revolving credit
facility and in part by the issuance of senior notes.
Other
The Corporation completed six acquisitions during 1996 in
addition to Augat and Amerace for a total of approximately $46.0
million consisting of cash and 57,714 shares of the Corporation's
common stock. These acquisitions were: in January, certain
assets of Bowers Manufacturing Corporation, manufacturer of
metallic and non-metallic electrical outlet boxes and surface
raceway systems; in March, Porta Systems Corporation, a fiber
optics business; in June, the Pilgrim Group of companies, a
Canadian manufacturer of cable tray wiring systems; in June,
International Energy Saver, manufacturer of evaporative cooling
and heat recovery systems; in November, Reznor Europe, a group of
companies that manufacture high-quality heating systems; and in
November, the assets of Microlectric Canada Ltd., manufacturer of
electric meter boxes and accessories. All were accounted for
using the purchase method of accounting, and represented
approximately $37.0 million of sales reported by the Corporation
in 1996.
During 1995, the Corporation completed five acquisitions for
approximately $48.0 million consisting of cash and 657,810 shares
of the Corporation's common stock. These acquisitions were: in
February, certain assets of the Anchor Electric meter center
business; in May, Photon Systems Corp., a designer and
manufacturer of systems that enable telecommunication and cable
companies to distribute signals over fiber optic networks; in
June, Elastomeric Technologies Inc., a manufacturer of customized
interconnection technology used in communications and portable
electronics; in July, E. K. Campbell Company, a custom industrial
heating and cooling equipment manufacturer; and in October,
Catamount Manufacturing, Inc., a manufacturer of cable ties, wire
connectors and related electrical products. The Anchor Electric,
Photon Systems and Elastomeric acquisitions were accounted for
using the purchase method of accounting and the E. K. Campbell
and Catamount acquisitions were accounted for as immaterial
poolings of interests without restating prior-years' results.
During 1994, the Corporation completed four acquisitions for
approximately $73.0 million consisting of cash and 447,432 shares
of common stock. Three were purchases from Eaton Corporation
involving primarily inventories and equipment: in January,
certain circuit protection products; in August, Commander
Electrical Products, Inc., a Canadian metal outlet box and
fittings business; and in November, a U.S. non-metallic
electrical outlet box business. Separately, in February, the
Corporation purchased certain assets from Anford, Inc., a
Canadian manufacturer of cable tray. In August 1994, the
Corporation also purchased a minority interest (approximately
29%) in Leviton Manufacturing Co., Inc., the leading U.S.
manufacturer of wiring devices, for approximately $51.0 million
consisting of cash and common stock.
Capital Spending
Capital spending of $107.8 million in 1996 returned to a more
typical level following the completion of a major spending
program on distribution facilities initiated during 1995 when
capital spending reached a record $131.4 million. Spending in
1994 was $98.4 million. Capital funds for this three-year period
were used for restructuring projects to improve service and
reduce operating costs, to expand manufacturing and distribution
capacity and produce new products, and to increase efficiency in
keeping with the Corporation's strategic focus on core businesses
and product lines. Projects in 1996 included completion of the
new central distribution center near Memphis, continued expansion
of the Corporation's operations in Mexico and restructuring-
related spending at Augat to consolidate manufacturing
operations. Projects in 1995 included spending on three new
state-of-the-art distribution facilities near Memphis and in
Canada and Belgium; the expansion of production capabilities in
Puerto Rico; and new equipment and efficiency-related
improvements at facilities in Arkansas and Mexico. In 1994, the
Corporation began refurbishment of a new, leased manufacturing
facility in Arkansas, completed a second expansion of its
existing distribution facility near Memphis, completed the
refurbishment and equipment upgrade at a new, leased distribution
facility in Nevada and began construction of the new distribution
facility in Canada.
Environmental Matters
The Corporation believes it is substantially in compliance with
all applicable environmental laws and regulations and that the
cost of maintaining substantial compliance with such laws and
regulations will not be material to its financial statements.
In connection with the merger with Augat in the fourth
quarter of 1996, the Corporation conducted environmental site
assessments on certain manufacturing facilities being remediated
or potentially requiring remediation. As a result of these
studies, as well as an evaluation of Augat's liabilities under
Superfund or similar statutes, the special charges associated
with this acquisition included $5.1 million to augment already
existing Augat environmental reserves. In 1995 and 1994, $1.8
and $7.0 million, respectively, were provided for potential
environmental remediation of planned facility closings. The
Corporation paid approximately $2.0, $1.5 and $1.0 million for
remediation and corrective matters for the years 1996, 1995 and
1994, respectively, with payments for Superfund-related matters
being less than $0.5 million in any year. The Corporation's
policy is to accrue undiscounted future remediation expenses to
the extent known and determinable.
Restructuring
During the fourth quarter of 1996, the Corporation recorded a
restructuring charge of $24.5 million relating to the integration
of Augat and initiatives to optimize operations and improve
future profitability. This charge included non-cash charges of
$6.6 million for the write-down of equipment to be disposed of
and cash charges of $17.9 million, primarily for employee
severance and related benefit costs. Cost savings resulting from
these initiatives are expected to be approximately $5.0 to $10.0
million in 1997 and $15.0 to $20.0 million annually thereafter.
In the fourth quarter of 1995, Augat recorded a
restructuring charge of $18.7 million for closing redundant or
excess facilities, abandoning excess equipment, discontinuing
inventory in low-margin product lines and employee severance
costs. At the end of 1996 only $0.7 million of the reserve
remained, primarily for ongoing employee severance costs.
Activities related to the $79.0 million pretax restructuring
charge taken by the Corporation in 1994 are essentially complete
and only $4.1 million of the reserve remained at the end of 1996,
primarily for ongoing environmental remediation costs at idled
facilities. All restructuring actions have been implemented and
have produced the cost savings anticipated when the charge was
taken.
Other Matters
The Corporation manages its foreign currency exchange rate risk
by entering into foreign exchange contracts to hedge its foreign
currency transaction exposures. The Corporation will, on
occasion, enter into interest rate swaps to reduce the impact of
changes in interest rates on portions of its floating-rate debt.
It 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
1996 was valued at $113.4 million. Although these investments
represent currently available funds, they remain invested so the
Corporation can obtain favorable, partially tax-exempt status on
earnings generated in Puerto Rico.
Dividends and Related Security-Holder Matters
In 1996, the Corporation declared cash dividends of $1.12 per
share, or $45.2 million. In addition to cash dividends of $1.12
per share declared on the Corporation's common stock, Augat
declared and paid cash dividends of $0.16 per share, or $3.2
million, prior to the merger in 1996. These dividends represent
81 percent of net earnings in 1996 compared to dividends
representing 54 percent of net earnings in 1995. 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 63 consecutive years.
The Corporation's common stock is traded on the New York
Stock Exchange. Thomas & Betts had 53,303,000 shares of common
stock outstanding at December 29, 1996, which were held by 5,611
shareholders of record.
CONSOLIDATED STATEMENT OF EARNINGS
Thomas & Betts Corporation
In thousands (except per share data) 1996 1995 1994
Net Sales $1,985,145 $1,733,368 $1,573,602
Costs and Expenses
Cost of sales 1,398,031 1,221,463 1,118,224
Marketing, general and administrative 339,124 283,861 255,073
Research and development 47,229 44,083 40,543
Amortization of intangibles 15,323 11,314 12,345
Merger expense 30,558 - -
Provision for restructured operations 24,501 18,700 79,011
1,854,766 1,579,421 1,505,196
Earnings from operations 130,379 153,947 68,406
Other expense-net 39,501 25,017 28,212
Earnings from continuing operations
before income taxes 90,878 128,930 40,194
Income taxes 31,010 40,428 12,107
Earnings from continuing operations 59,868 88,502 28,087
Earnings from discontinued operations,
net of income taxes of $4,628 - - 7,350
Gain on sale of discontinued
operations, net of income taxes
of $40,492 - - 58,583
Net earnings $ 59,868 $ 88,502 $ 94,020
Share Data
Earnings from continuing operations $ 1.13 $ 1.69 $ 0.55
Earnings from discontinued operations - - 0.15
Gain on sale of discontinued operations - - 1.15
Net earnings $ 1.13 $ 1.69 $ 1.85
Cash dividends declared $ 1.12 $ 1.12 $ 1.12
Average shares outstanding 53,059 52,494 50,862
See Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
Thomas & Betts Corporation
December 29, December 31,
In thousands 1996 1995
Assets
Current Assets
Cash and cash equivalents $ 126,355 $ 75,155
Marketable securities 35,940 60,638
Receivables, net 361,511 272,472
Inventories 363,306 304,989
Deferred income taxes 62,121 30,967
Prepaid expenses 7,818 6,165
Total Current Assets 957,051 750,386
Property, Plant and Equipment
Land 16,944 18,891
Buildings 217,792 214,165
Machinery and equipment 765,240 658,848
999,976 891,904
Less accumulated depreciation 460,032 419,071
539,944 472,833
Intangible Assets-Net 519,276 346,120
Investments and Other Assets 114,966 97,519
Total Assets $ 2,131,237 $1,666,858
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 49,365 $ 50,018
Current maturities of long-term debt 15,690 29,202
Accounts payable 190,184 146,654
Accrued liabilities 189,961 147,412
Income taxes 35,372 18,367
Dividends payable 11,328 11,221
Total Current Liabilities 491,900 402,874
Long-Term Liabilities
Long-term debt 645,096 353,666
Other long-term liabilities 100,676 35,510
Deferred income taxes 25,183 24,496
Shareholders' Equity
Common stock 284,639 26,383
Additional paid-in capital - 243,448
Retained earnings 569,869 559,968
Cumulative translation adjustment 15,084 24,255
Cost of treasury stock - (3,404)
Other (1,210) (338)
Total Shareholders' Equity 868,382 850,312
Total Liabilities and Shareholders' Equity $ 2,131,237 $1,666,858
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
Thomas & Betts Corporation
In thousands 1996 1995 1994
Cash Flows From Operating Activities
Earnings from continuing operations $ 59,868 $ 88,502 $ 28,087
Adjustments:
Depreciation and amortization 91,581 76,495 71,953
Provision for restructured operations 24,501 18,700 79,011
Accrued merger and other special charges 51,145 4,300 10,632
Deferred income taxes (26,728) 7,782 (38,400)
Changes in operating assets and
liabilities, net:
Receivables (63,147) (10,980) (29,505)
Inventories (29,159) (16,984) (17,129)
Accounts payable 22,386 (7,118) 43,028
Accrued liabilities (30,847) (26,977) 2,418
Income taxes payable 20,789 (5,681) 10,676
Cash from discontinued operations - - 7,606
Other 492 (5,615) 2,322
Net cash provided by operating activities 120,881 122,424 170,699
Cash Flows From Investing Activities
Purchases of and investments in businesses (256,390) (19,983) (84,084)
Purchases of property, plant and equipment (107,807) (131,442) (90,561)
Proceeds from sale of property, plant and
equipment 37,535 4,993 7,807
Marketable securities acquired (26,636) (50,925) (30,509)
Proceeds from matured marketable securities 51,387 49,500 19,292
Proceeds from sale of subsidiary, net of tax - - 144,700
Net investments in discontinued operations - - (7,781)
Other - 4,502 1,733
Net cash used in investing activities (301,911) (143,355) (39,403)
Cash Flows From Financing Activities
Increase (decrease) in borrowings with
original maturities less than 90 days (16,798) 46,938 (10,543)
Proceeds from long-term debt and other
borrowings 386,437 24,789 43,998
Repayment of long-term debt and other
borrowings (95,137) (31,658) (121,952)
Stock options exercised 12,812 10,194 8,916
Cash dividends paid (48,305) (47,138) (44,548)
Net cash provided by (used in)
financing activities 239,009 3,125 (124,129)
Effect of Exchange Rate Changes on Cash (6,779) 2,755 1,990
Net increase (decrease) in cash and cash
equivalents 51,200 (15,051) 9,157
Cash and cash equivalents - beginning of year 75,155 90,206 81,049
Cash and cash equivalents - end of year $ 126,355 $ 75,155 $ 90,206
Cash payments for interest $ 37,359 $ 32,176 $ 31,418
Cash payments for taxes $ 29,066 $ 36,699 $ 81,887
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Thomas & Betts Corporation
<TABLE>
Additional Cumulative
Common Stock Paid-In Retained Translation Treasury Stock
In thousands Shares Amount Capital Earnings Adjustment Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 2, 1994 49,960 $24,980 $181,048 $467,475 $12,884 (117) $(3,699)
Net earnings - - - 94,020 - - -
Dividends declared - - - (44,958) - - -
Stock options and incentive awards 467 234 11,245 - - 28 980
Business acquisition and investments 1,246 623 38,660 - - - -
Translation adjustments,
net of taxes of $915 - - - - 6,865 - -
Balance at January 1, 1995 51,673 25,837 230,953 516,537 19,749 (89) (2,719)
Immaterial poolings of interests 656 328 1,616 2,309 - - -
Net earnings - - - 88,502 - - -
Dividends declared - - - (47,380) - - -
Stock options and incentive awards 436 218 10,879 - - (18) (685)
Translation adjustments,
net of taxes of $719 - - - - 4,506 - -
Balance at December 31, 1995 52,765 26,383 243,448 559,968 24,255 (107) (3,404)
Reincorporation (107) 240,044 (243,448) - - 107 3,404
Net earnings - - - 59,868 - - -
Dividends declared - - - (48,412) - - -
Stock options and incentive awards 587 16,263 - - - - -
Business acquisitions and investments 58 1,949 - (39) - - -
Change in subsidiaries' year-end - - - (1,516) - - -
Translation adjustments,
net of taxes of $1,569 - - - - (9,171) - -
Balance at December 29, 1996 53,303 $284,639 $ - $569,869 $15,084 - $ -
</TABLE>
Preferred Stock: Authorized 500,000 shares, no par value. None issued
to date.
Common Stock: Authorized 80,000,000 shares, no par value.
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations
Thomas & Betts Corporation (the "Corporation" or "T&B") designs,
manufactures and markets, on a global basis, electronic and
electrical connectors and components as well as other related
products and accessories for construction, maintenance and
original equipment manufacturer ("OEM") markets. The Corporation
is a worldwide designer and manufacturer of a broad range of
electromechanical components and subsystems that provide
solutions for the automotive, communication and information
processing industries in North America, Europe and the Far East.
The Corporation is also one of the largest manufacturers in North
America 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 and of products and
components to the heating, mechanical and refrigeration markets
in North America and Europe.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the
Corporation and its wholly owned domestic and foreign
subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. The
Corporation uses the equity method of accounting for its
investments in 20 to 50-percent-owned companies.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Fiscal Year
The Corporation's fiscal year ends on the Sunday closest to the
end of the calendar year. Results for 1996, 1995 and 1994 are for
the 52 weeks ended December 29, 1996, December 31, 1995 and
January 1, 1995, respectively. In 1996, Augat changed the fiscal
year of its European and Far Eastern subsidiaries from November
30 to the Corporation's fiscal year-end to eliminate the one-
month reporting lag, resulting in a charge against retained
earnings of $1.5 million.
Financial Instruments and Concentrations of Credit Risk
The Corporation enters into forward foreign exchange contracts to
hedge foreign currency transaction exposures when deemed
appropriate for periods consistent with those committed
exposures. These financial instruments are with major financial
institutions and expose the Corporation to market and credit
risks and may at times be concentrated with certain
counterparties. The creditworthiness of counterparties is
subject to continuing review and full performance by these
counterparties is anticipated. Foreign exchange contracts
generally have maturities which do not exceed one year.
Currency hedging minimizes the impact of foreign exchange
rate movements on the Corporation's operating results as gains
and losses on contracts are offset by losses and gains on the
assets, liabilities and transactions being hedged. A high
correlation is maintained between the transactions and the hedges
to minimize currency risk. In most cases, both the exposed
transactions and the hedging contracts are marked to market
monthly with gains and losses included in earnings. Gains and
losses on certain contracts which hedge specific foreign currency
denominated commitments are deferred and recognized in the period
in which the transaction is completed.
As of December 29, 1996 and December 31, 1995, the
Corporation had outstanding contracts to sell $10.7 and $88.0
million, respectively, of principally Canadian and European
currencies for U.S. dollars and to buy the equivalent of $33.6
million at December 31, 1995 of European currencies, all maturing
within 180 days. Deferred contract gains and losses at December
29, 1996 and December 31, 1995 were not material.
Credit risk with respect to trade receivables is limited due
to the large number of customers comprising the Corporation's
customer base and their dispersion across many different
industries and geographic areas.
The Corporation will, on occasion, enter into interest rate
swaps to reduce the impact of changes in interest rates on
portions of its floating-rate debt. The rate differential 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
a double-A credit rating, which minimizes non-performance risk.
Receivables
Receivables are stated net of allowance for doubtful accounts and
cash discounts of $8.7 million at December 29, 1996 and $7.1
million at December 31, 1995.
Inventories
Inventories are stated at lower of cost or market. Cost is
determined using the last-in, first-out (LIFO) method for
approximately one-half of the Corporation's inventories (U.S. and
Europe, excluding Augat), and the first-in, first-out (FIFO)
method for the remainder of inventories, including Augat. The
LIFO value of inventories held at December 29, 1996 approximated
their current cost.
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 25 years
for land improvements, 5 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 (goodwill) acquired in business
combinations accounted for as purchases. These assets are being
amortized on a straight-line basis over various periods not
exceeding 40 years. Goodwill is reevaluated when business events
and circumstances indicate that the carrying amount may not be
recoverable. Reevaluation is based on projections of related
undiscounted future cash flows. As of December 29, 1996 and
December 31, 1995, accumulated amortization of intangible assets
was $71.6 and $56.7 million, respectively.
Income Taxes
The Corporation uses 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 and provides a valuation
allowance based on a "more-likely-than-not" standard.
Undistributed earnings of foreign subsidiaries held for
reinvestment in overseas operations amounted to $93.8 million at
December 29, 1996. Additional U.S. income taxes may be due upon
remittance of those earnings (net of foreign tax credits
resulting from the distribution), but it is impractical to
determine the amount of any such additional taxes.
Shareholders' Equity
In February 1996, the Board of Directors approved a two-for-one
stock split, which has been retroactively reflected in the
accompanying consolidated financial statements for all periods
presented. Also in February 1996, the Board of Directors
approved an amendment to the Certificate of Incorporation to
increase the authorized shares of common stock from 40 million to
80 million shares.
In May 1996, the Corporation's state of incorporation was
changed from New Jersey to Tennessee. The reincorporation
resulted in each outstanding share of the Corporation's common
stock, par value of $0.50, being converted into one share of
common stock, no par value. Tennessee law requires shares
repurchased by a corporation to be returned to the status of
authorized but unissued shares and, accordingly, the shares of
common stock previously held in treasury were canceled. There
was no change in total shareholders' equity as a result of the
elimination of par value and treasury stock.
Shareholders' equity included $0.8 million at both December
29, 1996 and December 31, 1995 and $0.9 million at January 1,
1995, related to unrealized gains on marketable securities;
reductions to equity of $2.0, $0.5 and $0.7 million at December
29, 1996, December 31, 1995 and January 1, 1995, respectively,
related to non-vested restricted stock awards; and a reduction to
equity of $0.6 million at December 31, 1995 related to a minimum
pension liability adjustment. Compensation expense related to
the restricted stock awards is recognized over the vesting
period.
Earnings per Share
Earnings per share are computed by dividing net earnings by the
weighted average number of 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.
Reclassification
In 1996, outbound freight expense was classified as a reduction
of sales to conform the Corporation's presentation method to one
that is more prevalent in its industry. Corresponding prior
years' amounts previously classified as marketing, general and
administrative expenses were reclassified to conform to this
method of presentation.
3. Mergers, Acquisitions and Divestitures
Augat Inc.
On December 11, 1996, Augat Inc. was merged with a subsidiary of
the Corporation. All of the outstanding common stock of Augat
was exchanged for 12,827,600 shares of the Corporation's common
stock. In addition, options to acquire Augat common stock were
converted to options to acquire 791,400 shares of the
Corporation's common stock. Augat is a worldwide manufacturer of
electronic connectors and devices used in markets such as
telecommunications, automotive, information processing and cable
television.
The merger was accounted for as a pooling of interests and
the Corporation's financial statements have been restated to
include the results of Augat for all periods presented, except
for dividends per share which reflect the Corporation's
historical per share amount.
Combined and separate results of T&B and Augat during the
periods preceding the merger were as follows:
In millions T&B Augat Combined
Nine months ended September 29, 1996 (unaudited)
Net sales $1,042.3 $441.3 $1,483.6
Net earnings $ 68.7 $ 22.0 $ 90.7
Fiscal year ended December 31, 1995
Net sales $1,198.5 $534.9 $1,733.4
Net earnings $ 80.9 $ 7.6 $ 88.5
Fiscal year ended January 1, 1995
Net sales $1,042.9 $530.7 $1,573.6
Earnings from continuing
operations $ 1.9 $ 26.2 $ 28.1
Net earnings $ 67.8 $ 26.2 $ 94.0
In the fourth quarter of 1996, the Corporation recorded
special charges totaling $97.1 million. The charges provided for
merger expenses, including legal and financial advisory fees and
change-of-control payments; restructuring expenses related to
both the Corporation's existing operations and the operations of
Augat (see also Note 4); adjustments to accounting estimates of
Augat's liabilities, primarily environmental, litigation,
warranty and employee benefit accruals, and provisions for
inventory obsolescence; the cost of index put options purchased
and held through the merger's stock pricing period; and other
generally one-time expenses, including certain termination
benefits related to the Corporation's executive retirement plan
and previously idled facility charges. The charges were recorded
in the statement of earnings as follows: net sales, $2.4 million;
cost of sales, $13.8 million; marketing, general and
administrative, $19.7 million; merger expense, $30.6 million;
provision for restructured operations, $24.5 million; and other
expense, $6.1 million.
Amerace
On January 2, 1996 the Corporation acquired all the outstanding
stock of Amerace Corporation for $212.5 million in cash
(originally $220.6 million, subsequently reduced through post-
closing adjustments). Amerace is a manufacturer of electrical
products for utility and industrial markets. Its most
significant products are underground power and distribution
connectors sold under the Elastimold brand name. This
acquisition was accounted for using the purchase method. The
aggregate purchase price was allocated to the acquired assets of
Amerace based on their respective fair values with the excess of
approximately $150 million allocated to goodwill. The goodwill
is being amortized on a straight-line basis over 40 years.
Results of operations of Amerace after the acquisition date
are included in the Consolidated Statement of Earnings. If the
acquisition and its financing had occurred on January 2, 1995,
management estimates that on an unaudited pro forma basis, net
sales, net earnings and net earnings per share would have been
$1,890.4 million, $93.9 million and $1.79 per share,
respectively, for the year ended December 31, 1995. These pro
forma results have been prepared for comparative purposes only
and are not necessarily indicative of the combined results of
operations that would have resulted had the acquisition taken
place on January 2, 1995, nor are they necessarily indicative of
results of operations for any future period. On May 14, 1996 the
Corporation sold most of the assets of the Hendrix Wire and Cable
business of Amerace Corporation. No gain or loss was incurred as
a result of this sale.
Other
The Corporation completed six acquisitions during 1996 in
addition to Augat and Amerace for a total of approximately $46.0
million consisting of cash and 57,714 shares of the Corporation's
common stock. These acquisitions were: in January, certain
assets of Bowers Manufacturing Corporation, manufacturer of
metallic and non-metallic electrical outlet boxes and surface
raceway systems; in March, Porta Systems Corporation, a fiber
optics business; in June, the Pilgrim Group of companies, a
Canadian manufacturer of cable tray wiring systems; in June,
International Energy Saver, manufacturer of evaporative cooling
and heat recovery systems; in November, Reznor Europe, a group of
companies that manufacture high-quality heating systems; and in
November, the assets of Microlectric Canada Ltd., manufacturer of
electronic meter boxes and accessories. All were accounted for
using the purchase method of accounting, and represented
approximately $37.0 million of sales reported by the Corporation
in 1996. The excess of the purchase price over the fair value of
the acquired assets in the above acquisitions was approximately
$26.0 million recorded as goodwill.
In 1995 the Corporation completed five acquisitions for
approximately $48.0 million consisting of cash and 657,810 shares
of the Corporation's common stock. These acquisitions were: in
February, certain assets of the Anchor Electric meter center
business; in May, Photon Systems Corp., a designer and
manufacturer of systems that enable telecommunication and cable
companies to distribute signals over fiber optic networks; in
June, Elastomeric Technologies Inc., a manufacturer of customized
interconnection technology used in communications and portable
electronics; in July, E. K. Campbell Company, a custom industrial
heating and cooling equipment manufacturer; and in October,
Catamount Manufacturing, Inc., a manufacturer of cable ties, wire
connectors and related electrical products. The Anchor Electric,
Photon Systems and Elastomeric acquisitions were accounted for
using the purchase method of accounting and the E. K. Campbell
and Catamount acquisitions were accounted for as immaterial
poolings of interests without restating prior-years' results.
Businesses acquired in 1995 represented approximately $39.0
million of sales reported by the Corporation in 1995.
In 1994 the Corporation completed four acquisitions for
approximately $73.0 million consisting of cash and 447,432 shares
of common stock. All of these acquisitions were accounted for
using the purchase method of accounting and represented
approximately $54.0 million of sales reported by the Corporation
in 1994. Three were purchases from Eaton Corporation involving
primarily inventories and equipment: in January, certain circuit
protection products; in August, Commander Electrical Products,
Inc., a Canadian metal outlet box and fittings business; and in
November, a U.S. non-metallic electrical outlet box business.
Separately, in February, the Corporation purchased certain assets
from Anford, Inc., a Canadian manufacturer of cable tray.
On July 18, 1994, the Corporation sold its multi-layer
ceramic chip capacitor subsidiary, Vitramon, Incorporated, for
$184.0 million in cash ($144.7 million after tax payments) and
realized a $58.6 million gain after tax.
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
approximately $51.0 million consisting of cash and common stock.
4. Restructuring
During the fourth quarter of 1996, the Corporation recorded a
restructuring charge of $24.5 million relating to the integration
of Augat and initiatives affecting Augat's and other of the
Corporation's operations. Restructuring initiatives include the
closure of Augat's corporate headquarters facility in Mansfield,
Massachusetts and redundant non-U.S. administrative facilities as
well as the rationalization of the combined sales force and
manufacturing operations. Capital expenditures for restructure-
related projects are estimated to be $28.0 million. All
restructuring actions are expected to be completed by the first
quarter of 1998. This charge included a $17.9 million provision
for cash expenditures, primarily for severance benefits and
employee termination costs, and $6.6 million for non-cash losses
due to the disposal of property and equipment associated with the
closing of facilities.
In the fourth quarter of 1995, Augat recorded a
restructuring charge of $18.7 million. This charge included $9.3
million for redundant or excess facilities and equipment being
closed or abandoned, $3.9 million for inventory in low-margin
product lines to be discontinued and $5.5 million for employee
severance and benefit costs. Through December 29, 1996 Augat
used $9.1 million for costs related to those redundant facilities
and equipment, $3.9 million for inventory write-downs in those
product lines and $5.0 million for related employee severance
benefits. Remaining reserves of $0.7 million, primarily for
ongoing employee severance costs, are believed to be adequate for
the purposes for which they were established.
In the third quarter of 1994, the Corporation recorded a
$79.0 million restructuring charge. This charge included $38.8
million for cash severance benefits, employee termination costs
and ongoing carrying and environmental remediation costs at
facilities to be closed and $40.2 million to cover non-cash
losses associated with the closing of plant facilities and
disposal of equipment and inventory related to products to be
discontinued. At December 29, 1996 the restructuring program was
essentially complete. The remaining reserve of $4.1 million is
primarily for environmental remediation at idled facilities over
the next two years. This reserve is believed adequate for the
purpose for which it was established.
5. Income Taxes
The components of earnings from continuing operations before
income taxes were as follows:
In thousands 1996 1995 1994
Domestic $45,330 $ 83,875 $27,154
Foreign 45,548 45,055 13,040
Total $90,878 $128,930 $40,194
The components of income tax expense on continuing operations
were as follows:
In thousands 1996 1995 1994
Current
Federal $ 33,923 $14,250 $37,471
Foreign 17,112 15,023 7,332
State and local 4,982 2,263 3,884
Total current 56,017 31,536 48,687
Deferred
Domestic (23,682) 7,333 (36,685)
Foreign ( 1,325) 1,559 105
Total deferred (25,007) 8,892 (36,580)
Income taxes $31,010 $40,428 $12,107
The reconciliation between the Federal statutory tax rate and the
Corporation's effective tax rate on earnings from continuing
operations was as follows:
1996 1995 1994
Federal statutory tax rate 35.0% 35.0% 35.0%
Increase(reduction)resulting from:
State tax - net of Federal tax
benefit 2.3 1.3 6.9
Partially tax-exempt income (9.4) (4.8) (16.1)
Goodwill 4.5 2.4 7.5
Merger expenses 5.6 - -
Change in valuation allowance (5.0) (1.4) 0.3
Other 1.1 ( 1.1) ( 3.5)
Effective tax rate 34.1% 31.4% 30.1%
The components of the Corporation's net deferred tax asset
were:
December 29, December 31,
In thousands 1996 1995
Deferred tax assets
Special-charge-related reserves $33,773 $12,202
Accrued employee benefits 10,333 12,567
Other accruals 24,197 20,963
Asset reserves 10,289 9,148
Foreign tax credit and loss
carryforwards 11,087 13,634
Other 11,206 8,444
Valuation allowance (10,825) (15,367)
Net deferred tax assets 90,060 61,591
Deferred tax liabilities
Property, plant and equipment (42,044) (35,152)
Pension benefits 7,470 (2,036)
Unremitted earnings of foreign
subsidiaries - ( 3,522)
Other (18,548) (14,410)
Total deferred tax liabilities (53,122) (55,120)
Net deferred tax asset $36,938 $6,471
The valuation allowance for deferred tax assets was
decreased by $4.5 million in 1996 due to utilization of foreign
net operating loss and foreign tax credit carryforwards. The
remaining valuation allowance at December 29, 1996 related to
foreign net operating loss carryforwards.
6. Fair Value of Financial Instruments
The Corporation's financial instruments include cash and cash
equivalents, marketable securities, short-term borrowings, long-
term debt, interest rate swaps and foreign currency contracts.
The carrying amounts of these financial instruments generally
approximated their fair values at December 29, 1996 and December
31, 1995 except that, based on the borrowing rates currently
available to the Corporation, management believes the fair value
of long-term debt was approximately $664.9 and $396.2 million at
December 29, 1996 and December 31, 1995, respectively.
The cost basis and fair market value of marketable securities
at December 29, 1996 and December 31,1995 were:
Amortized Gross Gross Fair
Cost Unrealized Unrealized Market
In thousands Basis Gains Losses Value
December 29, 1996
Mortgage-backed $33,477 $1,442 $(583) $34,336
Equity and other 1,074 530 - 1,604
Total $34,551 $1,972 $(583) $35,940
December 31, 1995
Mortgage-backed $44,716 $1,236 $(409) $45,543
Equity and other 14,586 509 - 15,095
Total $59,302 $1,745 $(409) $60,638
There were no sales of available-for-sale securities during
the year. The mortgage-backed securities held at December 29,
1996 have expected maturities ranging from one to eleven years.
7. Long-Term Debt
The Corporation's long-term debt at December 29, 1996 and
December 31, 1995 was as follows:
December 29, December 31,
In thousands 1996 1995
Revolving credit facility with
a weighted average interest
rate at December 29, 1996 of 5.83% $205,000 $ 92,500
Notes payable with a weighted
average interest rate at
December 29, 1996 of 7.40% due
through 2006 353,821 175,483
Other bank borrowings with a
weighted average interest rate at
December 29, 1996 of 5.59% 44,419 48,400
Non-U.S. borrowings with a
weighted average interest rate of
2.87% at December 29, 1996, due
through 2002 25,094 30,897
Industrial revenue bonds with a
weighted average interest rate at
December 29, 1996 of 3.95%, due
from 1997-2013 23,900 28,800
Other (primarily capital leases) 8,552 6,788
660,786 382,868
Less current portion 15,690 29,202
Long-term debt $645,096 $ 353,666
The Corporation holds one interest rate swap whereupon it
receives interest on a $25.0 million notional amount at the one-
month LIBOR rate in exchange for its payment at 7.09% through
April 1997.
Principal payments on long-term debt including capital
leases in each of the five years subsequent to December 29, 1996
are $15.7, $16.2, $10.2, $257.1 and $47.2 million, respectively.
The Corporation has a $500 million revolving credit facility
with a group of banks which makes funds available through March
29, 2000. The Corporation has the option, at the time of drawing
funds under this 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 that are based
on certain financial ratios. Dividends are permitted to continue
at the current rate per share and may be increased, provided the
annual payout does not exceed 50 percent of net earnings.
In January 1996, the Corporation completed the sale of
$150.0 million of 10-year 6-1/2% senior notes. The net proceeds
from this sale were used to reduce borrowings under the
Corporation's revolving credit facility incurred to finance the
acquisition of Amerace.
In the normal course of its business activities, the
Corporation is required under certain contracts to provide
letters of credit which may be drawn down in the event the
Corporation fails to perform under the contracts. Outstanding
letters of credit amounted to $52.6 million at December 29, 1996.
8. Stock Option and Incentive Plans
The Corporation has stock option plans that provide for the
purchase of the Corporation's common stock by its key employees.
Following is a summary of the option transactions for the
years 1994, 1995 and 1996:
Average
Per Share
Shares Option Price
Balance at January 2, 1994 1,934,067 $25.48
Granted 927,288 31.23
Exercised (396,723) 22.41
Terminated (145,116) 29.28
Balance at January 1, 1995 2,319,516 28.07
Granted 660,128 27.08
Exercised (380,210) 23.26
Terminated (189,310) 29.66
Balance at December 31, 1995 2,410,124 28.45
Granted 375,063 37.36
Exercised (502,420) 23.90
Terminated (116,535) 31.85
Balance at December 29, 1996 2,166,232 $30.71
Exercisable at January 1, 1995 1,111,250 $27.50
Exercisable at December 31, 1995 1,111,612 $27.48
Exercisable at December 29, 1996 1,536,214 $28.95
Following is a summary of the options outstanding at
December 29, 1996:
<TABLE>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
Range Weighted-Average
of Number Remaining Weighted-Average Number Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
<C> <C> <C> <C> <C> <C> <C>
$18.49 - $27.93 699,098 2.9 years $24.95 670,914 $24.91
$28.19 - $32.03 543,705 5.5 $30.64 465,351 $30.48
$32.38 - $37.37 637,920 7.1 $33.52 399,949 $33.96
$38.59 - $44.32 285,509 9.1 $38.67 - -
$18.49 - $44.32 2,166,232 5.6 $30.71 1,536,214 $28.95
</TABLE>
The 1993 Management Stock Ownership 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 not less than the fair market value on the
date of grant with a term not to exceed ten years. The plan also
provides for the issuance of restricted stock awards 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.
Restricted shares plus cash payments for federal and state taxes
awarded under this plan were 63,844 shares plus $0.5 million
awarded in 1996, 41,748 shares plus $0.6 million awarded in 1995,
and 56,332 shares plus $0.9 million awarded in 1994.
At December 29, 1996 a total of 2,874,646 shares was
reserved for issuance under stock options or restricted stock
awards already granted or available for future grant.
The Corporation has a Restricted Stock Plan for Nonemployee
Directors under which each director receives 200 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 2,162 in 1996, 1,850 in 1995, and
1,600 in 1994.
The outstanding restricted stock of Augat was converted into
equivalent shares of the Corporation's common stock and became
fully vested upon change of control of Augat. Equivalent shares
issued were 9,216 for 1996, 8,898 for 1995 and 20,975 for 1994.
The Corporation continues to account for its stock-based
employee compensation plans in accordance with Accounting
Principals Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly, no compensation cost has been
recognized for fixed stock option plans. In accordance with
Financial Accounting Standard No. 123, "Accounting for Stock-
Based Compensation," a valuation using the fair-value-based
accounting method has been made for stock options issued in 1996
and 1995. This valuation was performed using the Black-Scholes
option-pricing model.
The Corporation's ten-year term options were valued assuming
risk-free interest rates of 5.25% and 7.5% on their respective
issuance dates in 1996 and 1995, a dividend yield of 2.5%, an
average expected option life of 5 years and volatility of 20% for
both years. The valuation determined a per-share weighted-
average fair value for ten-year options granted during 1996 and
1995 of $8.03 and $8.20, respectively. Had these options been
accounted for using the fair-value method, it would have resulted
in additional compensation cost of $1.1 and $0.6 million after
tax for 1996 and 1995, respectively. Because the fair-value
method amortizes the estimated value of these options over their
three-year vesting period, the full pro forma effect of this
method will not be evident until 1997.
The Corporation also has five-year term options outstanding
that were issued in exchange for outstanding options of Augat.
These options were valued using an assumed risk-free interest
rate of 5.4% on their original issuance date in 1995, a dividend
yield of 2.5%, an average expected option life of 2.5 years and
volatility of 20%. The value of five-year options issued in 1996
was not significant. The valuation resulted in a per share
weighted-average fair value for these five-year options of
$11.91. Under the fair-value method, the entire value of these
options would have been recorded as additional compensation cost
of $3.2 million after tax in 1996 due to accelerated vesting of
these options upon change of control of Augat.
Had the Corporation adopted the fair-value-based accounting
method for stock options effective January 2, 1995, net earnings
would have been $55.6 million or $1.05 per share in 1996 and
$87.9 million or $1.67 per share in 1995.
9. Postretirement Benefits
Pension Plans
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 1996, 1995 and 1994 for the
Corporation's defined benefit pension plans included the
following components:
In thousands 1996 1995 1994
Service cost--benefits earned during
the period $ 7,773 $ 6,344 $ 6,813
Interest cost on projected benefit
obligation 13,110 11,670 10,879
Actual return on assets (22,848) (18,308) (3,353)
Net amortization and deferral 6,136 4,087 (10,761)
Net periodic pension cost $ 4,171 $ 3,793 $ 3,578
Assumptions used in developing the net periodic pension cost
were:
U.S. Plans Non-U.S.Plans
1996 1995 1994 1996 1995 1994
Discount rate 7.5% 7.9% 7.6% 7.2% 7.4% 7.6%
Rate of increase in
compensation level 4.5% 5.5% 5.0% 4.8% 5.0% 5.1%
Expected long-term rate of
return on plan assets 9.0% 8.5% 8.5% 8.6% 8.5% 8.6%
Rates are weighted averages.
The following table sets forth the funded status of the
Corporation's defined benefit plans and amounts recognized in the
Corporation's balance sheet:
December 29, December 31,
1996 1995
Actuarial present value of projected
benefits based on employment
service to date and present pay
levels:
Vested employees $ 162,557 $ 145,752
Non-vested employees 5,372 5,749
Accumulated benefit obligation 167,929 151,501
Additional amounts related to
projected pay increases 12,061 16,395
Projected benefit obligation 179,990 167,896
Plan assets at fair value 192,849 162,645
Plan assets in excess of (less than)
projected benefit obligation 12,859 (5,251)
Unrecognized transition assets (6,407) (7,825)
Unrecognized net (gain) loss (11,461) 9,891
Unrecognized prior service cost 2,338 1,784
Accrued pension cost $ (2,671) $ (1,401)
The present value of projected benefits for U.S. plans
recorded at December 29, 1996 and December 31, 1995 was
determined using discount rates of 7.75% and 7.5%, respectively,
and an assumed rate of increase in compensation of 4.5% for both
years.
Certain of the Corporation's non-U.S. defined contribution
pension plans are principally funded through insurance programs.
Pension expense related to non-U.S. plans in 1996, 1995 and 1994
was $1.5, $0.9 and $0.7 million, respectively.
The Corporation maintains a non-qualified supplemental
pension plan covering certain key executives, which provides for
benefit payments that exceed the limit imposed by income tax
regulations, and a retirement plan for nonemployee directors,
which provides benefits to those board members based on
compensation and years of service. The projected benefit
obligation relating to these unfunded plans was $18.5 million at
December 29, 1996 and $13.3 million at December 31, 1995.
Pension expense for these plans was $10.7 million in 1996 and
$2.4 million in each of 1995 and 1994. The 1996 pension expense
includes $7.9 million for early retirement of certain executives.
Other Postretirement Benefit Plans
The Corporation also sponsors defined-contribution 401(k) savings
plans for its non-union U.S. employees for which the
Corporation's contributions are based on a percentage of employee
contributions. The cost of these plans for continuing operations
was $4.5, $3.5 and $3.1 million in 1996, 1995 and 1994,
respectively.
The Corporation provides certain health care and life
insurance benefits to certain 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 estimated lives of the individuals covered.
The Corporation is not funding this liability. There have been
essentially no new entrants to these benefit plans since 1993.
The net periodic cost for postretirement health care and
life insurance benefits in 1996 and 1995 included the following
components:
In thousands 1996 1995
Service cost--benefits earned during the period $ 89 $ 108
Interest cost on accumulated benefit 2,430 1,377
Net amortization 829 590
Net cost $ 3,348 $ 2,075
The following table shows the Corporation's accumulated
postretirement benefit obligations and the amounts recognized on
the balance sheet at December 29, 1996 and December 31, 1995:
In thousands 1996 1995
Retirees $ 30,332 $ 16,451
Fully eligible active participants 624 424
Other active participants 1,775 1,585
Total accumulated postretirement
benefit obligation 32,731 18,460
Unrecognized transition liability (15,927) (16,936)
Unrecognized net gain 4,643 1,231
Unrecognized prior service cost (162) (203)
Accrued postretirement benefit costs $ 21,285 $ 2,552
The increase in accrued postretirement benefit costs from
1995 to 1996 reflects the inclusion of the Amerace plan in 1996.
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.5% in 1996
and 7.25% in 1995. An increase in the cost of covered health
care benefits of 9.5% was assumed for 1997, graded down annually
to 5.5% for 2004 and future years. A 1% increase in the health
care cost trend rate would increase the accumulated
postretirement benefit obligation by $1.7 million at December 29,
1996 and the net periodic cost by $0.1 million for the year then
ended.
10. Commitments
The Corporation and its subsidiaries are parties to various
leases relating to plants, distribution facilities, office
facilities, automobiles and other equipment, principally data
processing. All leases expire prior to the year 2023. Related
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. Capitalized leases are not
material.
Future minimum payments under noncancelable operating leases
consisted of the following at December 29, 1996:
Future Minimum
In thousands Payments
1997 $25,903
1998 11,678
1999 10,230
2000 8,150
2001 6,153
Thereafter 19,450
Total minimum operating lease payments $81,564
Rent expense for operating leases of continuing operations
was $34.2, $32.3 and $29.3 million in 1996, 1995 and 1994, respectively.
11. Other Financial Data
Other expense - net consisted of the following:
In thousands 1996 1995 1994
Investment income $ 8,716 $ 7,197 $ 6,546
Interest expense (48,689) (31,775) (31,064)
Index put options (5,452) - -
Income from equity investees 7,920 2,149 1,863
Foreign currency losses (2,065) (100) (1,634)
Foreign exchange contract
gains(losses) 1,077 (658) (1,298)
Other (1,008) (1,830) (2,625)
Other expense - net $(39,501) $(25,017) $(28,212)
Interest rate swaps increased interest expense by $0.1
million in 1996 and $2.4 million in 1994, while reducing interest
expense by $0.2 million in 1995.
The Corporation expenses the cost of advertising as it is
incurred. Total advertising expense was $18.0 million in 1996,
$17.3 million in 1995 and $16.7 million in 1994.
Accrued liabilities include salaries, fringe benefits and
other compensation amounting to $31.1 and $41.0 million in 1996
and 1995, respectively.
Inventories consisted of the following:
December 29, December 31,
In thousands 1996 1995
Finished goods $153,067 $138,187
Work in process 64,979 60,484
Raw materials 145,260 106,318
Total inventories $363,306 $304,989
12. Business Segments
The Corporation operates in three business segments: Electrical
Construction and Maintenance Components ("Electrical"),
Electronic/OEM Components ("Electronic"), and Other Products and
Components ("Other"). Net sales are comprised of 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.
In thousands 1996 1995 1994
Net Sales
Electrical $ 627,276 $ 579,996 $ 493,667
Electronic 920,742 832,701 786,285
Other 437,127 320,671 293,650
Total $1,985,145 $1,733,368 $1,573,602
Earnings from Operations(a)
Electrical $ 100,456 $ 92,064 $ 29,862
Electronic 37,061 68,309 57,653
Other 50,752 34,211 24,813
General Corporate (57,890) (40,637) (43,922)
Total $ 130,379 $ 153,947 $ 68,406
Identifiable Assets
Electrical $ 517,961 $ 491,166 $ 465,919
Electronic 747,882 628,013 554,600
Other 570,482 326,128 319,969
General Corporate 294,912 221,551 225,682
Total $2,131,237 $1,666,858 $1,566,170
Capital Expenditures
Electrical $ 30,273 $ 53,318 $ 28,508
Electronic 61,520 61,599 48,190
Other 13,265 14,285 10,025
General Corporate 2,749 2,240 3,838
Discontinued Operations - - 7,797
Total $ 107,807 $ 131,442 $ 98,358
Depreciation and Amortization
Electrical $ 27,240 $ 24,480 $ 22,010
Electronic 41,541 37,182 35,463
Other 20,350 11,937 12,459
General Corporate 2,450 2,896 2,021
Discontinued Operations - - 4,726
Total $ 91,581 $ 76,495 $ 76,679
(a) 1996 included special charges of $1.5 million in Electrical,
$67.1 million in Electronic, $3.5 million in Other and $18.9
million in General Corporate. 1995 included special charges
of $23.0 million in Electronic. 1994 included special
charges of $54.0 million in Electrical, $23.1 million in
Electronic, $4.3 million in Other and $8.2 million in General
Corporate. See Notes 3 and 4.
13. Financial Information Relating to Operations in Different
Geographic Areas
The Corporation's operations are conducted in three principal
areas: U.S., Europe and Other (primarily Canada, Mexico and the
Far East) locations. Transfers between geographic areas were
priced on a basis that yields an appropriate rate of return based
on assets employed, risk and other factors. General corporate
expenses have not been allocated to geographic areas. General
corporate assets not allocated to geographic areas are
principally cash and investments.
In thousands 1996 1995 1994
Sales to Unaffiliated
Customers
U.S. $1,504,210 $1,306,458 $1,229,610
Europe 201,853 202,153 165,102
Other 279,082 224,757 178,890
Total $1,985,145 $1,733,368 $1,573,602
Sales or Transfers Between
Geographic Areas
U.S. $ 101,272 $ 87,425 $ 69,562
Europe 12,787 15,432 9,271
Other 49,452 32,198 22,917
Total $ 163,511 $ 135,055 $ 101,750
Earnings Before Income
Taxes(a)
U.S. $ 125,517 $ 131,209 $ 88,469
Europe 23,052 27,658 2,389
Other 39,700 35,717 21,470
General Corporate (57,890) (40,637) (43,922)
Earnings from
operations 130,379 153,947 68,406
Other expense - net (39,501) (25,017) (28,212)
Total $ 90,878 $ 128,930 $ 40,194
Identifiable Assets
U.S. $1,397,562 $1,088,188 $1,019,987
Europe 209,066 160,732 144,404
Other 230,963 200,980 181,791
General Corporate 294,912 221,551 225,682
Adjustments and
eliminations (1,266) (4,593) (5,694)
Total $2,131,237 $1,666,858 $1,566,170
(a) 1996 included charges of $61.9 million in U.S., $6.7 million
in Europe, $3.5 million in Other, $18.9 million in General
Corporate and $6.1 million in Other expense. 1995 included
charges of $19.9 million in U.S., $1.0 million in Europe and
$2.1 million in Other. 1994 included charges of $67.1
million in U.S., $12.2 million in Europe, $2.2 million in
Other and $8.1 million in General Corporate. See Notes 3 and 4.
COMPANY REPORT ON FINANCIAL STATEMENTS
To the Shareholders of Thomas & Betts Corporation:
The accompanying financial statements, as well as all financial
data in this annual report, have been prepared by the Corporation
in accordance with generally accepted accounting principles
consistently applied. As such, they include certain amounts that
are based on the Corporation's estimates and judgments. The
Corporation has systems of internal control that are designed to
provide reasonable assurance that the financial records are
reliable for preparing financial statements and maintaining
accountability for assets, and that assets are safeguarded
against loss from unauthorized use or disposition. These systems
are augmented by the positive attitude of management in
maintaining a sound control environment, communication of
established written policies and procedures, the maintenance of a
qualified internal auditing group, the selection and training of
qualified personnel and an organizational structure that provides
appropriate delegation of authority, segregation of duties and
regular review of financial performance by management. In
addition to the systems of internal control, additional
safeguards are provided by the independent auditors and the Audit
Committee of the Board of Directors. The independent auditors,
whose report is set forth opposite, perform an objective,
independent audit of the Corporation's financial statements taken
as a whole. The Audit Committee, composed entirely of outside
directors, meets periodically with the independent auditors,
director of internal auditing and members of management to review
matters relating to the quality of financial reporting and
internal accounting control and the nature, extent and results of
audit efforts.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Thomas & Betts
Corporation: We have audited the consolidated balance sheets of
Thomas & Betts Corporation and subsidiaries as of December 29,
1996 and December 31, 1995, and the related consolidated
statements of earnings, cash flows, and shareholders' equity for
each of the years in the three-year period ended December 29,
1996. These consolidated financial statements are the
responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the
financial statements of Augat Inc., a wholly owned subsidiary,
which statements reflect total assets constituting 20 percent and
24 percent as of December 29, 1996, and December 31, 1995,
respectively, and total revenues constituting 29 percent, 31
percent and 34 percent for each of the years in the three-year
period ended December 29, 1996, respectively, of the related
consolidated totals. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for Augat Inc., is
based solely on the report of the other auditors.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the
other auditors, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Thomas & Betts Corporation and subsidiaries at
December 29, 1996 and December 31, 1995 and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 29, 1996, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Memphis, Tennessee
February 6, 1997
<TABLE>
QUARTERLY REVIEW
Thomas & Betts Corporation
In thousands
(except per share data) 1996 1995 1994
<S> <C> <C> <C>
First Quarter
Net sales $ 486,733 $ 435,062 $ 368,411
Gross profit 143,298 125,050 103,701
Earnings from continuing operations 26,080 22,788 15,964
Net earnings 26,080 22,788 19,577
Earnings per share - continuing operations .49 .44 .32
Earnings per share .49 .44 .39
Cash dividends declared per share .28 .28 .28
Market price range $39 1/2 - 35 15/16 $34 3/8 - 32 3/8 $34 - 29 1/8
Second Quarter
Net sales $ 499,780 $ 428,707 $ 388,106
Gross profit 151,276 130,061 114,027
Earnings from continuing operations 30,965 26,419 19,722
Net earnings 30,965 26,419 23,050
Earnings per share - continuing operations .58 .50 .39
Earnings per share .58 .50 .46
Cash dividends declared per share .28 .28 .28
Market price range $40 1/4 - 37 $34 1/4 - 31 3/8 $33 - 30 5/8
Third Quarter (a)
Net sales $ 497,046 $ 430,165 $ 396,874
Gross profit 150,894 126,954 114,916
Earnings (loss) from continuing operations 33,622 25,473 (34,315)
Net earnings 33,622 25,473 24,677
Earnings (loss) per share - continuing operations .63 .49 (.68)
Earnings per share .63 .49 .48
Cash dividends declared per share .28 .28 .28
Market price range $39 1/2 - 34 3/4 $35 1/8 - 32 1/4 $34 1/8 - 30 1/2
Fourth Quarter (b) (c)
Net sales $ 501,586 $439,434 $ 420,211
Gross profit 141,646 129,840 122,734
Earnings (loss) from continuing operations (30,799) 13,822 26,716
Net earnings (loss) (30,799) 13,822 26,716
Earnings (loss) per share - continuing operations (.57) .26 .52
Earnings (loss) per share (.57) .26 .52
Cash dividends declared per share .28 .28 .28
Market price range $45 7/8 - 37 7/8 $37 5/8 - 31 1/4 $35 5/8 - 32 5/8
</TABLE>
Restated to include the results of Augat Inc., acquired December 11, 1996
and accounted for as a pooling of interests.
Includes the results of Amerace Corporation from January 2, 1996.
Per share amounts are based on average shares outstanding in each quarter.
(a) 1994 includes a pretax gain of $99.1 million from the sale of
Vitramon, Inc. (discontinued operation), a pretax charge of
$79.0 million for restructuring, and a pretax operating write-down
of $10.6 million for previously vacated facilities.
(b) 1995 includes special charges of $23.0 million pretax ($0.29 per
share).
(c) 1996 includes special charges of $97.1 million pretax ($1.23 per
share) as detailed in Note 3.
<TABLE>
SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA
Thomas & Betts Corporation
Dollars and shares in thousands
(except per share data) 1996 (a) 1995 (b) 1994 (c) 1993 1992 1991
Operational Data
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,985,145 $1,733,368 $1,573,602 $1,349,446 $1,273,080 $ 739,013
Costs and expenses
Cost of sales 1,398,031 1,221,463 1,118,224 945,102 880,326 483,527
Marketing, general and administrative 339,124 283,861 255,073 239,231 227,027 160,355
Research and development 47,229 44,083 40,543 37,176 36,346 28,540
Amortization of intangibles 15,323 11,314 12,345 13,072 14,760 4,687
Merger expense 30,558 - - - - -
Provision for restructured operations 24,501 18,700 79,011 - 15,000 22,000
1,854,766 1,579,421 1,505,196 1,234,581 1,173,459 699,109
Earnings from operations 130,379 153,947 68,406 114,865 99,621 39,904
Other expense - net (39,501) (25,017) (28,212) (31,323) (36,883) (6,033)
Earnings from continuing operations
before income taxes 90,878 128,930 40,194 83,542 62,738 33,871
Income taxes 31,010 40,428 12,107 24,353 15,572 15,421
Earnings from continuing operations
before cumulative effect of change
in accounting for income taxes 59,868 88,502 28,087 59,189 47,166 18,450
Percent of sales 3.0% 5.1% 1.8% 4.4% 3.7% 2.5%
Earnings from discontinued operations
net of income taxes - - 7,350 11,322 10,343 7,938
Gain on sale of discontinued operations,
net of income taxes of $40,492 - - 58,583 - - -
Earnings before cumulative effect of
change in accounting for income taxes 59,868 88,502 94,020 70,511 57,509 26,388
Cumulative effect of change in accounting
for income taxes - - - 1,628 - -
Net earnings $ 59,868 $ 88,502 $ 94,020 $ 72,139 $ 57,509 $ 26,388
Net return on sales 3.0% 5.1% 6.0% 5.3% 4.5% 3.6%
Return on average shareholders' equity 7.0% 10.8% 12.8% 10.9% 9.7% 4.8%
Financial Position (at year end)
Current assets $ 957,051 $ 750,386 $ 732,453 $ 665,599 $ 621,104 $ 489,830
Current liabilities $ 491,900 $ 402,874 $ 353,987 $ 263,045 $ 249,426 $ 213,356
Working capital $ 465,951 $ 347,512 $ 378,466 $ 402,554 $ 371,678 $ 276,474
Current ratio 1.9 to 1 1.9 to 1 2.1 to 1 2.5 to 1 2.5 to 1 2.3 to 1
Property, plant and equipment - net $ 539,944 $ 472,833 $ 396,364 $ 396,003 $ 394,400 $ 315,195
Long-term debt $ 645,096 $ 353,666 $ 354,552 $ 439,299 $ 477,284 $ 118,506
Shareholders' equity $ 868,382 $ 850,312 $ 790,564 $ 682,443 $ 644,543 $ 540,027
Total assets $2,131,237 $1,666,858 $1,566,170 $1,451,042 $1,412,511 $ 892,901
Common Stock Data
Cash dividends declared $ 48,412 $ 47,380 $ 44,958 $ 42,220 $ 41,948 $ 44,973
Percent of net earnings 81% 54% 48% 59% 73% 170%
Per share
Earnings from continuing operations $ 1.13 $ 1.69 $ 0.55 $ 1.19 $ 0.96 $ 0.40
Net earnings $ 1.13 $ 1.69 $ 1.85 $ 1.45 $ 1.17 $ 0.58
Cash dividends declared $ 1.12 $ 1.12 $ 1.12 $ 1.12 $ 1.12 $ 1.11
Shareholders' equity $ 16.29 $ 16.15 $ 15.33 $ 13.69 $ 13.09 $ 11.78
Market price range $ 45 7/8 - $ 37 5/8 - $ 35 5/8 - $ 36 - $ 34 1/2 - $ 30 1/2 -
34 3/4 31 1/4 29 1/8 28 1/2 27 3/8 22 1/2
Other Data
Capital expenditures $ 107,807 $ 131,442 $ 98,358 $ 58,932 $ 61,929 $ 54,532
Depreciation $ 76,258 $ 65,181 $ 63,674 $ 60,592 $ 56,011 $ 46,501
Employees at year-end 14,700 12,600 11,800 12,300 11,500 8,800
Average shares outstanding 53,059 52,494 50,862 49,616 49,110 45,662
</TABLE>
Restated to include the results of Augat Inc., acquired December 11, 1996
and accounted for as a pooling of interests.
Includes the results of Amerace Corporation from January 2, 1996 and
American Electric from January 2, 1992.
(a) Includes special charges of $97.1 million pretax ($1.23 per share) as
detailed in Note 3.
(b) Includes special charges of $23.0 million pretax ($0.29 per share).
(c) Includes a pretax gain from the sale of Vitramon Inc. (discontinued
operation), of $99.1 million, a pretax charge of $79.0 million for
restructuring, and a pretax operating write-down of $10.6 million for
previously vacated facilities.
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
Place of
Name Incorporation
Augat Inc. Massachusetts
AUG-ISO Inc. New Jersey
Augat Communication Products Inc. Washington
Augat Realty Inc. Massachusetts
Augat Wiring Systems Inc. Alabama
LRC Electronics, Inc. New York
Reliable Electronic Finishing Company, Inc. Massachusetts
Elastomeric Technologies Inc. Pennsylvania
Augat AG Switzerland
Augat Components GmbH* Germany
Augat K.K. Japan
Augat Ltd. United Kingdom
Augat AB Sweden
Augat Manufacturing S.A. Switzerland
Augat Pte. Ltd. Singapore
Augat SRL Italy
Augat Canada Canada
Augat GmbH Germany
Augat International Ltd. U.S. Virgin Islands
Augat Pty. Ltd. Australia
Augat S.A. France
Augat S.A. de C.V. Mexico
Blackburn Electric Canada Inc. Canada
E.K. Campbell Company Missouri
Catamount Manufacturing, Inc. Massachusetts
Centennial Plastics, Inc. Arkansas
Catamount GmbH Germany
Catamount de Mexico, S.A. de C.V. Mexico
Techspan Catamount Inc. Canada
FL Amelec, Inc. Texas
American Electric de Mexico, S.A. de C.V. Mexico
Thomas & Betts Monterrey S.A. de C.V. Mexico
International Energy Saver, Inc. Arizona
Pilgrim Pacific Inc. Canada
1065381 Ontario Inc. Canada
Pilgrim Technical Products Limited Canada
Pilgrim Technical, Inc. Pennsylvania
Thomas & Betts International, Inc. Delaware
Amerace Corporation Delaware
Amerace Ltd. Canada
Amerace de Mexico S.A. de C.V. Mexico
Conductron Corporation Massachusetts
Conductron Subsidiary Corp. Massachusetts
Conductron Holding Company Delaware
Eagle Utility Sales Inc. Canada
Elastimold Corporation Illinois
Joint Ventures of Amerace Corporation:
Euromold S.A. Belgium
Fujimold Ltd. Japan
Taimold Electrical Ltd. Taiwan
Reznor Europe N.V. Belgium
Reznor France SARL France
Reznor Lufttechnik GmbH Germany
Reznor U.K. Ltd. United Kingdom
Thomas & Betts A Ltd. Israel
Thomas & Betts Aktiebolag Sweden
Thomas & Betts Euro Distribution S.A. Belgium
Thomas & Betts Export, Inc. Barbados
Thomas & Betts France France
Thomas & Betts GmbH Germany
Thomas & Betts GmbH & Company KG Germany
Thomas & Betts Holdings (U.K.) Ltd. United Kingdom
Amerace Limited United Kingdom
Thomas & Betts Limited United Kingdom
Thomas & Betts Manufacturing Limited United Kingdom
Thomas & Betts Hong Kong, Limited Hong Kong
Thomas & Betts Hungary Kft. Hungary
Thomas & Betts Japan, Ltd. Japan
Thomas & Betts (Luxembourg) S.A. Luxembourg
Thomas & Betts (Malaysia) Sdn. Bhd. Malaysia
Thomas & Betts de Mexico S.de R.L. 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
TB Intl, S.L. (minority interest) Spain
Thomas & Betts Limited Canada
T&B Commander Electrical Materials Inc. Canada
Thomas & Betts (Ontario) Ltd. Canada
Thomas & Betts Puerto Rico Corporation Delaware
* 50% owned by Augat AG and 50% by Augat GmbH
All subsidiaries are included in the consolidated financial
statements.
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Shareholders and Board of Directors
Thomas & Betts Corporation:
We consent to incorporation by reference in the Registration
Statements (No. 33-35297, No. 33-56789 and No. 33-68370) on Form
S-8 and in the Registration Statements (No. 33-44153 and No. 333-
20481) on Form S-3 of Thomas & Betts Corporation of our report
dated February 6, 1997, relating to the consolidated balance
sheets of Thomas & Betts Corporation and subsidiaries as of
December 29, 1996 and December 31, 1995 and the related
consolidated statements of earnings, cash flows and shareholders'
equity for each of the years in the three-year period ended
December 29, 1996, which report appears or is incorporated by
reference in the December 29, 1996 annual report on Form 10-K of
Thomas & Betts Corporation. Our report contains a reference to
our reliance on the report of other auditors who performed the
audit of Augat Inc., a wholly owned subsidiary.
KPMG Peat Marwick LLP
Memphis, Tennessee
March 24, 1997
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 33-35297, 33-56789, and 33-68370 of Thomas & Betts Corporation on
Form S-8 and Registration Statement Nos. 33-44153 and 333-20481 of
Thomas & Betts Corporation on Form S-3 of our report dated February 6,
1997 (relating to the consolidated financial statements of Augat Inc.
{a wholly-owned subsidiary of Thomas & Betts Corporation since December
11, 1996} and subsidiaries, not presented separately herein) appearing
as exhibit 99 in this Annual Report on Form 10-K of Thomas & Betts
Corporation for the year ended December 29, 1996.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 25, 1997
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints T. Kevin Dunnigan, Fred R. Jones, Jerry
Kronenberg, and each of them, his or her true and lawful attorney or
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the SEC Form 10-K, of Thomas & Betts
Corporation for the year 1996, and any and all amendments and/or exhibits
thereto, and to file the same and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Signature Title Date
/s/T. Kevin Dunnigan Chairman of the Board, March 6, 1997
T. Kevin Dunnigan Chief Executive Officer
and Director
/s/Clyde R. Moore President, Chief Operating March 6, 1997
Clyde R. Moore Officer and Director
/s/Fred R. Jones Vice President-Finance and March 6, 1997
Fred R. Jones Treasurer
/s/Jerry Kronenberg Vice President-General Counsel March 6, 1997
Jerry Kronenberg
/s/Raymond B. Carey, Jr. Director March 6, 1997
Raymond B. Carey, Jr.
/s/Ernest H. Drew Director March 6, 1997
Ernest H. Drew
/s/Jeananne K. Hauswald Director March 6, 1997
Jeananne K. Hauswald
/s/Thomas W. Jones Director March 6, 1997
Thomas W. Jones
/s/Robert A. Kenkel Director March 6, 1997
Robert A. Kenkel
/s/John N. Lemasters Director March 6, 1997
John N. Lemasters
/s/Kenneth R. Masterson Director March 6, 1997
Kenneth R. Masterson
/s/Thomas C. McDermott Director March 6, 1997
Thomas C. McDermott
/s/J. David Parkinson Director March 6, 1997
J. David Parkinson
/s/Jean-Paul Richard Director March 6, 1997
Jean-Paul Richard
/s/Ian M. Ross Director March 6, 1997
Ian M. Ross
/s/William H. Waltrip Director March 6, 1997
William H. Waltrip
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements for the period ended December 29,
1996, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-29-1996 DEC-31-1995 JAN-01-1995
<PERIOD-END> DEC-29-1996 DEC-31-1995 JAN-01-1995
<CASH> 126,355 75,155 90,206
<SECURITIES> 35,940 60,638 52,569
<RECEIVABLES> 370,205 279,619 263,430
<ALLOWANCES> (8,694) (7,147) (5,832)
<INVENTORY> 363,306 304,989 281,373
<CURRENT-ASSETS> 957,051 750,386 732,453
<PP&E> 999,976 891,904 788,401
<DEPRECIATION> (460,032) (419,071) (392,037)
<TOTAL-ASSETS> 2,131,237 1,666,858 1,566,170
<CURRENT-LIABILITIES> 491,900 402,874 353,987
<BONDS> 645,096 353,666 354,552
0 0 0
0 0 0
<COMMON> 284,639 26,383 25,837
<OTHER-SE> 583,743 823,929 764,727
<TOTAL-LIABILITY-AND-EQUITY> 2,131,237 1,666,858 1,566,170
<SALES> 1,985,145 1,733,368 1,573,602
<TOTAL-REVENUES> 1,985,145 1,733,368 1,573,602
<CGS> 1,398,031 1,221,463 1,118,224
<TOTAL-COSTS> 456,735 357,958 386,972
<OTHER-EXPENSES> (472) 439 3,694
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 39,973 24,578 24,518
<INCOME-PRETAX> 90,878 128,930 40,194
<INCOME-TAX> 31,010 40,428 12,107
<INCOME-CONTINUING> 59,868 88,502 28,087
<DISCONTINUED> 0 0 65,933
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 59,868 88,502 94,020
<EPS-PRIMARY> 1.13 1.69 1.85
<EPS-DILUTED> 1.13 1.69 1.85
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-29-1996 DEC-29-1996 DEC-29-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-29-1996
<CASH> 78,639 96,610 105,378
<SECURITIES> 62,353 81,543 72,083
<RECEIVABLES> 330,251 350,877 378,492
<ALLOWANCES> (7,183) (7,545) (7,575)
<INVENTORY> 355,859 359,455 359,353
<CURRENT-ASSETS> 864,344 926,997 941,430
<PP&E> 969,221 984,219 986,493
<DEPRECIATION> (420,083) (429,913) (439,601)
<TOTAL-ASSETS> 2,050,434 2,096,621 2,102,488
<CURRENT-LIABILITIES> 451,093 423,983 419,165
<BONDS> 630,047 671,302 660,866
0 0 0
0 0 0
<COMMON> 26,475 199,444 200,269
<OTHER-SE> 840,508 689,102 714,629
<TOTAL-LIABILITY-AND-EQUITY> 2,050,434 2,096,621 2,102,488
<SALES> 486,733 986,513 1,483,559
<TOTAL-REVENUES> 486,733 986,513 1,483,559
<CGS> 343,435 691,939 1,038,091
<TOTAL-COSTS> 95,456 192,065 285,135
<OTHER-EXPENSES> (1,298) (4,290) (5,698)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 9,255 19,700 29,605
<INCOME-PRETAX> 39,885 87,099 136,426
<INCOME-TAX> 13,805 30,054 45,759
<INCOME-CONTINUING> 26,080 57,045 90,667
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 26,080 57,045 90,667
<EPS-PRIMARY> 0.49 1.07 1.70
<EPS-DILUTED> 0.49 1.07 1.70
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> MAR-02-1995 JUN-02-1995 SEP-01-1995
<CASH> 58,040 50,905 77,458
<SECURITIES> 64,739 77,321 52,048
<RECEIVABLES> 284,378 274,433 286,793
<ALLOWANCES> (15,721) (15,481) (15,683)
<INVENTORY> 312,780 312,060 309,924
<CURRENT-ASSETS> 752,548 757,676 767,729
<PP&E> 819,468 840,840 840,587
<DEPRECIATION> (409,425) (414,575) (407,878)
<TOTAL-ASSETS> 1,595,151 1,621,894 1,630,676
<CURRENT-LIABILITIES> 345,291 326,244 348,862
<BONDS> 371,137 394,250 369,654
0 0 0
0 0 0
<COMMON> 16,037 16,090 16,143
<OTHER-SE> 793,077 814,063 824,534
<TOTAL-LIABILITY-AND-EQUITY> 1,595,151 1,621,894 1,630,676
<SALES> 435,062 863,769 1,293,934
<TOTAL-REVENUES> 435,062 863,769 1,293,934
<CGS> 310,012 608,658 911,869
<TOTAL-COSTS> 84,309 167,452 2552,463
<OTHER-EXPENSES> 245 (806) (295)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 5,951 12,088 18,761
<INCOME-PRETAX> 34,545 74,765 111,136
<INCOME-TAX> 11,757 25,558 36,456
<INCOME-CONTINUING> 22,788 49,207 74,680
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 22,788 49,207 74,680
<EPS-PRIMARY> 0.44 0.94 1.43
<EPS-DILUTED> 0.44 0.94 1.43
</TABLE>
EXHIBIT 99
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of Augat Inc.:
We have audited the consolidated balance sheets of Augat
Inc. (a wholly-owned subsidiary of Thomas & Betts Corporation
since December 11, 1996) and its subsidiaries as of December
29, 1996 and December 31, 1995, and the related consolidated
statements of income, shareholders' equity and cash flows for
each of the three years in the period ended December 29, 1996.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above (not presented separately herein) present
fairly, in all material respects, the financial position
of Augat Inc. and its subsidiaries at December 29, 1996 and
December 31, 1995, and the results of their operations and their
cash flows for each of the three years in the period ended
December 29, 1996, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
February 6, 1997
