<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 15, 2000
(Date of earliest event reported)
THOMAS & BETTS CORPORATION
(Exact name of registrant as specified in its charter)
Tennessee 1-4682
(State or Other Jurisdiction (Commission File Number)
of Incorporation)
22-1326940
(IRS Employer Identification No.)
8155 T&B Boulevard
Memphis, Tennessee 38125
(Address of Principal (ZIP Code)
Executive Offices)
Registrant's Telephone Number, Including Area Code:
(901) 252-8000
<PAGE>
ITEM 5. OTHER EVENTS
On February 15, 2000, Thomas & Betts Corporation (the "Registrant")
announced, in the press release attached as Exhibit 20 to this report and
incorporated herein by reference, its financial results for the fiscal year
ended January 2, 2000. To assist investors in their analysis of the financial
data released today, the Registrant is providing certain supplemental
information in Exhibit 20.2 to this report which is incorporated herein by
reference.
The Registrant also announced, in the press release attached as
Exhibit 20.3 to this report and incorporated herein by reference, that it has
hired a new chief financial officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
20.1 Press Release of the Registrant dated February 15, 2000.
20.2 Supplemental Information
20.3 Press Release of the Registrant dated February 15, 2000.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Thomas & Betts Corporation
(Registrant)
By: /s/ Jerry Kronenberg
----------------------------------
Jerry Kronenberg
Title: Vice President-General Counsel
and Secretary
Date: February 15, 2000
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description of Exhibits
------- -----------------------
<S> <C>
20.1 Press Release of the Registrant dated February 15, 2000.
20.2 Supplemental Information
20.3 Press Release of the Registrant dated February 15, 2000.
</TABLE>
<PAGE>
NEWS
[THOMAS & BETTS CORPORATION LETTERHEAD]
Contact: Renee Johansen
901-252-5962
FOR IMMEDIATE RELEASE
Thomas & Betts Announces Fourth-Quarter Results
MEMPHIS, Tenn.-February 15, 2000 Thomas & Betts Corporation (NYSE:TNB) today
announced that fourth-quarter 1999 net earnings were $23.2 million, or $0.40 per
diluted share. Those results compare with 1998's fourth-quarter net earnings of
$46.1 million, or $0.81 per diluted share.
Fourth-quarter net sales increased to $621.7 million, 4.9% higher than
in 1998's quarter. Sales in the quarter, excluding the effect of acquisitions
and divestitures, increased 0.4%.
Gross margin was 27.5% in 1999's fourth quarter versus 30.9%
in the prior-year quarter. The operating margin was also lower, 7.9% compared
with 12.4%, resulting in a 33.0% decrease in operating profit year over year.
Shipping disruptions resulting from implementation of a new web-enabled order
management system lowered sales and profits in the fourth quarter. The company
reported a loss from unconsolidated companies as a result of its share of losses
recorded at its ET&B joint venture.
The company estimated that the mid-fourth-quarter start-up of the
Thomas & Betts Order Processing System (TOPS) delayed $20 million of shipments
until fiscal year 2000, caused an additional loss of approximately $24 million
of fourth-quarter sales and increased freight, labor and other costs by
approximately $18 million as the company sought to minimize the new system's
impact on customer service. The estimated total impact of those lost and
deferred sales and additional costs was $36 million pretax or $0.43 per diluted
share after taxes. "As our volume expanded during the fourth quarter we began to
experience delays in shipping orders at most plants and all three of our North
American distribution centers," said Clyde R. Moore, president and chief
executive officer. "As of today, only our central distribution center faces
delays, and those have been reduced from close to five days in backlog at their
peak in the fourth quarter to close to two days currently. Our progress in
reducing backlog would have been greater were it not for the strength of early
2000 orders. While we are disappointed by the shipment delays, we remain
convinced that TOPS greatly enhances the level of service provided to our
customers while delivering substantial added benefits on the e-commerce front,"
added Moore.
Thomas & Betts said that it recorded fourth-quarter accounting
adjustments to recognize additional expenses and credits related to changes in
accounting estimates, earlier product line and plant relocations and the
transition to new financial systems. The net pretax impact of those income
statement and balance sheet adjustments was $1.8 million, or $0.03 per diluted
share after taxes, in the quarter. The company recorded pretax charges of $6.9
million, or $0.07 per
<PAGE>
diluted share after taxes, reflecting year-end audit adjustments at its ET&B
automotive joint venture.
FULL-YEAR RESULTS
Sales for the full year 1999 rose 13.1% from 1998's level to a record
$2,522.0 million. Excluding the effect of acquisitions and divestitures, sales
were up 2.0%. Net earnings for 1999 were $148.3 million, or $2.56 per diluted
share. Net earnings in 1998 were $164.5 million, or $2.89 per diluted share,
excluding special charges for plant closings and product line consolidations.
Including those charges, 1998 net earnings were $87.5 million, or $1.54 per
diluted share.
"Our performance in 1999 was clearly not acceptable. However, the
issues we faced due to our new systems were temporary in nature. We chose to
transition to those new systems at a time when our organization was already
engaged in a massive cost-reduction program, integration of acquisitions and
preparation for the Y2K changeover. That caused missteps. We're already
implementing changes to our organization to correct those missteps. We also
realize that we must take steps to restore shareholder value. We are acting to
implement changes on both of these fronts," said Moore.
SEGMENT PERFORMANCE
Sales of the Electrical segment improved to $326.1 million, 4.7% higher
than in the prior-year quarter. Without acquisitions, Electrical sales were 6.8%
lower year over year. While this segment's sales benefited from a resurgence in
the Canadian economy, it was also most adversely impacted by the TOPS
implementation. Segment earnings decreased 37.3% to $32.0 million due to a $27.1
million impact of the TOPS implementation. Segment earnings were positively
impacted by $3.4 million of accounting adjustments. For the year, Electrical
sales increased 21.5% to $1,358.6 million, but segment earnings decreased 9.0%
versus 1998, again due to the negative impact of the TOPS implementation and
$7.4 million of net accounting adjustments and special items.
The Electronic OEM segment posted a sizeable sales gain, with sales up
18.9% to $185.9 million when compared with 1998's fourth quarter. Continued high
demand for battery packs to cellular handset manufacturers together with solid
sales of components to the computer industry more than offset decreased sales to
automotive markets. Segment earnings were $1.9 million, below 1998's earnings of
$17.5 million, largely as a result of $7.5 million of net accounting
adjustments, the aforementioned $6.9 million ET&B impact, a $5.9 million impact
of the TOPS implementation and professional electronics' margin pressure in both
Asia and Europe. Total 1999 Electronic OEM sales rose 8.0% to $686.7 million,
but segment earnings were substantially lower than 1998's level, at $26.8
million, due largely to the impact of $31.8 million of third-quarter and
fourth-quarter accounting adjustments, the ET&B loss and the impact of the TOPS
implementation.
Sales of the Communications segment were $53.2 million, 10.5% lower
than same-quarter 1998 sales. Sales in the prior year included $11.6 million of
revenues from certain amplifier product lines divested in the third quarter of
1999. Excluding those sales, Communications sales in 1999's fourth quarter were
11.1% higher than in 1998's fourth quarter. Segment earnings more than doubled
to $3.6 million compared with $1.5 million in the yearearlier period. The large
increase in earnings reflects divestiture of unprofitable business lines earlier
in 1999, and a positive impact of $0.4 million of accounting adjustments. Total
segment sales for the year were $260.3 million, just marginally lower than 1998
sales. The segment reported a loss of $4.5 million for the year, due primarily
to nine months of losses from the divested business lines and also third-quarter
accounting adjustments and other special items totaling $12.6 million.
<PAGE>
OUTLOOK FOR 2000
"We're already at work to put our earnings back on track and to deliver
the returns expected by our shareholders. We have set an achievable goal for
ourselves in the first quarter to meet or surpass our first-quarter 1999 EPS of
$0.60. The TOPS system is performing close to its full potential but is not yet
completely error-free, and we continue to bear costs as we catch-up on our
backlog for expediting freight and additional labor in order to minimize the
impact on our customers," said Moore. "Early indications are that we can exceed
our first-quarter target. While we still have shipping backlog from TOPS, our
January shipments were well ahead of January 1999."
"Our core business is solid and now with TOPS and our financial systems
in place as the backbone of our business-tobusiness E-commerce strategy, we are
more excited than ever about the opportunities available to Thomas & Betts to be
an industry leader in the new B2B world," concluded Moore.
Thomas & Betts is a leading producer of connectors and components for
worldwide electrical and electronic markets. Visit Thomas & Betts on the World
Wide Web at www.tnb.com.
This press release contains supplemental information for
investors regarding the impact of implementation of the TOPS. Estimates provided
regarding the impact of that implementation are estimates only and are solely
based on the judgment of management. Management has used its best judgment in
preparing those estimates, but the company's actual experience may have differed
from results that may be implied by those estimates.
Forward-looking statements in this news release are subject
to many uncertainties in the company's operations and business environments.
Such uncertainties, which are discussed further in the company's quarterly
filing with the Securities and Exchange Commission, may cause the actual results
of the company to be materially different from any future results expressed or
implied by such forward-looking statements.
<PAGE>
THOMAS & BETTS CORPORATION
Comparative Income Statement
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
--------------------- -----------------------
Jan. 2, Jan. 3, Jan. 2, Jan. 3,
2000 1999 2000 1999
-------- ------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $621,696 $592,432 $2,522,008 $2,230,351
Costs and expenses:
Cost of sales 450,833 409,616 1,847,262 1,581,215
Marketing, general
and administrative 108,201 91,543 427,192 366,463
Research and development 11,051 12,862 47,959 48,690
Amortization of
Intangibles 6,025 4,751 19,643 17,364
Provision (recovery) -
restructured operations (3,756) - (11,632) 62,096
-------- ------- ---------- ---------
Total operating expenses 572,354 518,772 2,330,424 2,075,828
Earnings from operations 49,342 73,660 191,584 154,523
Income(loss)from
unconsolidated companies (81) 6,277 23,776 26,172
Interest expense-net 16,786 13,380 60,995 45,756
Other expense
(income)-net (170) 1,590 (5,371) 10,031
Earnings before taxes 32,645 64,967 159,736 124,908
Income taxes 9,467 18,843 11,429 37,407
------- ------- --------- ---------
Net earnings $ 23,178 $ 46,124 $ 148,307 $ 87,501
======= ======= ========= =========
Net earnings per share
Basic $ 0.40 $ 0.81 $ 2.57 $ 1.54
Diluted $ 0.40 $ 0.81 $ 2.56 $ 1.54
Average shares
outstanding
Basic 57,819 56,760 57,690 56,677
Diluted 57,989 56,962 57,912 56,990
Cash dividend per share $ 0.28 $ 0.28 $ 1.12 $ 1.12
</TABLE>
<PAGE>
THOMAS & BETTS CORPORATION
Comparative Balance Sheet
(In thousands)
<TABLE>
<CAPTION>
January 2, January 3,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
Cash and marketable securities $ 84,770 $ 106,506
Receivables - net 470,532 404,784
Inventories 537,401 469,641
Deferred income taxes 46,917 61,829
Prepaid expenses 26,822 15,642
--------- ---------
Total current assets 1,166,442 1,058,402
Property, plant and equipment-net 666,528 631,022
Intangible assets-net 611,362 621,487
Investments in unconsolidated
companies 154,919 142,251
Other assets 55,942 46,425
--------- ---------
TOTAL ASSETS $2,655,193 $2,499,587
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings and current
maturities of long-term debt $ 35,695 $ 97,657
Accounts payable 300,242 262,483
Accrued liabilities 162,856 155,815
Income taxes 7,244 55,674
Dividends payable 16,190 15,920
--------- ---------
Total current liabilities 522,227 587,549
Long-term debt 935,731 790,963
Other long-term liabilities 88,828 93,788
Deferred income taxes 17,730 12,182
Shareholders' equity 1,090,677 1,015,105
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,655,193 $2,499,587
========== ==========
</TABLE>
<PAGE>
THOMAS & BETTS CORPORATION
Business Segment Performance
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended
--------------------------
January 2, January 3,
2000 1999 Change
---------- ----------- ---------
<S> <C> <C> <C>
Net Sales:
Electrical $ 326,086 $ 311,420 4.7%
Electronic OEM 185,866 156,346 18.9%
Communications 53,246 59,524 (10.5%)
All other 56,498 65,142 (13.3%)
--------- --------- ---------
Total $ 621,696 $ 592,432 4.9%
========= ========= =========
Segment Earnings:
Electrical $ 32,025 $ 51,054 (37.3%)
Electronic OEM 1,903 17,468 (89.1%)
Communications 3,637 1,486 144.8%
All other 9,543 9,994 (4.5%)
--------- --------- ---------
Total $ 47,108 $ 80,002 (41.1%)
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Twelve Months Ended
--------------------------
January 2, January 3,
2000 1999 Change
---------- ----------- ---------
<S> <C> <C> <C>
Net Sales:
Electrical $1,358,626 $1,117,917 21.5%
Electronic OEM 686,716 635,946 8.0%
Communications 260,302 260,601 (0.1%)
All other 216,364 215,887 (0.1%)
--------- --------- --------
Total $2,522,008 $2,230,351 13.1%
========= ========= ========
Segment Earnings:
Electrical $ 171,900 $ 188,927 (9.0%)
Electronic OEM 26,771 60,845 (56.0%)
Communications (4,463) 16,369 (127.3%)
All Other 24,174 22,619 6.9%
--------- --------- --------
Total $ 218,382 $ 288,760 (24.4%)
========= ========= ========
</TABLE>
<PAGE>
EXHIBIT 20.2
SUPPLEMENTAL INFORMATION
The following schedules are provided as supplemental information to assist
investors in their analysis of the financial data released today by the
Corporation.
ESTIMATED IMPACT OF TOPS IMPLEMENTATION
In the following schedule, management estimated the financial impact of the
implementation of the Thomas & Betts Order Processing Systems (TOPS) by business
segment. These amounts are estimates only and are based solely on the judgment
of management.
The impact of delayed shipments was estimated from backlog increases. The
estimated foregone margin on delayed sales is based upon the product mix
contained in the backlog increase. The impact of lost orders was estimated based
on canceled orders and customer feedback. The foregone margin related to the
delayed sales was assumed to be approximately the average of the particular
segment.
Incremental costs include higher freight, distribution and labor expense. The
estimated impact of incremental costs was based on the difference between
historical and current or projected freight and distribution costs arising from
use of air freight compared with ground transportation and additional personnel
committed to expediting shipments. Incremental labor was estimated on the basis
of actual increases in headcount at the Corporation's distribution centers,
plants and corporate headquarters to help ease customer-related inconvenience.
Management used its best judgment in preparing these estimates, but investors
are cautioned that changes in the Corporation's business or operating
environments could cause actual results to vary materially from results that may
be inferred from these estimates.
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
($ millions) Q4 '99 Q1 '00 Q2 '00
--------------------- ------------------- ----------------------
SALES EBIT SALES EBIT SALES EBIT
-------- ---------- --------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
DELAYED SHIPMENTS
Electrical $ (15.0) $ (6.0) $ 11.0 $ 4.4 $ 4.0 $ 1.6
Electronic OEM (4.0) (1.6) 4.0 1.6 - -
Communications (1.2) (0.4) 1.2 0.4 - -
All other - - - - - -
-------- ---------- --------- -------- --------- ---------
Total $ (20.2) $ (8.0) $ 16.2 $ 6.4 $ 4.0 $ 1.6
LOST ORDERS
Electrical $ (18.0) $ (7.5) $ (4.0) $ (1.7) $ (2.0) $ (0.8)
Electronic OEM (2.0) (0.8) (2.0) (0.8) - -
Communications - - - - - -
All other (4.1) (1.2) - - - -
-------- ---------- --------- -------- --------- ---------
Total $ (24.1) $ (9.5) $ (6.0) $ (2.5) $ (2.0) $ (0.8)
INCREMENTAL COSTS
Electrical $ (1.8) $ (13.6) $ (1.4) $ (2.4) $ (0.5) $ (0.8)
Electronic OEM (1.0) (3.5) (0.3) (0.5) - -
Communications - (0.5) - - - -
Related to all other sales (0.1) (0.4) (0.2) (0.3) - -
-------- ---------- --------- -------- --------- ---------
Total $ (2.9) $ (18.0) $ (1.9) $ (3.2) $ (0.5) $ (0.8)
-------- ---------- --------- -------- --------- ---------
TOPS TOTAL $ (47.2) $ (35.5) $ 8.3 $ 0.7 $ 1.5 -
-------- ---------- --------- -------- --------- ---------
-------- ---------- --------- -------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT 20.2
SUPPLEMENTAL INFORMATION
1999 ACCOUNTING ADJUSTMENTS & SPECIAL ITEMS
The following schedule summarizes the attribution of income statement and
balance sheet adjustments by major category to the Corporation's business
segments. Further discussion of the events and issues giving rise to these
adjustments can be found in the Corporation's press release dated February 15,
2000, and in the Corporation's 1999 third quarter Report on Form 10-Q, as
amended by Form 10-Q/A.
<TABLE>
<CAPTION>
($ millions) THRU Q3 Q4
--------------------- -------------------
SALES EBIT SALES EBIT
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
PRETAX ITEMS
- Acquisition assimilation
Electrical $ (1.0) $ (1.0) - -
Electronic OEM (1.2) (8.2) - $ (6.9)
Communications (0.3) (0.3) $ (1.0) (1.0)
Related to all other sales - - - -
--------- --------- -------- ---------
Subtotal (2.5) (9.5) (1.0) (7.9)
- Relocation of facilities
Electrical (0.3) (0.8) - (2.9)
Electronic OEM - (4.7) - 1.7
Communications - (3.7) - (2.4)
Related to all other sales - (3.8) - -
--------- --------- -------- ---------
Subtotal (0.3) (13.0) - (3.6)
- New systems' impacts
Electrical - (0.5) - 3.7
Electronic OEM (4.2) (6.9) - (4.9)
Communications (5.6) (3.9) (1.0) (0.5)
Related to all other sales - - - -
--------- --------- -------- ---------
Subtotal (9.8) (11.3) (1.0) (1.7)
- Promotional costs
Electrical (11.9) (11.9) - -
Electronic OEM - - - -
Communications - - - -
Related to all other sales - - - -
--------- --------- -------- ---------
Subtotal (11.9) (11.9) - -
- Accounting/estimating changes
Electrical (2.1) (7.6) 0.9 4.0
Electronic OEM (0.5) (4.5) (6.4) (4.3)
Communications (0.6) (3.0) 3.6 4.3
Related to all other sales - (0.6) 1.1 1.9
--------- --------- -------- ---------
Subtotal (3.2) (15.7) (0.8) 5.9
- M&A activity
Electrical - 11.0 - (1.4)
Electronic OEM - - - -
Communications - (2.1) - -
Related to all other sales - - - -
--------- --------- -------- ---------
Subtotal - 8.9 - (1.4)
--------- ---------
Total pretax impact $ (27.7) (52.5) $ (2.8) (8.7)
========= =========
TAX PROVISION
On above items $ 17.5 $ 2.7
Tax refunds/reserve changes 30.7 -
--------- ---------
After-tax impact $ (4.3) $ (6.0)
--------- ---------
Diluted EPS impact $ (0.07) $ (0.10)
Diluted number shares (millions) 58.0 58.0
</TABLE>
<PAGE>
EXHIBIT 20.2
SUPPLEMENTAL INFORMATION
1998 COST-REDUCTION PROGRAM INCREMENTAL NET SAVINGS IN 2000
Listed below are estimated incremental savings in 2000 associated with specific
projects from the Corporation's Cost-Reduction Program initiated in July 1998.
The schedule compares the Corporation's current 2000 incremental savings
estimates with estimates for each project made at the commencement of the
program in 1998. In total, management now expects projects from the 1998
Cost-Reduction Program to yield $30.5 million in incremental savings in 2000,
compared with a projection of $40.6 million in savings at the time the program
was announced in October 1998. These savings are incremental to the $27.3
million savings realized in 1999 from the program. Further discussion of the
1998 Cost-Reduction Program can be found in the Corporation's 1998 Report on
Form 10-K, as amended by Form 10-K/A, and subsequent reports on Form 10-Q.
Both 1998 and 2000 estimates were based solely on the judgment of management who
used its best judgement in preparing these estimates. Investors are cautioned
that changes in the Corporation's business or operating environment could cause
actual results to vary materially from results that may be inferred from these
estimates.
<TABLE>
<CAPTION>
Incremental Savings
in 2000
($ millions)
--------------------------
Number Original Current
Positions Estimate Estimate
Project Affected (Oct. '98) (Feb. '00) Explanation
- ----------------------------- ----------- ----------- ----------- ----------------------------------
<S> <C> <C> <C> <C>
1. Hackettstown 334 $ 6.8 $ 5.2 Project timeframe extended
2. Vidalia 213 6.4 2.5 Scope reduced, timeframe extended
3. Lugano 319 6.2 3.7 Customer approval delays
4. Bainbridge 198 3.8 0.8 Scope reduced
5. Tulsa 145 2.0 1.2
6. Garwood 144 1.6 1.7
7. Athens 154 1.3 1.0
8 Amersham 141 1.3 2.3
9. 37 other projects 1,856 11.3 12.1
----------- ----------- -----------
Total 3,504 $ 40.6 $30.5
=========== =========== ===========
SEGMENT
Electrical $ 27.3 $ 15.3
Electronics OEM 5.9 9.6
Communications 1.6 2.4
Related to all other sales 5.8 3.2
----------- -----------
Total $ 40.6 $ 30.5
=========== ===========
</TABLE>
<PAGE>
The following items constitute supplemental cash flow information and
incremental impacts of businesses divested during 1999.
<TABLE>
<CAPTION>
PERIOD ENDED JANUARY 2, 2000
-----------------------------------
($ millions) THREE MONTHS TWELVE MONTHS
-------------- ---------------
<S> <C> <C>
Depreciation & amortization $ 22.0 $ 98.0
Capital expenditures 34.8 133.1
Dividends paid 16.2 64.8
Contribution in 1999 of divested amplifier businesses:
Sales - 56.2
Earnings/(loss) (1.3) (8.6)
</TABLE>
February 15, 2000
<PAGE>
Exhibit 20.3
FOR IMMEDIATE RELEASE
John Murphy to Join Thomas & Betts as CFO
MEMPHIS, Tenn., February 15, 2000 -- Thomas & Betts Corporation (NYSE:TNB)
announced today that John P. Murphy will join the company as senior vice
president and chief financial officer effective late March. Murphy replaces
Fred R. Jones, who is retiring as CFO.
Murphy, 52, has been senior vice president and chief financial officer of
Johns Manville Corporation since 1997. Prior to joining Johns Manville
Corporation, a leading manufacturer and marketer of premium-quality building
products, Murphy was vice president and chief financial officer of Goulds
Pumps, Inc., a leading worldwide pump manufacturer, from 1993 until 1997.
"John joins us with the full support of our board and brings with him thirty
years of successful front-line financial and general management experience.
He has a record of tight accounting control, reduction of working capital and
a focus on asset utilization in international manufacturing environments,"
said Clyde R. Moore, president and chief executive officer. "His presence
will strengthen our finance organization at this critical time as we
transition to business-to-business e-commerce."
Thomas & Betts is a leading producer of connectors and components for
worldwide electrical and electronic markets. Visit Thomas & Betts on the
World Wide Web at www.tnb.com.
