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_______________________________________________________________________________
_______________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 2, 2000.
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________
TO _________________.
COMMISSION FILE NUMBER 1-4682
THOMAS & BETTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 22-1326940
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8155 T&B BOULEVARD, MEMPHIS, TENNESSEE 38125
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 252-8000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $.10 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 (Section 229.405 of this chapter) 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. |_|
As of March 6, 2000, 57,934,265 shares of the Registrant's Common Stock
were outstanding and the aggregate market value of the voting stock held by
non-affiliates of the Registrant (based on the average bid and asked prices of
such stock on the New York Stock Exchange composite tape) was $1,298,089,625.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended
January 2, 2000, are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held May 3, 2000, are incorporated by reference into Part III.
_______________________________________________________________________________
_______________________________________________________________________________
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TABLE OF CONTENTS
Page
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PART I
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ITEM 1. Business............................................ 3
ITEM 2. Properties.......................................... 8
ITEM 3. Legal Proceedings................................... 9
ITEM 4. Submission of Matters to a Vote of Security
Holders............................................. 11
Executive Officers of the Registrant................ 11
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Shareholder Matters................................. 12
ITEM 6. Selected Financial Data............................. 12
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.................. 12
ITEM 7A. Quantitative and Qualitative Disclosures About
Market Risk ........................................ 13
ITEM 8. Financial Statements and Supplementary Data......... 13
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.............. 14
PART III
ITEM 10. Directors and Executive Officers of the Registrant.. 14
ITEM 11. Executive Compensation.............................. 14
ITEM 12. Security Ownership of Certain Beneficial
Owners and Management............................... 14
ITEM 13. Certain Relationships and Related Transactions...... 14
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K................................ 15
EXHIBIT INDEX ..................................................... E-1
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PART I
ITEM 1. BUSINESS
Thomas & Betts Corporation (the "Corporation" or "Thomas & Betts") is a
leading manufacturer of connectors and components for worldwide electrical and
electronics markets. Thomas & Betts operates over 250 manufacturing,
distribution and office facilities around the globe in 25 countries. Thomas &
Betts was first established in 1898 as a sales agency for electrical wires and
raceways, and was incorporated and began manufacturing products in New Jersey in
1917. The Corporation was reincorporated in Tennessee in May 1996. Corporate
offices are maintained at 8155 T&B Boulevard, Memphis, Tennessee 38125, and the
telephone number at that address is 901-252-8000. The Corporation's website is
www.tnb.com.
The Corporation designs, manufactures and sells components used in
assembling, maintaining and repairing electrical, electronic and
communications systems. The Corporation's products include: 1) electrical
components and accessories for industrial, commercial, utility and
residential construction, renovation and maintenance applications and for
applications in other companies' products primarily in North America, but
also in Europe and other areas of the world; 2) electromechanical components,
connectors and subsystems for use in high-speed applications involving
miniaturization, surface-mounts, electromagnetic interference and
multiplexing that are sold to the information processing and automotive
industries in North America, Europe and Asia for use in other manufacturers'
products; 3) electromechanical components, subsystems and accessories used to
maintain, construct and repair cable television, telecommunications and data
communications networks worldwide; 4) transmission poles and towers primarily
for North American customers; and 5) heating units and accessories for North
American and European markets.
The Corporation classifies its products into business segments that are
organized around the market channels through which it sells those products:
Electrical, Electronic Original Equipment Manufacturers (OEMs) and
Communications. Some products and sales cannot be classified into those segments
and are included in "All Other." About one-half of Thomas & Betts' products meet
global specifications and are sold worldwide. Other products, primarily those
sold in the Electrical channel, have region-specific standards and are sold
mostly in North America or in other regions sharing North American electrical
codes.
The Corporation sells its products through electrical, electronic,
telephone, cable and heating, ventilation and air-conditioning (HVAC)
distributors, directly to OEMs and end users, and through mass merchandisers,
catalog merchandisers and home centers. No single customer of the Corporation
accounted for 10% or more of net sales in any of the last three years.
Thomas & Betts pursues growth through market penetration, global
expansion, new product development, joint ventures and acquisitions. In 1999,
the Corporation completed three acquisitions for total consideration of $70.7
million consisting of $17 million of cash and 869,722 shares of common stock.
The largest was the acquisition of L.E. Mason, a market leader in weatherproof
electrical boxes and covers.
Also, in 1999 the Corporation divested itself of three cable television
amplifier businesses, removing itself from the active components portion of the
cable television business.
In 1998, the Corporation completed nine acquisitions for total
consideration of $168 million cash and 1,461,000 shares of common stock. In
November 1998, Thomas & Betts completed the cash acquisition of Kaufel Group
Ltd. ("Kaufel"), more than doubling the lighting product line that Thomas &
Betts offers. Canadian-based Kaufel manufactures emergency lighting products and
sells in Canada, the U.S., Europe and Asia-Pacific. In July 1998, the
Corporation acquired Telecommunication Devices, Inc., a manufacturer of battery
packs for mobile communications equipment. Other 1998 acquisitions added to the
scope of products offered through Electrical and Communications market channels.
In 1997, Thomas & Betts completed six acquisitions, the largest of
which was the July 1997 acquisition of Diamond Communications Products, Inc.
Diamond's products enhanced the Corporation's offering in the "drop-end" portion
of the
Page 3 of 17
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cable television industry that connects cable service to homes and other
service destinations. Other 1997 acquisitions increased the breadth of products
offered within the Electrical segment.
ELECTRICAL SEGMENT
The Electrical segment's markets include industrial construction,
renovation, maintenance and repair; commercial and residential construction and
renovation; project construction; and industrial OEM, primarily in North
America. Total sales of the segment were $1,359 million, $1,118 million and
$1,020 million, or 53.9%, 50.1% and 45.1% of total sales for 1999, 1998 and
1997, respectively.
Thomas & Betts designs, manufactures and markets thousands of
different electrical connectors, components and other products for electrical
applications. The Corporation has a leading position in the market for many
of those products. Products include fittings and accessories for electrical
raceways; fastening products, such as plastic and metallic ties for bundling
wire and flexible tubing; connectors, such as compression and mechanical
connectors for high-current power and grounding applications; indoor and
outdoor switch and outlet boxes, covers and accessories; floor boxes; metal
framing used as structural supports for conduits, cable trays, electrical
enclosures and lighting raceways; ground rods and clamps; emergency, outdoor
security, roadway and hazardous location lighting; circuit breakers, safety
switches and meter centers; and other products, including insulation
products, wire markers, cable tray and application tooling products. Products
are sold under a variety of the Corporation's well-known brand names.
Electrical products are sold through electrical and utility
distributors, as well as retail outlets such as home centers and mass merchants.
The Corporation has relationships with over 8,000 national, regional and
independent distributors, retailers and buying groups with locations across
North America. Thomas & Betts 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 end users. Thomas & Betts' products are sold through 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.
Because electrical standards vary by region, and historically the
Corporation has emphasized North American standards, the majority of Electrical
segment sales are currently realized in the U.S. and Canada. Thomas & Betts has
the potential to increase its participation in markets outside of North America
by developing or acquiring product lines that conform to other regional
standards.
ELECTRONIC OEM SEGMENT
Thomas & Betts sells electronic components primarily to OEMs in the
automotive, information services, office equipment, mobile communications,
industrial electronics, test equipment, computer-aided-engineering and
manufacturing systems, instrumentation, medical electronics markets, and
additional applications in aerospace. The Corporation also sells products
through electronics distributors. Electronic OEM segment sales were $686.7
million, $635.9 million and $752.5 million, or 27.2%, 28.5% and 33.3% of Thomas
& Betts' total sales for 1999, 1998 and 1997, respectively.
The Corporation's Electronic OEM components include: printed circuit
connectors; IDC connectors for mass termination of flat cables;
custom-engineered connectors for professional electronics (including MPI) and
automotive applications; flexible interconnects, flat cables and assemblies for
automotive and other applications; cable ties; terminals; D-subminiature
connectors, a broad group of industry standard connectors; custom and standard
switches; battery packs; printed circuit board sockets; and terminal blocks.
These components are sold under a variety of Thomas & Betts' brand names.
Thomas & Betts manufactures and sells both custom-designed and standard
components through distributors and directly to OEM customers. To enable it to
compete in the global electronics marketplace, the Corporation has design,
manufacturing and distribution capabilities in North America, Europe and the Far
East. Thomas & Betts has a broad customer base.
OEM customers are reducing 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.
Page 4 of 17
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The Corporation has been designated as a preferred supplier by many of its
most important OEM customers for electronic components, and continues to seek
preferred status from other accounts.
COMMUNICATIONS SEGMENT
Thomas & Betts' Communications segment designs, manufactures and
markets electromechanical components, subsystems and accessories used to
maintain, construct and repair cable television (CATV), telecommunications and
data communications networks. Although the majority of the segment's sales are
recorded in North America, the products are of an international standard and are
also sold outside of North America. Total Communications segment sales were
$260.3 million, $260.6 million and $262.1 million, or 10.3%, 11.7% and 11.6% of
the Corporation's total sales for 1999, 1998 and 1997, respectively.
The Corporation's communications product offering includes: CATV drop
hardware; RF connectors; fiber management systems; fiber optic connectors and
splitters; modular voice and data connectors and related components; aerial,
pole, pedestal and buried splice enclosures; connectors; encapsulation and
sheath repair systems; and cable ties.
Products are sold directly to CATV system operators and also through
telecommunications and CATV distributors. Components, with the exception of
modular voice and data connectors, are sold under a variety of the Corporation's
brand names. Modular voice and data connectors and a package of related products
are sold through an exclusive arrangement with IBM's Advanced Connectivity
Systems, and are not offered directly to other end users.
OTHER SALES
The Corporation sells its other products and components, comprised of
heating products and steel poles and towers, through distributors and directly
to end users. Other sales were $216.4 million, $215.9 million and $224.8
million, or 8.6%, 9.7% and 10.0% of the Corporation's total sales for 1999, 1998
and 1997, 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. Those products are sold under the
Reznor-Registered Trademark- and E.K. Campbell-Registered Trademark- brand
names through HVAC, mechanical and refrigeration distributors in over 1,800
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. Those 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-TM-, Meyer-TM- and Thomas & Betts-Registered Trademark-
brand names.
MANUFACTURING AND DISTRIBUTION
Thomas & Betts 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.
Page 5 of 17
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The Corporation also utilizes other advanced equipment and techniques in
the manufacturing and distribution process, including computer software for
scheduling, material requirements planning, shop floor control, capacity
planning, and the warehousing and shipment of products.
Thomas & Betts' products enjoy a reputation for quality in the markets
in which they are sold. To ensure quality, all of Thomas & Betts' facilities
embrace quality programs, and 80% of all facilities owned as of October 31,
1998 now meet ISO 9000, 9001, 9002 or QS 9000 standards. By year-end 2000,
all facilities owned by Thomas & Betts for at least two years are expected to
have received either ISO or QS certification. 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 Distributor Manufacturer Integration
(DMI-Registered Trademark-) program.
From its origin as a delivery guarantee for electrical distributors,
the DMI-Registered Trademark- program has evolved into a program that
encompasses purchasing incentives, extensive marketing support, training and
service discounts primarily for electrical and CATV distributors. In 1999,
the DMI-Registered Trademark- program added 27 new participants, representing
an increase of 8% over the previous year. The DMI-Registered Trademark-
advanced partnership program includes customer cost-reduction processes such
as automatic stock replenishment, advanced distributor inventory modeling,
automatic receiving, price synchronization, invoice balancing and summary
billing. Combining those 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-Registered Trademark- partnership
program a success for the Corporation as well as its participating
distributors.
In late 1999, the Corporation implemented a new web-enabled order
processing system which management believes is strategically important to the
Corporation's future industry position, particularly in the area of
business-to-business e-commerce. The Corporation plans to continue to develop
web-based capabilities to provide higher levels of service and efficiency to its
customers.
RAW MATERIALS
Thomas & Betts purchases a wide variety of raw materials for the
manufacture of its products, including metals, commodities and materials such as
copper, aluminum, zinc, gold, steel, resins, rubber compounds, battery cells and
castings. 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
Thomas & Betts has centralized research, development and engineering
capabilities for those products that are globally accepted and maintains
regional facilities to respond to the specific needs of local markets. The
Corporation has a reputation for innovation and value based upon its ability to
rapidly develop products that meet the needs of the marketplace.
The Corporation invests significant resources in its research and
development activities. Research, development and engineering expenditures
invested into new and improved products and processes were $48 million, $49
million and $53 million, or 1.9%, 2.2% and 2.3% of total sales for 1999, 1998
and 1997, respectively.
The Corporation made major investments and future commitments toward
next-generation engineering tools in the areas of solid modeling software and
rapid prototyping. The foundation has also been set to integrate these tools
across the design, manufacturing and production areas. These research and
development activities continue to be focused on high-growth markets and
complementary products. Most research and development activity in 1999 took
place in the Electronic OEM and Communications segments with efforts focused
in part on expanding applications for the Metallized Particle Interconnect
(MPI-TM-), microprocessor socket, commercializing polymer lithium ion battery
technology for mobile communications applications and developing additional
fiber optic products.
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PATENTS AND TRADEMARKS
Thomas & Betts owns approximately 2,500 active patent registrations
and applications worldwide. The Corporation has over 1,550 active trademarks
worldwide, including THOMAS & BETTS, T&B, AGASTAT, ALCOSWITCH, AMERICAN
ELECTRIC LIGHTING, ANCHOR, ANSLEY, ARMIGER, ASTER, AUGAT, BLACKBURN, BOWERS,
BUCHANAN, CANSTRUT, CATAMOUNT, CENTER LOK, COLOR-KEYED, COMMANDER, DIAMOND,
ELASTOMERIC TECHNOLOGIES, E.K. CAMPBELL, ELASTIMOLD, ELECTROLINE,
EMERGI-LITE, EPITOME, ELECTROLAY, EVER-LOK, E-Z-CODE, FLEX-STRIP, HAZLUX,
HOLMBERG, KINDORF, KOLD-N-KLOSE, LIQUID TITE, LRC, MARR, MARRETTE, MAX-GARD,
MEYER, MICROLECTRIC, MPI, NEVADA WESTERN, OCAL, RDI, POWERLITE, RED DOT,
REZNOR, RUSSELLSTOLL, SACHS, SHAMROCK, SIGNATURE SERVICE, SITE LIGHT,
SNAP-N-SEAL, STA-KON, STEEL CITY, SUPER STRUT, TDI BATTERIES, TAYLOR,
TY-FAST, TY-RAP, UNION, VALON and ZINSCO.
While the Corporation considers its patents and trademarks (including
trade dress) to be valuable assets, it does not believe that its competitive
position is dependent solely on patent or trademark protection or that its
operations are dependent on any individual patent or trademark. The
Corporation does not consider any of its licenses, franchises or concessions
to be material to its business.
COMPETITION
Thomas & Betts encounters competition in all areas of its business,
and the methods of competition vary depending on the market into which the
Corporation is selling. The Corporation competes primarily on the basis of
product quality, technology or innovation, price, performance and customer
service. No single company competes directly with Thomas & Betts in all of
its product lines, but various companies compete with Thomas & Betts in one
or more product lines.
In total, Thomas & Betts has many competitors varying in size. Some
have substantially greater sales and assets than Thomas & Betts while other
companies are smaller than Thomas & Betts.
EMPLOYEES
As of January 2, 2000, the Corporation and its subsidiaries had
approximately 21,500 full-time employees worldwide. Employees of the
Corporation's international subsidiaries in the aggregate comprise
approximately 58% of all employees. Of the total number of employees,
approximately 35% are represented by trade unions. The Corporation believes
its relationships with its employees are excellent.
REGULATION
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. Thomas & Betts 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
position or results of operations.
FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. DOMESTIC OPERATIONS
For information concerning financial results for industry segments
and foreign and U.S. domestic operations for the three years ended January 2,
2000, refer to Notes 13 and 14, respectively, of Notes to Consolidated
Financial Statements contained in the Corporation's 1999 Annual Report to
Shareholders, which Notes are incorporated herein by reference. Export sales
originating in the U.S. were $61.1 million, $52.3 million and $52.8 million
for 1999, 1998 and 1997, respectively.
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ITEM 2. PROPERTIES
The Corporation has total plant, office, distribution, storage and
warehouse space of approximately 11,305,000 sq. ft. in over 250 locations in
29 states, the Commonwealth of Puerto Rico and 23 other countries. This space
is composed of approximately 8,017,000 sq. ft. of manufacturing space,
2,653,000 sq. ft. of office, distribution, storage and warehouse space and
635,000 sq. ft. of idle space.
The following table lists the Corporation's manufacturing locations by
segment as of January 2, 2000:
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Approximate Area
In Sq. Ft.
No. Of -----------------------
Segment Location Facilities Leased Owned
- ------- -------- ---------- ------ -----
<S> <C> <C> <C> <C>
Electrical
Alabama 1 126,000
Arkansas 1 246,000
California 1 213,000
Florida 1 65,000
Georgia 3 262,600 157,818
Massachusetts 3 16,200 260,000
Mississippi 1 236,648
New Jersey 1 134,000
New Mexico 2 25,025 100,000
Ohio 1 135,000
Puerto Rico 3 112,353 28,200
South Carolina 1 84,600
Tennessee 2 457,000
Texas 1 35,805
Australia 6 32,197 28,729
Canada 14 163,923 800,680
France 2 25,189 7,973
Germany 2 27,976
Mexico 3 675,872
Netherlands 3 11,728 53,800
UK 7 21,500 137,230
Electronic OEM
California 1 119,500
Illinois 2 68,281
Maine 1 99,280
Massachusetts 1 53,000
Michigan 3 229,972
Pennsylvania 2 40,930
South Carolina 3 103,516
Hungary 2 144,431
Japan 1 74,300
Luxembourg 1 43,246
Malaysia 2 48,110
Mexico 4 559,742
Scotland 1 55,000
Singapore 1 60,000
Switzerland 1 188,000
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Approximate Area
In Sq. Ft.
No. Of ----------------------
Segment Location Facilities Leased Owned
- ------- -------- ---------- ------ -----
<S> <C> <C> <C> <C>
Communications
New York 1 268,000
Mexico 2 170,814
Other
Pennsylvania 1 227,050
South Carolina 1 105,000
Texas 1 136,172
Wisconsin 1 171,206
Belgium 1 139,932
Mexico 2 229,637
</TABLE>
In addition to the aforementioned manufacturing facilities, the
Corporation owns three central distribution centers in Belgium (141,792 sq.
ft.), Canada (260,000 sq. ft.) and Byhalia, Mississippi (960,000 sq. ft.) and
leases a fourth central distribution center in Sparks, Nevada (283,037 sq.
ft.). The Corporation also has principal sales offices, warehouses and
storage facilities located in approximately 1,008,000 sq. ft. of property,
most of which is leased. Included in this total is approximately 214,000 sq.
ft. of space in Memphis, Tennessee for the Corporation's corporate and group
headquarters.
The Corporation has approximately 635,000 sq. ft. of idle
manufacturing and office space in Kansas, Michigan, Pennsylvania, New Jersey,
New York, Massachusetts, France, Germany, Spain, and the U.K., not included
in the above table.
ITEM 3. LEGAL PROCEEDINGS
On February 16, 2000, certain shareholders of the corporation filed
a purported class-action suit in the United States District Court for the
Western District of Tennessee against the Corporation, Clyde R. Moore and
Fred R. Jones. The complaint alleges fraud and violations of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5
thereunder. The plaintiffs allege that purchasers of the Corporation's common
stock between April 28, 1999 and December 14, 1999 were damaged when the
market value of the stock dropped by nearly 29% on December 15, 1999. The
plaintiffs allege generally that the defendants artificially inflated the
market value of the Corporation's common stock by a series of misleading
statements or by failing to disclose certain adverse information. An
unspecified amount of damages is sought. At this time, the Corporation is
investigating the allegations, and is unable to predict the outcome of this
litigation and its ultimate effect, if any, on the financial condition of the
Corporation. However, the Corporation believes that there are meritorious
defenses to the claims and intends to vigorously defend against the
allegations. Mr. Moore and Mr. Jones may be entitled to indemnification by
the Corporation.
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 by the Corporation for the presence of contamination that may
require remediation, including closed facilities in Elizabeth, New Jersey;
Pittsburgh, Pennsylvania; and currently operated facilities in Hager City,
Wisconsin, and Lancaster, South Carolina. In addition, the Corporation is
evaluating or remediating, or may have liability associated with,
contamination at two manufacturing plants, which were sold by American
Electric prior to its acquisition by the Corporation, located in Bainbridge,
Georgia, and Medora, Indiana, 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
Page 9 of 17
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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. The Corporation
believes that the indemnities are reliable; however, there can be no
assurances that such indemnities will be honored. 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. 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 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 those sites. The
Corporation has assumed responsibility for its share of costs at the
remaining eight sites covered by that Agreement.
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 three facilities formerly owned or operated by Amerace,
located in Butler, New Jersey; New Milford, New Hampshire; and Tenafly, New
Jersey; and at two facilities currently owned and operated by Amerace located
in Albuquerque, New Mexico; and 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 eleven 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 formerly 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.
In July 1997, the Corporation acquired Diamond Communications, Inc.
Pursuant to the various environmental laws and regulations described above,
Diamond is evaluating, and may have liability associated with contamination
at its Garwood, New Jersey facility.
In November 1998, the Corporation acquired Kaufel Group, Ltd.
Pursuant to the various environmental laws and regulations described above,
the Corporation is evaluating, and may have liability associated with
contamination at two facilities owned and operated by Kaufel, both located in
Dorval, Quebec.
In January 1999, the Company acquired Ocal, Inc. Pursuant to the
various environmental laws and regulations described above, Ocal is
evaluating, and may have liability associated with contamination at one
facility currently operated by Ocal in Mobile, Alabama.
In September 1999, the Company acquired L.E. Mason Co. Pursuant to
the various environmental laws and regulations described above, L.E. Mason is
evaluating, and may have liability associated with, contamination at one
facility currently operated by L.E. Mason in Boston, Massachusetts.
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 position or results of operations.
The Corporation is subject to other legal proceedings and claims
that arise in the ordinary course of its business. In the opinion of
management, the aggregate liability, if any, with respect to those other
actions will not materially adversely affect the financial position or
results of operations of the Corporation.
Page 10 of 17
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year ended January 2, 2000.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding executive officers of the Corporation is as
follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation
S-K and General Instruction G(3) of Form 10-K):
<TABLE>
<CAPTION>
Date Assumed
Name Position Age Present Position
---- -------- --- ----------------
<S> <C> <C> <C>
Clyde R. Moore President and 46 May 1997
Chief Executive Officer
T. Roy Burton President-Electronics/ 52 March 1994
OEM Group
John R. Janulis Vice President-Controller 55 February 1994
Fred R. Jones Vice President- 52 December 1998
Chief Financial Officer
Jerry Kronenberg Vice President-General 65 May 1998
Counsel and Secretary
Gregory M. Langston Group President- 44 February 1998
International
David D. Myler Vice President- 55 December 1993
Administration
W. Neil Parker President-Electrical 57 May 1996
Components Group
Gary R. Stevenson President-Operations/ 47 December 1998
Administration Group
</TABLE>
Mr. Moore was President and Chief Operating Officer of FL Industries, Inc.
(1990 to 1992) and President of its American Electric Division (1985 to
1992). He was President-Electrical Division (1992 to 1994) and President
and Chief Operating Officer (1994 to 1997) of the Corporation.
Mr. Janulis was Vice President-Finance of the American Electric Division of
FL Industries, Inc. (1990 to 1992) and Vice President-Finance (1992 to
1994) of Thomas & Betts Holdings, Inc. (name changed from FL Industries,
Inc. in 1992).
Mr. Jones was Senior Vice President and Chief Financial Officer (1992 to
1995) of Joy Technologies, Inc. and Vice
President-Finance and Treasurer of the Corporation (1995 to 1998).
Mr. Kronenberg was Chairman of the Labor and Employee Relations Committee
of the law firm of McBride, Baker & Coles (1990 to 1994) and Vice
President-General Counsel of the Corporation (1994 to 1998).
Mr. Langston was President of Groupe Schneider Mexico (1992 to 1995) and
President-Utility Group of the Corporation (1995 to February 1998).
Mr. Myler was Vice President-Administration (1991 to 1993) of Thomas &
Betts Holdings, Inc. (name changed from FL Industries, Inc. in 1992).
Page 11 of 17
<PAGE>
Mr. Parker was President of Thomas & Betts Limited (1992 to 1996),
President-Thomas & Betts Canada (1995 to 1996), and Chief Executive Officer
of Thomas & Betts Limited (1996 to 1998).
Mr. Stevenson was Vice President-Operations of the American Electric
Division of FL Industries, Inc. (1989 to 1992), Vice President-Operations
(1992 to 1994) of Thomas & Betts Holdings, Inc. (name changed from FL
Industries, Inc. in 1992) and Vice President-Operations of the Corporation
(1994 to 1998).
Mr. Jones and Mr. Myler have informed the Corporation that they will each
retire in 2000. The Corporation has appointed the following persons to become
executive officers:
<TABLE>
<CAPTION>
Date Assumed
Name Position Age Present Position
---- ------------ ----------------
<S> <C> <C> <C>
John P. Murphy Senior Vice 52 March 2000
President and
Chief Financial
Officer
Connie C. Muscarella Vice President- 45 March 1998
Human Resources
</TABLE>
Mr. Murphy was Vice President and Chief Financial Officer of Goulds Pumps,
Inc. (1993 to 1997) and Senior Vice President and Chief Financial Officer
of Johns Manville Corporation (1997 to 2000).
Ms. Muscarella was Vice President-Human Resources of SKW Bio-Systems, Inc.
(1990 to 1998).
Executive officers are elected by, and serve at the discretion of,
the Board of Directors for a term of one year. The current terms expire May
3, 2000. There is no arrangement or understanding between any officer and any
person, other than a director or executive officer of the Corporation acting
in his or her official capacity, pursuant to which any officer was selected.
There is no family relationship between any executive officer and any other
officer or director of the Corporation. There has been no event involving any
executive officer of the Corporation under any bankruptcy act, criminal
proceeding, judgment or injunction during the past five years.
PART II
Information for Items 5 through 8 of this Report appears in the
Corporation's Annual Report to Shareholders for the fiscal year ended January 2,
2000, as indicated in the following table and is incorporated herein by
reference.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Information regarding market information, shareholders and dividends is
contained in the Financial Highlights, Quarterly Review and Corporate
Information sections of the Corporation's Annual Report to Shareholders for the
fiscal year ended January 2, 2000, on pages 3, 55 and 57, and is incorporated
herein by reference.
<TABLE>
<CAPTION>
PAGE IN
ANNUAL REPORT TO
SHAREHOLDERS
----------------
<S> <C>
ITEM 6. SELECTED FINANCIAL DATA
Six-Year Summary of Selected Financial Data..........18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATION............................................19
Page 12 of 17
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK....................................26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Earnings..................28
Consolidated Balance Sheets..........................29
Consolidated Statements of Cash Flows................30
Consolidated Statements of Shareholders' Equity......31
Notes to Consolidated Financial Statements...........32
</TABLE>
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document and the documents that are incorporated by reference
include various forward-looking statements about Thomas & Betts that are
subject to risks and uncertainties. Forward-looking statements include
information concerning future results of operations, cost savings and
synergies. Also, statements that contain words such as "believes," "expects,"
"anticipates," "intends," "estimates," or similar expressions are
forward-looking statements. Shareholders should note that these
forward-looking statements are subject to risks and uncertainties and that
many factors, some of which are discussed elsewhere in this document and in
the documents that are incorporated by reference, could affect the future
financial results of Thomas & Betts. Accordingly, actual results may differ
materially from those expressed or implied by such forward-looking statements
contained or incorporated by reference in this document.
There are numerous important factors that could cause actual results to
differ materially from those in forward-looking statements, certain of which are
beyond the control of Thomas & Betts, including:
- changes in customer demand for various products of Thomas & Betts that
could affect its overall product mix, margins, plant utilization
levels and asset valuations;
- economic slowdown in the U.S. or economic slowdowns in Thomas & Betts'
major offshore markets, including Canada, Western Europe, particularly
Germany and the U.K., Japan and Taiwan;
- effects of significant changes in monetary or fiscal policies in the
U.S. and abroad which could result in currency fluctuations, including
fluctuations in the Canadian dollar, German mark, Japanese yen, Swiss
franc and U.K. pound;
- inflationary pressures which could raise interest rates and
consequently Thomas & Betts' cost of funds;
- unforeseen difficulties in completing identified cost-reduction
actions initiated in the third quarter of 1998, including disposal of
idle facilities, geographic shifts of production locations and closure
of redundant administrative facilities;
- unforeseen problems in Thomas & Betts' computer systems and from third
parties with which Thomas & Betts deals in business transactions,
including those related to "Year 2000" date-recognition ability in
time-sensitive software;
- availability and pricing of commodities and materials needed for
production of Thomas & Betts' products, including steel, copper, zinc,
aluminum, gold, resins, rubber compounds, battery cells and castings;
- increased downward pressure on selling prices for Thomas & Betts'
products;
- unforeseen difficulties arising from past and future acquisitions or
dispositions of businesses;
Page 13 of 17
<PAGE>
- changes in financial results of, or possibly the relationships with,
Thomas & Betts' joint ventures and other equity income investments in
Taiwan, Japan, Belgium and the U.S.;
- changes in environmental regulations, policies and projected
remediation technology advances that could impact projections of
remediation expenses; and
- significant changes in governmental policies domestically and abroad
that could create trade restrictions, patent enforcement issues,
adverse tax rate changes and changes to 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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding members of the Corporation's Board of
Directors is presented in sections "Security Ownership," "Board and Committee
Membership," "Compensation" and "Proposal No. 1, Election of Directors" and
on pages 3 through 9 and pages 17 through 19 of the Definitive Proxy
Statement for the Corporation's Annual Meeting of Shareholders which will be
held May 3, 2000 and is incorporated herein by reference. Information
regarding executive officers of the Corporation is included above in Part I
of this Form 10-K under the caption "Executive Officers of the Registrant"
pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General
Instruction G(3) of Form 10-K. Information required by Item 405 of Regulation
S-K is presented in "Section 16(a) Beneficial Ownership Reporting Compliance"
on page 4 of the Definitive Proxy Statement and is incorporated herein by
reference.
Information for Items 11 through 13 of this Report appears in the
Definitive Proxy Statement for the Corporation's Annual Meeting of Shareholders
to be held on May 3, 2000, as indicated in the following table and is
incorporated herein by reference.
<TABLE>
<CAPTION>
PAGE IN PROXY
STATEMENT
-------------
<S> <C>
ITEM 11. EXECUTIVE COMPENSATION
Compensation............................................8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Security Ownership......................................3
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Transactions with Nonemployee Directors.................9
Employment Contracts, Termination of
Employment and Change-of-Control
Arrangements for Executives.......................13
Page 14 of 17
<PAGE>
Transactions with Management...........................13
</TABLE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(1) 1. Financial Statements
The consolidated financial statements of the Corporation,
together with the report thereon of KPMG LLP, dated March 17,
2000, are presented on pages 28 through 54 of the Corporation's
1999 Annual Report to Shareholders and are incorporated herein by
reference. With the exception of the aforementioned information
and the information incorporated by reference in Items 5, 6, 7
and 8 hereof, the Corporation's 1999 Annual Report to
Shareholders is not to be deemed as filed as part of this Report.
2. Financial Statement Schedules
All financial statement schedules have been omitted because they
are not applicable, not material, or the required information is
included in the consolidated financial statements, or the notes
thereto, contained in the Corporation's 1999 Annual Report to
Shareholders and incorporated herein by reference.
3. Exhibits
Exhibits 3.1, 3.2, 4.1 through 4.14, 10.1 through 10.14, 12, 13,
21, 23 and 24 are being filed in connection with this Report and
incorporated herein by reference.
The Exhibit Index on pages E-1 through E-4 is incorporated herein
by reference.
(2) Reports on Form 8-K
During the last quarter of the period covered by this Report, the
Corporation filed the following Current Reports on Form 8-K:
Filed on October 27, 1999 Form 8-K dated October 26, 1999, Items
5 and 7, announcing the Corporation's financial results for the
fiscal quarter ended October 3, 1999.
Filed on November 19, 1999
Form 8-K dated November 17, 1999, Items 5 and 7, announcing
plans to reissue financial statements for the first fiscal
quarter of 1999.
Filed on December 15, 1999
Form 8-K dated December 14, 1999, Items 5 and 7, announcing that
fourth-quarter earnings could be as much as 40% below the current
First Call consensus earnings expectation.
Filed on December 20, 1999
Form 8-K dated December 20, 1999, Items 5 and 7, announcing the
completion of a review of certain accounting matters.
Page 15 of 17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Corporation has duly caused this Report to
be signed on its behalf by the undersigned, hereunto duly authorized.
THOMAS & BETTS CORPORATION
(Registrant)
BY: /s/FRED R. JONES
--------------------------------------
Fred R. Jones
Vice President-Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Corporation in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
/s/CLYDE R. MOORE* President, Chief Executive
- --------------------------- Officer (PRINCIPAL EXECUTIVE
Clyde R. Moore OFFICER) and Director
/s/FRED R. JONES Vice President-Chief March 23, 2000
- --------------------------- Financial Officer (PRINCIPAL
Fred R. Jones FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER)
/s/ERNEST H. DREW* Director
- ---------------------------
Ernest H. Drew
/s/T. KEVIN DUNNIGAN* Chairman of the Board
- ---------------------------
T. Kevin Dunnigan
/s/JEANANNE K. HAUSWALD* Director
- ---------------------------
Jeananne K. Hauswald
/s/DEAN JERNIGAN* Director
- ---------------------------
Dean Jernigan
/s/RONALD B. KALICH, SR.* Director
- ---------------------------
Ronald B. Kalich, Sr.
/s/ROBERT A. KENKEL* Director
- ---------------------------
Robert A. Kenkel
/s/KENNETH R. MASTERSON* Director
- ---------------------------
Kenneth R. Masterson
</TABLE>
Page 16 of 17
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
/s/THOMAS C. MCDERMOTT* Director
- ---------------------------
Thomas C. McDermott
/s/JEAN-PAUL RICHARD* Director
- ---------------------------
Jean-Paul Richard
/s/JERRE L. STEAD* Director
- ---------------------------
Jerre L. Stead
/s/WILLIAM H. WALTRIP* Director
- ---------------------------
William H. Waltrip
</TABLE>
*By: /s/FRED R. JONES March 23, 2000
----------------------
Fred R. Jones
As attorney-in-fact for the
above-named officers and
directors pursuant to powers
of attorney duly executed by
such persons.
Page 17 of 17
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
3.1 Amended and Restated Charter of the Corporation.
3.2 Bylaws of the Corporation, as amended.
4.1 Indenture dated as of January 15, 1992 between the Corporation
and First Trust of New York, as Trustee, relating to the
Corporation's debt securities. (Filed as Exhibit 4(a) to the
Corporation's 1991 Annual Report on Form 10-K, Commission File
No. 1-4682, and incorporated herein by reference.)
4.2 Supplemental Indenture dated as of May 2, 1996 between the
Corporation and First Trust of New York, as Trustee, relating
to the Corporation's 8 1/4% Senior Notes due January 15, 2004.
(Filed as Exhibit 4.3 to the Corporation's Registration
Statement on Form 8-B filed May 2, 1996, and incorporated
herein by reference.)
4.3 Second Supplemental Indenture dated as of February 10, 1998
between the Corporation and The Chase Manhattan Bank, as
Trustee, relating to the Corporation's Medium-Term Notes the
last of which is due February 13, 2003. (Filed as Exhibit 4.1
to the Corporation's Current Report on Form 8-K dated February
10, 1998, Commission File No. 1-4682, and incorporated herein
by reference.)
4.4 Third Supplemental Indenture dated May 7, 1998 between the
Corporation and The Chase Manhattan Bank, as Trustee, relating
to the Corporation's Medium-Term Notes the last of which is
due May 7, 2008. (Filed as Exhibit 4.1 to the Corporation's
Current Report on Form 8-K dated May 4, 1998, Commission File
No. 1-4682, and incorporated herein by reference.)
4.5 Indenture dated as of August 1, 1998 between the Corporation
and The Bank of New York, as Trustee, relating to the
Corporation's debt securities. (Filed as Exhibit 4.1 to the
Corporation's Current Report on Form 8-K dated February 3,
1999, Commission File No. 1-4682, and incorporated herein by
reference.)
4.6 Supplemental Indenture No. 1 dated February 10, 1999 between
the Corporation and The Bank of New York, a Trustee, relating
to the Corporation's Medium-Term Notes, Series B. (Filed as
Exhibit 4.2 to the Corporation's Current Report on Form 8-K
dated February 3, 1999, Commission File No. 1-4682, and
incorporated herein by reference.)
4.7 Form of 6 1/2% Senior Note due January 15, 2006. (Filed as
Exhibit 4.4 to the Corporation's Registration Statement No.
33-00893 on Form S-4 filed February 13, 1996, and incorporated
herein by reference.)
4.8 Form of 8 1/4% Senior Note due January 15, 2004. (Filed as
Exhibit 4(b) to the Corporation's 1991 Annual Report on Form
10-K, Commission File No. 1-4682, and incorporated herein by
reference.)
4.9 Form of 6.29% Medium-Term Note due nine months or more from
date of issue. (Filed as Exhibit 4.2 to the Corporation's
Current Report on Form 8-K dated February 10, 1998, Commission
File No. 1-4682, and incorporated herein by reference.)
4.10 Form of 6.25% Medium-Term Note due nine months or more from
date of issue. (Filed as Exhibit 4.2 to the Corporation's
Current Report on Form 8-K dated May 4, 1998, Commission File
No. 1-4682, and incorporated herein by reference.)
E-1
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.11 Form of 6.39% Medium-Term Note, Series B, due nine months or
more from date of issue. (Filed as Exhibit 4.3 to the
Corporation's Current Report on Form 8-K dated February 3,
1999, Commission File No. 1-4682, and incorporated herein by
reference.)
4.12 Rights Agreement dated as of December 3, 1997 between the
Corporation and First Chicago Trust Company of New York, as
Rights Agent and Form of Rights Certificate. (Filed as
Exhibits 1 and 2 to the Corporation's Registration Statement
on Form 8-A filed December 15, 1997 and incorporated herein by
reference.)
4.13 Amended and Restated Indenture dated July 29, 1999 between
Thomas & Betts Limited, a subsidiary of the Corporation, and
Montreal Trust Company of Canada, as Trustee, relating to
7.15% Senior Debentures due 2008. This agreement is not being
filed as an exhibit pursuant to Regulation S-K, Item
601(b)(4)(iii); however, the Corporation will provide a copy
of such agreement to the Commission upon request.
4.14 Supplemental Indenture No. 1 dated as of January 3, 2000
between Thomas & Betts Limited and Montreal Trust Company of
Canada, as Trustee, relating to 7.15% Senior Debentures due
2008. This agreement is not being filed as an exhibit pursuant
to Regulation S-K, Item 601(b)(4)(iii); however, the
Corporation will provide a copy of such agreement to the
Commission upon request.
10.1 Five-Year Credit Agreement dated July 1, 1998 among the
Corporation, Morgan Guaranty Trust Company of New York, as
Agent, and certain lenders. (Filed as Exhibit 10.1 to the
Corporation's third quarter 1998 Quarterly Report on Form
10-Q, Commission File No. 1-4682, and incorporated herein by
reference.)
10.2 Amendment No. 1 to the Five-Year Credit Agreement dated as of
January 4, 1999 among the Corporation, Morgan Guaranty Trust
Company of New York, as Agent, and certain lenders. (Filed as
Exhibit 10.2 to the Corporation's 1998 Annual Report on Form
10-K, Commission File No.1-4682 and incorporated herein by
reference.)
10.3 Amended and Restated 364-Day Credit Agreement dated as of June
30, 1999 among the Corporation, Wachovia Bank, N.A., as Agent,
and certain lenders. (Filed as Exhibit 10.1 to the
Corporation's second quarter 1999 Quarterly Report on Form
10-Q, Commission File No. 1-4682, and incorporated herein by
reference.)
10.4 1993 Management Stock Ownership Plan, as amended (Filed as
Exhibit 10.6 to the Corporation's 1997 Annual Report on Form
10-K, Commission File No. 1-4682, and incorporated herein by
reference), and Forms of Stock Option Agreements and Form of
Restricted Stock Award Agreement.
10.5 Executive Incentive Plan, effective May 5, 1999.
10.6 Pension Restoration Plan effective January 1, 1995. (Filed as
Exhibit 10.8 to the Corporation's 1997 Annual Report on Form
10-K, Commission File No. 1-4682, and incorporated herein by
reference.)
10.7 Retirement Plan for Nonemployee Directors dated September 6,
1989, as amended December 3, 1997. (Filed as Exhibit 10.9 to
the Corporation's 1997 Annual Report on Form 10-K, Commission
File No. 1-4682, and incorporated herein by reference.)
E-2
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
10.8 Deferred Fee Plan for Nonemployee Directors as amended and
restated effective May 6, 1998. (Filed as Exhibit 10.11 to the
Corporation's 1998 Annual Report on Form 10-K, Commission File
No. 1-4682, and incorporated herein by reference.)
10.9 Form of executive officer employment agreement, as amended.
(Filed as Exhibit 10.11 to the Corporation's 1997 Annual
Report on Form 10-K, Commission File No. 1-4682, and
incorporated herein by reference.)
10.10 Executive Retirement Plan as amended December 1, 1999.
10.11 Supplemental Executive Investment Plan, effective January 1, 1997.
10.12 Restricted Stock Plan for Nonemployee Directors effective May 6, 1992.
(Filed as Exhibit 10.14 to the Corporation's 1998 Annual
Report on Form 10-K, Commission File No. 1-4682, and
incorporated herein by reference.)
10.13 Nonemployee Directors Stock Option Plan effective May 5, 1999 and
Form of Stock Option Agreement.
10.14 Agreement with T. Kevin Dunnigan dated February 5, 1997.
(Filed as Exhibit 10 to the Corporation's 1996 Annual Report
on Form 10-K, Commission File No. 1-4682, and incorporated
herein by reference.)
12 Statement re Computation of Ratio of Earnings to Fixed Charges.
13 Annual Report to Shareholders for the fiscal year ended January 2, 2000.
21 Subsidiaries of the Corporation.
23 Consent of Independent Public Accountants.
24 Powers of Attorney.
</TABLE>
E-3
<PAGE>
EXHIBIT 23
ACCOUNTANTS' CONSENT
The Shareholders and Board of Directors
Thomas & Betts Corporation:
We consent to incorporation by reference in the Registration Statements (No.
33-56789, No. 33-68370, No. 333-80435, No. 333-93101, No. 333-31290 and No.
333-31302) on Form S-8, Registration Statements (No. 333-61465, No. 333-60459,
No. 333-87025, No. 333-93161 and No. 333-80483) on Form S-3 and Registration
Statement (No. 333-893) on Form S-4 of Thomas & Betts Corporation of our report
dated March 17, 2000, relating to the consolidated balance sheets of Thomas &
Betts Corporation and subsidiaries as of January 2, 2000 and January 3, 1999,
and the related consolidated statements of earnings, cash flows and
shareholders' equity for each of the years in the three-year period ended
January 2, 2000, which report appears or is incorporated by reference in the
January 2, 2000 Annual Report on Form 10-K of Thomas & Betts Corporation.
KPMG LLP
Memphis, Tennessee
March 24, 2000
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED CHARTER
OF
THOMAS & BETTS CORPORATION
ARTICLE I.
CORPORATE NAME
The name of the corporation is Thomas & Betts Corporation.
ARTICLE II.
REGISTERED AGENT AND OFFICE
The registered agent of the corporation is C T Corporation System, and
the registered office of the corporation is at 530 Gay Street, Knoxville, County
of Knox, Tennessee 37902.
ARTICLE III.
PRINCIPAL OFFICE
The principal office of the corporation is at 8155 T&B Boulevard,
Memphis, Tennessee 38125.
ARTICLE IV.
INCORPORATORS
The incorporators are T. Kevin Dunnigan and Clyde R. Moore, 1555
Lynnfield Street, Memphis, Tennessee 38119.
ARTICLE V.
NATURE AND PURPOSES OF CORPORATION
The corporation is for profit. The purposes for which this corporation
is organized are to engage in and to do any lawful act concerning any or all
lawful business for which corporations now or at any time hereafter may be
incorporated under the Tennessee Business Corporation Act, as amended from time
to time.
ARTICLE VI.
AUTHORIZED SHARES
The corporation is authorized to issue 251,000,000 shares, consisting of
250,000,000 shares of Common Stock, $.10 par value, and 1,000,000 shares of
Preferred Stock, $.10 par value. The designations, relative rights, preferences
and limitations of the shares of each class, or the manner in which such
relative rights, preferences and limitations are determined, are as follows:
COMMON STOCK. The Common Stock shall have full voting rights and shall
entitle the holders thereof to one vote for each share of Common Stock held.
<PAGE>
PREFERRED STOCK. Subject to the provisions hereof, the Board of Directors
is hereby expressly authorized to determine, in whole or in part, the
preferences, limitations and relative rights of the Preferred Stock as a class,
and to issue shares of Preferred Stock in series, and to fix from time to time
before issuance the number of shares to be included in each series and the
designations, relative rights, preferences and limitations of all shares of each
series. The authority of the Board of Directors with respect to each series
shall include, without limitation, the determination of any or all of the
following matters:
A. The number of shares constituting such series and the designation
thereof to distinguish the shares of such series from the shares of all other
series;
B. The dividend rate on the shares of such series and whether such
dividends shall be cumulative and, if cumulative, the date from which dividends
shall accumulate;
C. The redemption price or prices for shares of such series, if
redeemable, and the terms and conditions of such redemption;
D. The preference, if any, of shares of such series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
corporation;
E. The voting rights, if any, of shares of such series in addition to the
voting rights prescribed by law and the terms of exercise of such voting rights;
F. The right, if any, of shares of such series to be converted into
shares of any other series or class and the terms and conditions of such
conversion;
G. The terms or amount of any sinking fund provided for the purchase or
redemption of such series; and
H. Any other relative rights, preferences and limitations of such series.
The shares of each series may vary from the shares of any other series as
to any of such matters.
SERIES A PREFERRED PARTICIPATING CUMULATIVE PREFERRED STOCK.
SECTION 1. DESIGNATION AND NUMBER OF SHARES. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 300,000. Such number of shares of the Series A Preferred Stock may be
increased or decreased by resolution of the Board of Directors; PROVIDED that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
issuable upon exercise or conversion of outstanding rights, options or other
securities issued by the Corporation.
2
<PAGE>
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable on March 31, June 30,
September 30 and December 31 of each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $1.00 and (ii) subject to the
provision for adjustment hereinafter set forth, 200 times the aggregate per
share amount of all cash dividends or other distributions and 200 times the
aggregate per share amount of all non-cash dividends or other distributions
(other than (A) a dividend payable in shares of Common Stock, no par value per
share, of the Corporation (the "Common Stock") or (B) a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise)), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
If the Corporation shall at any time after December 3, 1997 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause 2(a)(ii) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph 2(a) above immediately after
it declares a dividend or distribution on the Common Stock (other than as
described in clauses 2(a)(ii)(A) and 2(A)(ii)(B) above); PROVIDED that if no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first issuance of any share or
fraction of a share of Series A Preferred Stock and such first Quarterly
Dividend Payment Date), a dividend of $1.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(d) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is on or before the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issue of such shares, or
unless
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the date of issue is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment date, in which case
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for determination of
holders of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall not be more
than 60 days prior to the date fixed for the payment thereof.
SECTION 3. VOTING RIGHTS. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 200 votes
on all matters submitted to a vote of shareholders of the Corporation. If the
Corporation shall at any time after the Rights Declaration Date pay any dividend
on Common Stock payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as a single class on all matters submitted to a vote of shareholders of
the Corporation.
(c) (i) If at any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock and any other series of
Preferred Stock then entitled as a class to elect directors, voting together as
a single class, irrespective of series, shall have the right to elect two
Directors.
(ii) During any default period, such voting right of the holders
of Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph 3(c)(iii) hereof or at any annual meeting of
shareholders, and thereafter at annual meetings of shareholders, PROVIDED that
neither such voting right nor the right of the holders of any other
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series of Preferred Stock, if any, to increase, in certain cases, the authorized
number of Directors shall be exercised unless the holders of 10% in number of
shares of Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of holders of Common Stock shall not affect the exercise
by holders of Preferred Stock of such voting right. At any meeting at which
holders of Preferred Stock shall exercise such voting right initially during an
existing default period, they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of Directors as may then
exist up to two Directors or, if such right is exercised at an annual meeting,
to elect two Directors. If the number which may be so elected any special
meeting does not amount to the required number, the holders of the Preferred
Stock shall have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required number. After
the holders of the Preferred Stock shall have exercise their right to elect
Directors in any default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or PARI PASSU with the Series A Preferred
Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than 10% of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of holders of Preferred Stock, which meeting shall thereupon
be called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this paragraph 3(c)(iii)
shall be given to each holder of record of Preferred Stock by mailing a copy of
such notice to him or her at his or her last address as the same appears on the
books of the Corporation. Such meeting shall be called for a time not earlier
than 20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than 10% of the total number of
shares of Preferred Stock outstanding, irrespective of series. Notwithstanding
the provisions of this paragraph 3(c)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of shareholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
3(c)(ii) hereof) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected the
Director whose office shall have become vacant. References in this paragraph
3(c) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
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(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the charter or bylaws irrespective of any increase
made pursuant to the provisions of paragraph 3(c)(ii) hereof (such number being
subject, however, to change thereafter in any manner provided by law or in the
charter or bylaws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(d) The Charter of the Corporation shall not be amended in any manner
(whether by merger or otherwise) so as to adversely affect the powers,
preferences or special rights of the Series A Preferred Stock without the
affirmative vote of the holders of a majority of the outstanding shares of
Series A Preferred Stock, voting separately as a class.
(e) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not be
required for taking any corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on outstanding shares of Series A Preferred Stock shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such other
parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock; PROVIDED that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
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(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for value any shares of stock of the Corporation
unless the Corporation could, under paragraph 4(a), purchase or otherwise
acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as a part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors as permitted by the Charter
or as otherwise permitted under Tennessee Law.
SECTION 6. LIQUIDATION, DISSOLUTION AND WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of share of Series A Preferred Stock shall have
received $1.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment;
PROVIDED that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 200 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all such other parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Corporation shall at any time
after the Rights Declaration Date pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such
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event under the provision clause (1) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 7. CONSOLIDATION, MERGER, ETC. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 200 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 8. NO REDEMPTION. The Series A Preferred Stock shall not be
redeemable.
SECTION 9. RANK. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
SECTION 10. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share which shall entitled the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
ARTICLE VII.
MANAGEMENT OF THE CORPORATION
The property, affairs, and business of the corporation shall be managed
by a Board of Directors which shall exercise all the powers of the corporation
without action by the shareholders, except as otherwise expressly provided by
statute or by this Charter or by the Bylaws.
The Board of Directors may make Bylaws, and, from time to time may alter,
amend or
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repeal any Bylaws; but any Bylaw made, altered or amended by the Board of
Directors may be altered, amended or repealed by the shareholders at any annual
meeting or at any special meeting provided notice of such proposed alteration,
amendment or repeal is included in the notice of meeting.
In discharging the duties of a director and in determining what the
director reasonably believes to be in the best interests of the corporation, a
director may, in addition to considering the effects of any action on
shareholders and to the maximum extent permitted by law, consider any relevant
factor. Without limiting the generality of the foregoing, the Board of Directors
of the corporation may consider the effects a proposed merger, exchange, tender
offer or significant disposition of the assets of the corporation or any of the
corporation's subsidiaries would have on the corporation's employees, customers,
suppliers, and the communities in which the corporation or its subsidiaries
operate or are located, and the long-term as well as the short-term interests of
the corporation and its shareholders, including the possibility that these
interests may best be served by the continued independence of the corporation,
in connection with its deliberations concerning, and actions taken with respect
to, such merger, exchange, tender offer or significant disposition of assets.
ARTICLE VIII.
LIMITATION OF DIRECTOR LIABILITY
No person who is or was a director of the corporation, or such person's
heirs, executors or administrators, shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this provision shall not eliminate
or limit the liability of any such party (i) for any breach of a director's duty
of loyalty to the corporation or its shareholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, or (iii) for unlawful distributions under the Tennessee Business
Corporation Act. Any repeal or modification of the provisions of this Article
VIII, directly or by the adoption of an inconsistent provision of this Charter,
shall not adversely affect any right or protection in favor of a particular
individual at the time of such repeal or modification.
ARTICLE IX.
SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders may be called at any time by the
Chairman of the Board of Directors or by the President or by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
directors which the corporation would have at the time of the adoption of such
resolution if there were no vacancies, and by no other person or persons.
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ARTICLE X.
REMOVAL OF DIRECTORS AND FILLING OF VACANCIES
Any director may be removed, either with or without cause, at any time,
by the affirmative vote of at least 50% of the total number of votes entitled to
be cast at a special meeting of shareholders called for that purpose.
Any director may be removed for cause, at any time, by a majority vote of
the entire Board of Directors at a meeting called for that purpose, the notice
of meeting for which states that a purpose of the meeting is the removal of a
director.
Any vacancy in the Board of Directors arising at any time and for any
cause, may be filled by the vote of a majority of the directors remaining in
office. Any vacancy not filled by the Board of Directors may be filled by the
shareholders at an annual meeting or at a special meeting of shareholders called
for that purpose.
Dated: May 6, 1998 THOMAS & BETTS CORPORATION
By: /s/ Clyde R. Moore
------------------------------
Clyde R. Moore
President and Chief Executive Officer
Attested:
/s/ Jerry Kronenberg
- ----------------------------
Jerry Kronenberg, Secretary
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Exhibit 3.2
BYLAWS
OF
THOMAS & BETTS CORPORATION
As Adopted by the Board of Directors March 11, 1996
and
Amended and Restated September 3, 1997
and
Amended and Restated February 3, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 MEETINGS OF SHAREHOLDERS........................................1
Section 1 Annual Meeting..................................................1
Section 2 Special Meetings................................................1
Section 3 Place of Meetings...............................................1
Section 4 Notice of Meetings..............................................1
Section 5 Quorum; Adjournment.............................................1
Section 6 Organization....................................................1
Section 7 Voting..........................................................2
Section 8 Shareholder Lists...............................................2
Section 9 Notice of Business and Nominations..............................2
A. Annual Meetings of Shareholders.............................2
B. Special Meetings of Shareholders............................3
C. General.....................................................4
Section 10 Inspectors of Elections.........................................4
ARTICLE 2 BOARD OF DIRECTORS..............................................5
Section 1 General Powers..................................................5
Section 2 Number, Election and Term of Office.............................5
Section 3 Meetings........................................................5
Section 4 Place of Meeting................................................5
Section 5 Notice of Meetings..............................................5
Section 6 Quorum and Manner of Acting.....................................6
Section 7 Organization....................................................6
Section 8 Resignations....................................................6
Section 9 Removal of Directors............................................6
Section 10 Vacancies.......................................................6
Section 11 Compensation....................................................6
Section 12 Increasing Number of Directors..................................7
ARTICLE 3 EXECUTIVE AND OTHER COMMITTEES..................................7
Section 1 Executive Committee, General Powers and Membership..............7
Section 2 Procedure.......................................................7
Section 3 Other Committees................................................7
ARTICLE 4 OFFICERS........................................................8
Section 1 Election, Term of Office and Qualifications.....................8
Section 2 Removal.........................................................8
Section 3 Resignations....................................................8
Section 4 Vacancies.......................................................8
Section 5 Chairman of the Board of Directors..............................8
Section 6 President.......................................................8
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<CAPTION>
<S> <C> <C>
Section 7 Chief Executive Officer.........................................8
Section 8 Secretary and Assistant Secretary...............................9
Section 9 Treasurer.......................................................9
ARTICLE 5 INDEMNIFICATION OF OFFICERS AND DIRECTORS......................10
Section 1 Right to Indemnification.......................................10
Section 2 Right of Claimant to Bring Suit................................10
Section 3 Non-Exclusivity of Rights; Continuation of Rights..............11
Section 4 Insurance......................................................11
ARTICLE 6 EXECUTION OF INSTRUMENTS, ETC..................................11
Section 1 Contracts, Etc., How Executed..................................11
Section 2 Deposits.......................................................12
Section 3 Checks, Drafts, Etc............................................12
ARTICLE 7 SHARES AND THEIR TRANSFER; SHAREHOLDER RECORDS.................12
Section 1 Certificates of Stock..........................................12
Section 2 Transfer of Shares.............................................12
Section 3 Closing of Transfer Books; Record Date.........................12
Section 4 Lost and Destroyed Certificates................................13
Section 5 Regulations....................................................13
ARTICLE 8 NOTICE.........................................................13
Section 1 Waiver of Notice...............................................13
ARTICLE 9 MISCELLANEOUS..................................................13
Section 1 Fiscal Year....................................................13
Section 2 Seal...........................................................13
ARTICLE 10 AMENDMENTS.....................................................14
Section 1 ...............................................................14
</TABLE>
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BYLAWS
ARTICLE 1
MEETINGS OF SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of shareholders for
the election of directors and for the transaction of such other business as may
properly come before said meeting shall be held on a day during the period from
April 15 to May 15, or on any other day, and at a time determined by the Board
of Directors.
Section 2. SPECIAL MEETINGS. Except as otherwise required by law,
a special meeting of shareholders may be called at any time by the Chairman of
the Board of Directors if he or she is an officer of the Corporation or by the
President or by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of directors which the Corporation would have at
the time of the adoption of such resolution if there were no vacancies (the
"Whole Board") and by no other person or persons.
Section 3. PLACE OF MEETINGS. All meetings of shareholders shall be
held at the principal office of the Corporation in the State of Tennessee, or at
other places in or outside of such State as may be designated by the Board of
Directors and specified in the notice of meeting.
Section 4. NOTICE OF MEETINGS. Notice of each meeting stating the
purpose or purposes for which the meeting is called and the time when and the
place where it is to be held, shall be served upon each shareholder of record
entitled to vote at such meeting, either personally or by mailing such notice to
him or her or by such other manner as may be permitted by the Tennessee Business
Corporations Act, not less than 10 days nor more than two months before the time
fixed for such meeting. If mailed, it shall be directed to a shareholder at his
or her address as it appears on the shareholder list. Any previously scheduled
meeting of the shareholders may be postponed by resolution of the Board of
Directors upon public notice given prior to the date previously scheduled for
such meeting of shareholders.
Section 5. QUORUM; ADJOURNMENT. Except as otherwise provided by law or
by the Charter, at each meeting of shareholders, the holders of record of a
majority of the total number of the shares of capital stock entitled to vote
must be present in person or by proxy to constitute a quorum for the transaction
of business. Whether or not there is a quorum at any meeting, the shareholders
present and entitled to cast a majority of the votes thereat or the Chairman of
the meeting may adjourn and readjourn the meeting from time to time. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.
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Section 6. ORGANIZATION. At every meeting of the shareholders, the
Chairman of the Board of Directors, or, in his or her absence, the President,
or, in his or her absence, a Vice President designated by the President or, in
the absence of such designation, a chairman designated by the Board of
Directors, shall act as Chairman. The Secretary or the Assistant Secretary or
such officer of the Corporation designated by the chairman shall act as
secretary of each meeting of the shareholders.
Section 7. VOTING. Each shareholder of record present shall be entitled
at each meeting of shareholders to such number of votes as shall be prescribed
by the Charter for the shares of capital stock recorded in his or her name in
the shareholder records of the Corporation:
(a) at the record date fixed as provided in Section 3 of
Article 7, or
(b) if no such record date shall have been fixed, then at the
close of business on the eleventh day before the day of
such meeting.
The voting at any meeting of shareholders need not be by ballot, unless
specifically required by law or requested by a qualified voter present in person
or by proxy.
Except to the extent permitted under the Tennessee Business Corporation
Act, shares of the Corporation's capital stock shall not be entitled to vote if
such shares are owned, directly or indirectly, by another corporation of which
the Corporation owns, directly or indirectly, a majority of the shares entitled
to vote for directors of such corporation. Notwithstanding, the foregoing shall
not limit the power of the Corporation to vote any shares, including its own
shares, held by it in a fiduciary capacity.
Section 8. SHAREHOLDER LISTS. The Transfer Agent or the Secretary, or
such other officer as may be designated by the Board of Directors, shall make a
full, true and complete list, in alphabetical order, of all shareholders
entitled to vote at each annual or special meeting of shareholders, and the
address and the number of shares of capital stock held by each. The Board of
Directors shall produce such list at the time and place of the meeting, to
remain there during the meeting. Such list shall be the only evidence as to who
are the shareholders entitled to vote at the meeting.
Section 9. NOTICE OF BUSINESS AND NOMINATIONS.
A. ANNUAL MEETINGS OF SHAREHOLDERS.
[1] Nominations of persons for election to the Board of
Directors of the Corporation and any proposal of business to be
considered by the shareholders may be made at an annual meeting of
shareholders only (a) pursuant to the Corporation's notice of meeting,
(b) by or at the direction of the Board of Directors or (c) by any
shareholder of the Corporation who was a shareholder of record at the
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time of giving of notice provided for in this Section, who is entitled to
vote at the meeting and who complied with the notice procedures set forth
in this Section.
[2] For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (c) of
paragraph (A) (1) of this Section, the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be
timely, a shareholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 120 days
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the shareholder to be timely must be so
delivered not later than the close of business on the later of the 120th
day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made.
Such shareholder's notice shall set forth (a) as to each person
whom the shareholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); (b) as
to any other business that the shareholder proposes to bring before the
meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c)
as to the shareholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (i) the name and
address of such shareholder, as such name and address appear in the
Corporation's shareholder records, and of such beneficial owner and (ii)
the class and number of shares of the Corporation which are owned
beneficially and of record by such shareholder and such beneficial owner.
[3] Notwithstanding anything in the second sentence of paragraph
(A) (2) of this Section to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees
for director or specifying the size of the increased Board of Directors
made by the Corporation at least 120 days prior to the first anniversary
of the preceding year's annual meeting, a shareholder's notice required
by this Section shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Corporation.
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B. SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall
be conducted at a special meeting of shareholders as shall have been
brought before the meeting pursuant to the notice of meeting. Nominations
of persons for election to the Board of Directors may be made at a
special meeting of shareholders at which directors are to be elected
pursuant to the notice of meeting (a) by or at the direction of the Board
of Directors or (b) by any shareholder of the Corporation who is a
shareholder of record at the time of giving of notice provided for in
this Section, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section.
Nominations by shareholders of persons for election to the Board of
Directors may be made at such a special meeting of shareholders if the
shareholder's notice required by paragraph (A) (2) of this Section shall
be delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the 90th day prior to such special meeting
and not later than the close of business on the later of the 60th day
prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.
C. GENERAL.
[1] Only such persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Section. Except as otherwise
provided by law, the Chairman of the meeting shall have the power and
duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set
forth in this Section and, if any proposed nomination or business is not
in compliance with this Section, to declare that such defective proposal
or nomination shall be disregarded.
[2] For purposes of this Section, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15 (d) of the Exchange
Act.
[3] Notwithstanding the foregoing provisions of this Section, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section. Nothing in this Section shall be
deemed to affect any rights of shareholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act.
Section 10. INSPECTORS OF ELECTIONS. The Board of Directors by
resolution shall appoint one or more inspectors, which inspector or inspectors
may include individuals who serve the Corporation in other capacities,
including, without limitation, as officers, employees,
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agents or representatives of the Corporation, to act at the meeting and make a
written report thereof. One or more persons may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate has been appointed to act or is able to act at a meeting of
shareholders, the chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before discharging his or her duties,
shall take and sign an oath or affirmation faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability.
ARTICLE 2
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business of the Corporation, except as
otherwise expressly provided by law or by the Charter, shall be managed by the
Board of Directors.
Section 2. NUMBER, ELECTION AND TERM OF OFFICE. A Board of Directors of
not less than seven nor more than fifteen members as may be determined by the
Board of Directors at a meeting held prior to the annual meeting shall be
elected at the annual meeting of shareholders. The number of directors to be
elected shall be stated in the notice of the meeting. Subject to such
limitation, the persons receiving the greatest number of votes shall be the
directors and they shall hold office until the next annual meeting and until
their successors shall have been elected and qualified, or until death,
resignation, disqualification or removal. Each director shall within one month's
time of his or her election and so long as he or she shall continue to be a
director, be a bona fide holder of at least one share of the Common Stock of the
Corporation.
Section 3. MEETINGS. The Board of Directors shall hold regular
meetings on such days and at such hours as may be fixed by the Board of
Directors from time to time, except that a regular meeting shall be held as soon
as practicable after the adjournment of the annual meeting of the shareholders
at which such Board of Directors shall have been elected, for the purpose of
organization, the election of officers and the transaction of such other
business as may properly come before the meeting.
Special meetings shall be held whenever called by the Chairman of the
Board of Directors or by the President or any two directors.
Section 4. PLACE OF MEETING. Meetings of the Board of Directors shall
be held at the principal office of the Corporation or at such other place as the
Board of Directors may from time to time determine.
Section 5. NOTICE OF MEETINGS. Notice need not be given for regular
Board of Directors meetings, the dates, times, and places of which have been
fixed by the Board of Directors in advance for the calendar year. Notice of a
special meeting or of a change in the date, time, or place of holding a regular
Board of Directors meeting shall be communicated (i) in writing to each director
at the director's residence or usual place of business, or at such
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<PAGE>
other address as the director may have designated in a written request filed
with the Secretary, at least two days before the day on which the meeting is to
be held, or (ii) orally, in person or by telephone, at least 24 hours before the
time at which the meeting is to be held. Notice of any meeting of the Board of
Directors may be waived in writing by any director either before or after the
time of such meeting; and at any meeting at which every director shall be
present, even though without any notice, any business may be transacted.
Section 6. QUORUM AND MANNER OF ACTING. A majority of the total number
of directors shall be present in person or by telephone at any meeting of the
Board of Directors in order to constitute a quorum for the transaction of
business thereat. Whether or not there is a quorum at any meeting, a majority of
the directors who are present may adjourn and readjourn any meeting from time to
time to a day and hour certain.
Section 7. ORGANIZATION. At every meeting of the Board of Directors,
the Chairman of the Board of Directors, or, in his or her absence, the
President, or, in his or her absence, a chairman chosen by a majority of the
directors present, shall preside. The Secretary of the Corporation shall act as
secretary of the meetings of the Board of Directors. At any meeting of the Board
of Directors, in the absence of the Secretary, the chairman of such meeting
shall appoint a person to act as secretary of the meeting.
Section 8. RESIGNATIONS. Any director may resign at any time by giving
written notice to the Chairman of the Board of Directors or to the President or
to the Secretary of the Corporation or to the Board of Directors. Such
resignation shall take effect at the time specified therein and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 9. REMOVAL OF DIRECTORS. Any director may be removed, either
with or without cause, at any time, by the affirmative vote of at least 50% of
the total number of votes entitled to be cast at a special meeting of
shareholders called for that purpose. Any director may be removed for cause, at
any time, by a majority vote of the entire Board of Directors at a meeting
called for that purpose, the notice of meeting for which states that a purpose
of the meeting is the removal of a director.
Section 10. VACANCIES. Any vacancy in the Board of Directors arising at
any time and for any cause, may be filled by the vote of a majority of the
directors remaining in office. Any vacancy not filled by the Board of Directors
may be filled by the shareholders at an annual meeting or at a special meeting
of shareholders called for that purpose.
Section 11. COMPENSATION. The Board of Directors, by the affirmative
vote of a majority of directors in office and irrespective of any personal
interest of any of them, shall have the authority to establish reasonable
compensation, including reimbursement of expenses, of directors for services to
the Corporation as directors, officers or otherwise. Nothing herein contained
shall be construed to preclude any director from serving in any other capacity
or receiving compensation for such service.
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Section 12. INCREASING NUMBER OF DIRECTORS. The Board of Directors shall
have power at any time when the shareholders as such are not assembled in a
meeting, regular or special, to increase the number of directors elected by the
shareholders and forthwith to fill such position or positions by the election of
one or more directors, to hold office until the next annual meeting of
shareholders, and until his, her or their successor or successors are elected
and qualified.
ARTICLE 3
EXECUTIVE AND OTHER COMMITTEES
Section 1. EXECUTIVE COMMITTEE, GENERAL POWERS AND MEMBERSHIP. From
time to time, the Board of Directors may, by a majority of the Whole Board,
appoint from its members an Executive Committee consisting of at least three
members of the Board of Directors, a majority of whom shall not be employees of
the Corporation, and the Committee shall meet at the call of the Chairman, or,
in the absence of the Chairman, at the call of any member of such committee, to
act for the Board of Directors, to the extent permitted by law, in any situation
in which action of the Board of Directors is required and it is not practicable
to have a meeting of the Board of Directors. The Executive Committee shall have
and may exercise all the powers of the Board of Directors except the power to
authorize or approve distributions or reacquisition of shares, except according
to a formula or method prescribed by the Board of Directors, the power to
appoint or remove a member of the Executive Committee or other committee, the
power to fill vacancies in the Board of Directors, the power to remove an
officer appointed by the Board of Directors, the power to amend or repeal these
Bylaws and the power to authorize or approve the issuance or sale or contract
for sale of shares, or to determine the designation and relative rights,
preferences, and limitations of a class or series of shares, except as
authorized by the Board of Directors within limits specifically prescribed by
the Board of Directors. All actions of the Executive Committee shall be reported
to the Board of Directors at its meeting next succeeding such action and,
insofar as the rights of third parties shall not be affected thereby, shall be
subject to revision and alteration by the Board of Directors.
All members of the Board of Directors not appointed to the Executive
Committee may be authorized by appropriate action of the Board of Directors to
attend the meetings of the Executive Committee as observers but without any
right to vote at such meetings and shall be entitled to receive such fees as
shall be fixed by the Board of Directors.
Section 2. PROCEDURE. The Executive Committee shall fix its own
rules of procedure and shall meet where and as provided by such rules or by
resolution of the Board of Directors. The presence in person or by telephone of
a majority shall be necessary to constitute a quorum and in every case the
affirmative vote of a majority of all members of the committee shall be
necessary.
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Section 3. OTHER COMMITTEES. From time to time, the Board of Directors,
by resolution adopted by a majority vote of the Whole Board, may appoint any
other committee or committees for any purpose or purposes with such powers as
shall be specified in the resolution of appointment and permitted by law.
ARTICLE 4
OFFICERS
Section 1. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Board of
Directors shall elect a President, a Secretary and a Treasurer and it may elect
a Chairman of the Board of Directors, who may or may not be designated an
officer of the Corporation, one or more Vice Presidents and such other officers
as it may deem necessary from time to time, with such authority and such duties
as may be prescribed by the Board of Directors from time to time. Subject to the
provisions of Section 2 and Section 3 of this Article each elected officer shall
hold office until the next annual election and until his or her successor is
chosen and qualified. Divisional officers, who shall not be officers of the
Corporation, may be appointed by the Chief Executive Officer to perform such
duties as may be assigned from time to time by the Chief Executive Officer.
The same person, whether an officer of the Corporation or a divisional
officer, may hold more than one office, so far as permitted by law, except the
offices of president and secretary, and exercise and perform the powers and
duties thereof.
Section 2. REMOVAL. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by a majority of the Whole Board, at
any meeting of the Board of Directors, or by any committee or officer upon whom
such power of removal shall have been conferred by resolution adopted by a
majority of the Whole Board.
Section 3. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Chairman of the Board of Directors if he or she is an
officer of the Corporation or to the President or to the Secretary or to the
Board of Directors. Any such resignation shall take effect at the time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 4. VACANCIES. A vacancy in any office arising from any cause
may be filled for the unexpired portion of the term in the manner prescribed in
these Bylaws for election to such elective office.
Section 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall preside at all shareholders' meetings and meetings of
the Board of Directors. He or she shall perform such additional duties and
possess such additional powers as from time to time shall be prescribed for him
or her by the Board of Directors.
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Section 6. PRESIDENT. The President shall perform such duties and
possess such powers as from time to time shall be prescribed for him or her by
the Board of Directors. In the absence of the Chairman of the Board of Directors
he or she shall perform the duties and possess the powers of the Chairman of the
Board of Directors.
Section 7. CHIEF EXECUTIVE OFFICER. The Board of Directors may from
time to time designate either the Chairman of the Board of Directors or the
President as the Chief Executive Officer of the Corporation to be in general
charge of the business of the Corporation in all its departments. This shall
require the affirmative vote of a majority of the Whole Board given at any
meeting.
Section 8. SECRETARY AND ASSISTANT SECRETARY. The Secretary shall:
A. keep the minutes of all meetings of the shareholders and of
the Board of Directors, and of any committee of the Board of Directors to which
a secretary shall not have been appointed, in books to be kept for the purpose;
B. see that all notices are duly given in accordance with
these Bylaws or as required by law;
C. be custodian of the records (other than financial) and have
charge of the seal of the Corporation and see that it is used upon all papers or
documents whose execution on behalf of the Corporation under its seal is
required by law or duly authorized in accordance with these Bylaws; and
D. in general, perform all duties incident to the office of the
Secretary, and such other duties as from time to time may be assigned by the
Board of Directors or by the Chairman of the Board of Directors if he or she is
an officer of the Corporation or by the President or by any committee thereunto
authorized.
The Assistant Secretary shall, in the absence of the
Scretary, perform the duties and exercise the powers of the Secretary and
shall perform such other duties as from time to time may be assigned by the
Board of Directors or by the Chairman of the Board of Directors if he or she
is an officer of the Corporation or by the President or by any committee
thereunto authorized.
Section 9. TREASURER. The Treasurer shall:
A. have charge and custody of, and be responsible for, all
funds and securities of the Corporation; and
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B. in general, perform all the duties incident to the office of
Treasurer, and such other duties as from time to time may be assigned by the
Board of Directors or by the Chairman of the Board of Directors if he or she is
an officer of the Corporation or by the President or by any committee thereunto
authorized.
ARTICLE 5
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director or officer of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director or officer or in any other capacity while serving as a
director or officer, shall be indemnified and held harmless by the Corporation
to the fullest extent authorized or permitted by the Tennessee Business
Corporation Act, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification conferred in
this Section shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Tennessee Business Corporation Act requires, the
payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1
of this Article is not paid in full by the Corporation within ninety days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim, and, if successful in whole or in part,
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the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Tennessee Business Corporation Act
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, independent legal counsel,
or its shareholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Tennessee Business Corporation Act, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. NON-EXCLUSIVITY OF RIGHTS; CONTINUATION OF RIGHTS. The right
to indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this Article shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Charter, Bylaw, agreement, vote of
shareholders or disinterested directors or otherwise. All rights to
indemnification under this Article shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or served
in such capacity at any time while this Article is in effect. Any repeal or
modification of this Article or any repeal or modification of relevant
provisions of the Tennessee Business Corporation Act or any other applicable
laws shall not in any way diminish any rights to indemnification of such
director or officer or the obligations of the Corporation arising hereunder.
Section 4. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director or officer of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Tennessee Business Corporation Act.
ARTICLE 6
EXECUTION OF INSTRUMENTS, ETC.
Section 1. CONTRACTS, ETC., HOW EXECUTED. All contracts and other
corporate instruments shall be executed in the name of and in behalf of the
Corporation and delivered by the Chairman of the Board of Directors if he or she
is an officer of the Corporation, the President, the President of a division of
the Corporation, any Vice President or the Treasurer and may be attested by the
Secretary, Assistant Secretary or the Vice President-General Counsel unless the
Board of Directors shall specifically direct otherwise.
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Section 2. DEPOSITS. Funds of the Corporation may be deposited from
time to time to the credit of the Corporation with such depositaries as may be
selected by the Board of Directors or by any committee or officer or officers,
agent or agents of the Corporation to whom such power may be delegated from time
to time by the Board of Directors.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes, acceptances, or other evidences of indebtedness
issued in the name of the Corporation shall be signed by the Vice
President-Chief Financial Officer or the Treasurer or such agent or agents of
the Corporation as shall be designated from time to time by the Vice
President-Chief Financial Officer or the Treasurer. Unless otherwise provided by
resolution of the Board of Directors, endorsements for deposit to the credit of
the Corporation in any of its duly authorized depositaries may be made without
counter signature, by the President or any Vice President, or the Treasurer, or
by any other officer or agent of the Corporation to whom such power shall have
been delegated by the Vice President-Chief Financial Officer or Treasurer and
may be made by hand-stamped impression in the name of the Corporation.
ARTICLE 7
SHARES AND THEIR TRANSFER; SHAREHOLDER RECORDS
Section 1. CERTIFICATES OF STOCK. The stock of the Corporation shall be
represented by certificates signed by the Chairman of the Board of Directors if
he or she is an officer of the Corporation or by the President and the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed
with the seal of the Corporation. Such seal may be a facsimile, engraved or
printed. Where any such certificate is signed by a Transfer Agent or Assistant
Transfer Agent or by a Transfer Clerk and by a Registrar, the signatures of the
Chairman of the Board of Directors, President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer and of the Transfer Agent, Assistant Transfer
Agent, Transfer Clerk and Registrar upon such certificate may be facsimiles,
engraved or printed.
Section 2. TRANSFER OF SHARES. Transfers of shares of the capital stock
of the Corporation shall be recorded in the shareholder records of the
Corporation when duly assigned by the holder of record of such shares or by his
or her attorney thereunto duly authorized, and on surrender of the certificate
or certificates, for such shares or pursuant to the abandoned property laws of
any state of the United States if the shareholder's share interest shall be
properly within the jurisdiction of the state and has been deemed abandoned and
subject to custodial retention under the laws of such state.
Section 3. CLOSING OF TRANSFER BOOKS; RECORD DATE. The Board of
Directors may close the stock transfer books for a period not exceeding 60 days
preceding the date of any meeting of shareholders or the date for payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect; provided,
however, in lieu of closing the stock transfer books, as aforesaid the Board of
Directors may at its discretion fix in advance a date, not exceeding 60 days
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<PAGE>
preceding the date of any meeting of shareholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the shareholders entitled to notice of, and
to vote at, any such meeting, or entitled to receive payment of any such
dividend, or any such allotment of rights, or to exercise the rights in respect
to any such change, conversion or exchange of capital stock, and all persons who
are holders of record at such time of the class of stock involved, and no
others, shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend, or allotment of rights or exercise of such
rights, as the case may be.
Section 4. LOST AND DESTROYED CERTIFICATES. The holder of record of any
certificate of stock who shall claim that such certificate is lost or destroyed
may make an affidavit or affirmation of that fact and advertise the same in such
manner as the Board of Directors, the Transfer Agent or the Registrar may
require and give a bond, if required to do so, in the form and in such sum as
the Board of Directors, the Transfer Agent or the Registrar may direct,
sufficient to indemnify the Corporation, the Transfer Agent and the Registrar
against any claim that may be made on account of such certificate, whereupon one
or more new certificates may be issued of the same tenor and for the same
aggregate number of shares as the one alleged to be lost or destroyed.
Section 5. REGULATIONS. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issuance, transfer and
registration of certificates of stock; it may appoint one or more transfer
agents or registrars of transfers or both, and may require all certificates of
stock to bear the signature of either or both.
ARTICLE 8
NOTICE
Section 1. WAIVER OF NOTICE. No notice of the time, place or purpose of
any meeting of shareholders or directors, or of any committee, or any
publication thereof, whether prescribed by law, by the Charter or by these
Bylaws, need be given to any person who attends such meeting, or who, in
writing, executed either before or after the holding thereof, waives such
notice, and such attendance or waiver shall be deemed equivalent to notice.
ARTICLE 9
MISCELLANEOUS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall end on
the Sunday closest to the end of the calendar year.
Section 2. SEAL. The seal of the Corporation shall be a device,
circular in form, containing the name of the Corporation, the figures "1996" and
the words, "Corporate Seal" and "Tennessee." The corporate seal may be used in
printing, engraving, lithographing,
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stamping or otherwise making, placing or affixing, or causing to be printed,
engraved, lithographed, stamped or otherwise made, placed or affixed, upon any
paper or document, by any process whatsoever, an impression facsimile, or other
reproduction of the corporate seal. The Secretary, Assistant Secretary, Vice
President-General Counsel or any other person specifically authorized by the
Board of Directors, may use the seal of the Corporation in connection with
corporate contracts or instruments.
ARTICLE 10
AMENDMENTS
Section 1. These Bylaws may be amended or repealed by the shareholders
at any annual meeting, or at any special meeting if notice of the proposed
amendment or new Bylaws is included in the notice of such meeting. These Bylaws
may be amended or repealed by the affirmative vote of a majority of the Whole
Board given at any meeting, the notice or waiver of notice whereof mentions such
amendment or repeal as one of the purposes of such meeting.
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GRANT AGREEMENT
NONQUALIFIED STOCK OPTION
Thomas & Betts Corporation (the "Corporation"), for and in consideration of
the provisions and conditions as stated herein and in the Corporation's 1993
Management Stock Ownership Plan (the "Plan") and other good and valuable
consideration, does hereby grant to the employee (one of the key employees of
the Corporation) identified in the attached Notice of Grant of Stock Option
(the "Optionee") this option to purchase from the Corporation the number of
shares of Common Stock of the Corporation at the price per share set forth in
the Notice of Grant of Stock Option, which option is not intended to qualify
as an incentive stock option ("ISO") as that term is defined in Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code")
The option granted pursuant to this Grant Agreement (the "Option") shall be
subject to the following conditions:
(1) Subject to the provisions of Paragraph 4, the Option shall become
exercisable in three installments in accordance with the following
schedule and after the expiration of the following periods of time:
<TABLE>
<CAPTION>
Portion of Period from which
Installment Option Grant Option Granted
----------- ------------ -----------------
<S> <C> <C>
First One-third 12 months
Second One-third 24 months
Third One-third 36 months
</TABLE>
If the Optionee does not purchase the full number of shares which he
has at any time become entitled to purchase, he may purchase all or any
part of those shares at any subsequent time during the term of this
Option.
(2) The Option herein granted to the extent that is exercisable may be
exercised by giving written notice to the Corporate Human Resources
Department or other designated person of the
<PAGE>
Corporation at its principal office no later than the Expiration Date
(as defined in Paragraph 3). Such notice shall include a statement of
the number of shares with respect to which this Option is being
exercised and the exercise date, and shall be accompanied by full
tender of the purchase price payable which may be made in whole or in
part either in cash or by the exchange of such number of whole shares
of Thomas & Betts Corporation Common Stock owned by the Optionee whose
fair market value as of the close of the business day immediately
preceding the specified Exercise Date does not exceed the purchase
price payable; PROVIDED, HOWEVER, that the following holding periods
shall have been satisfied with respect to shares to be exchanged: (i)
if the shares to be exchanged were acquired by exercise of an ISO, such
ISO shall have been granted at least two years prior thereto; and (ii)
if the shares to be exchanged were acquired by exercise of an option,
such Common Stock shall have been owned by the Optionee for at least
one year prior to such payment, and FURTHER PROVIDED that the Committee
shall have the right, upon prior notice to the holders of options, to
modify, suspend or cancel the right to pay the purchase price in whole
or in part by exchange of shares at any time in the event the Committee
determines that there has been a change in tax or accounting
consequences to the Corporation or to any Optionee. Nothing in this
agreement shall confer upon the Optionee any rights as a stockholder
prior to the time of the delivery to the Optionee of a stock
certificate for the shares purchased under this agreement.
(3) Unless this Option expires earlier in accordance with any provision of
Paragraph 4, this Option shall expire on the date which is ten (10)
years from the Date of Grant (the "Expiration Date").
(4) If, prior to the Expiration Date, the Optionee (i) becomes totally and
permanently disabled as determined by the Corporation in its sole
discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or
is terminated as an employee of the Corporation, this Option shall be
exercisable under the circumstances and for the time periods set forth
below, but only to the extent such time periods do not extend beyond
the Expiration Date:
(a) If the Optionee's employment terminates or is terminated for
any reason other than (i) retirement, (ii) the Optionee
becoming totally and permanently disabled, or (iii) death,
this Option may be exercised within thirty (30) days of the
date of such termination to the extent exercisable in
accordance with the provisions of Paragraph 1.
<PAGE>
(b) If the Optionee retires at his normal or later retirement date
or, with the consent of the Corporation, takes early
retirement, this Option may be exercised in full,
notwithstanding the provisions of Paragraph 1, at any time
within six (6) years of the date of retirement;
(c) If the Optionee becomes totally and permanently disabled, this
Option may be exercised in full, notwithstanding the provisions
of Paragraph 1, at any time within six (6) years of the date
the Optionee's service as an employee is terminated within the
meaning of the Code by reason of being totally and permanently
disabled;
(d) If the Optionee dies while he is employed or within three (3)
years of his retirement in accordance with subparagraph (b)
above, this Option may be exercised in full, notwithstanding
the provisions of Paragraph 1, at any time within three (3)
years of the Optionee's date of death by the legal
representative of the Optionee or any person who acquires this
Option by bequest or inheritance; and
(e) For purpose of this Paragraph 4, a sick leave or other bona
fide leave of absence granted in accordance with the
Corporation's usual procedure which does not operate to
interrupt continuous employment for other benefits granted by
the Corporation shall not be considered a termination of
employment or an interruption of continuous employment
hereunder and an employee who is granted such a leave of
absence shall be considered to be continuously employed during
such period of leave; provided, that if the Code or the
regulations promulgated thereunder establish a more restrictive
rule defining termination of employment applicable to the
option granted herein, such rule shall be substituted herefor.
(5) The Optionee agrees, by the acceptance of this Option, for himself and
his executors and administrators, that if a registration statement
under the Securities Act of 1933 is not in effect at the time of the
exercise of any portion of this Option, with respect to the sale by the
Corporation and the resale by the Optionee of the shares issuable upon
such exercise, it shall be a condition precedent to the right to
purchase such shares that the notice of exercise shall be accompanied
by a written representation that the Optionee or his executor or
administrator is acquiring such shares for his own or such executor's
or administrator's
<PAGE>
account for investment and not with a view to the distribution thereof.
(6) The Corporation shall not he required to issue or deliver any
certificate or certificates for shares of stock purchased upon the
exercise of this Option until the admission of such shares to listing
on any stock exchange on which the Corporation's stock may then be
listed and until the Corporation takes such steps as may be required by
law and applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange as above
mentioned, or until, in the opinion of counsel for the Corporation, any
such listing or registration or other steps are not required.
(7) The shares issued may be authorized but unissued stock, or treasury
stock, and the number of shares with respect to which this Option may
be exercised, and the price payable with respect thereto, shall be
properly adjusted if the Corporation shall at any time declare a stock
split, issue any stock dividend, or make a reclassification of such
stock, so that the Optionee or his executors, administrators, legatees
or distributees entitled hereunder shall not be in any way in a better
or worse position as to the number of shares acquired and the aggregate
amount paid therefore, solely from having exercised this option with
respect to any of said shares after, rather than before, such stock
split, stock dividend, or reclassification.
(8) The granting of this Option shall not constitute or be evidence of any
agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Optionee for any
specified period. The Company continues to retain the absolute right to
terminate the employment relationship with the Optionee at any time,
with or without good cause.
(9) This Option shall be binding upon the Corporation and its successors
and assigns, and upon the Optionee and his administrators and executors.
(10) Whenever the Corporation is required to issue or transfer shares of its
Common Stock to Optionee pursuant hereto, the Corporation shall have
the right to require the Optionee to remit to the Corporation an amount
sufficient to satisfy all federal, state and local withholding tax
requirements, if any.
(11) The Optionee agrees, by the acceptance of this Option, to the amendment
of this Grant Agreement, the Notice of Grant of Stock Option and the
form of exercise of option provided by the Corporation in any manner
requested by the Corporation pursuant to advice from the Securities and
Exchange Commission at any time during the term of this Option, and to
execute any and all instruments relative thereto when so requested by
the Corporation.
(12) Throughout this agreement, the masculine gender shall be deemed to
include the feminine.
<PAGE>
(13) This Option is not transferable by the Optionee otherwise than by will
or by the laws of descent and distribution and during the lifetime of
the Optionee it is exercisable only by the Optionee.
<PAGE>
GRANT AGREEMENT
INCENTIVE STOCK OPTION
Thomas & Betts Corporation (the "Corporation"), for and in consideration of
the provisions and conditions as stated herein and in the Corporation's 1993
Management Stock Ownership Plan (the "Plan") and other good and valuable
consideration, does hereby grant to the employee (one of the key employees of
the Corporation) identified in the attached Notice of Grant of Stock Option
(the "Optionee") this option to purchase from the Corporation the number of
shares of Common Stock of the Corporation at the price per share set forth in
the Notice of Grant of Stock Option, which option, except as provided in
Paragraph 4, is intended to qualify as an incentive stock option ("ISO") as
that term is defined in Section 422(b) of the Internal Revenue Code of 1986,
as amended (the "Code").
The option granted pursuant to this Grant Agreement (the "Option") shall be
subject to the following conditions:
(1) Subject to the provisions of Paragraph 4, the Option shall become
exercisable in three installments in accordance with the following
schedule and after the expiration of the following periods of time:
<TABLE>
<CAPTION>
Portion of Period from which
Installment Option Grant Option Granted
----------- ------------ -----------------
<S> <C> <C>
First One-third 12 months
Second One-third 24 months
Third One-third 36 months
</TABLE>
If the Optionee does not purchase the full number of shares which he
has at any time become entitled to purchase, he may purchase all or any
part of those shares at any subsequent time during the term of this
Option.
(2) The Option herein granted to the extent that it is exercisable may be
exercised by giving written notice to the Corporate Human Resources
Department or other designated person of the Corporation at its
principal office no later than the Expiration Date (as defined in
Paragraph 3). Such notice shall include a statement of the number of
shares with respect to which this Option is being exercised and the
exercise date, and shall be accompanied by full tender of the purchase
price payable which may be made in whole or in part either in cash or
by the exchange of such number of whole shares of Thomas & Betts
Corporation Common Stock owned by the Optionee whose fair market value
as of the close of the business day immediately preceding the specified
Exercise Date does not exceed the purchase price payable; PROVIDED,
HOWEVER, that the following holding periods shall have been satisfied
with respect to shares to be exchanged: (i) if the shares to be
exchanged were acquired under an ISO, such ISO shall have been granted
at least two years prior thereto; and (ii) if the shares to be
exchanged were acquired by exercise of an option, such Common Stock
shall have been owned by the Optionee for at least one year prior to
such payment; and FURTHER PROVIDED that the Committee shall have the
right, upon prior notice to the holders of options, to modify, suspend
or cancel the right to pay the purchase price in whole
<PAGE>
or in part by exchange of shares at any time in the event the Committee
determines that there has been a change in tax or accounting
consequences to the Corporation or to any Optionee. Nothing in this
agreement shall confer upon the Optionee any rights as a stockholder
prior to the time of the delivery to the Optionee of a stock
certificate for the shares purchased under this agreement.
(3) Unless this Option expires earlier in accordance with any provision of
Paragraph 4, this Option shall expire on the date which is ten (10)
years from the Date of Grant (the "Expiration Date").
(4) If, prior to the Expiration Date, the Optionee (i) becomes totally and
permanently disabled as determined by the Corporation in its sole
discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or
is terminated as an employee of the Corporation, this Option shall be
exercisable under the circumstances and for the time periods set forth
below, but only to the extent such time periods do not extend beyond
the Expiration Date:
(a) If the Optionee's employment terminates or is terminated for any
reason other than (i) retirement, (ii) the Optionee becoming
totally and permanently disabled, (iii) death, or (iv) under the
circumstances described in Paragraph 4(b), this Option may be
exercised within thirty (30) days of the date of such termination
to the extent exercisable in accordance with the provisions of
Paragraph 1;
(b) In the event that (i) the Optionee has an employment agreement with
the Corporation which provides for his continued employment
following a change in control ("Employment Agreement") and (ii) a
"Change in Control," as defined in Section 2 of such Employment
Agreement, occurs, this Option shall become fully exercisable upon
the "Effective Date," as defined in Section 1(a) of such Employment
Agreement, notwithstanding any provision in Paragraph 1 to the
contrary, provided, however, that to the extent (if any) that the
limitation set forth in Code Section 422(d) is exceeded, the Option
shall be treated as a Nonqualified Stock Option; in addition, if
such Optionee's employment with the Corporation is thereafter
terminated under the circumstances described in Section 7(d) of
such Employment Agreement, this Option shall remain exercisable at
any time prior to the Expiration Date, provided, however, that if
such exercise occurs more than three (3) months after the date of
such Optionee's termination of employment, the Option shall be
treated as a Nonqualified Stock Option;
(c) If the Optionee retires at his normal or later retirement date or,
with the consent of the Corporation, takes early retirement, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within six (6) years of the date of
retirement; provided, however, that if such exercise occurs more
than three (3) months after the date of such retirement, the Option
shall be treated as a Nonqualified Stock Option;
(d) If the Optionee becomes totally and permanently disabled, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within six
<PAGE>
(6) years of the date the Optionee's service as an employee is
terminated within the meaning of the Code by reason of being
totally and permanently disabled; provided, however, that if such
Exercise occurs more than one (1) year after the date the
Optionee's employment is terminated due to such disability, this
Option shall be treated as a Nonqualified Stock Option;
(e) If the Optionee dies while he is employed or within three (3) years
of his retirement in accordance with subparagraph (c) above, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within three (3) years of the Optionee's
date of death by the legal representative of the Optionee or any
person who acquires this Option by bequest or inheritance;
provided, however, if the Optionee's date of death is more than
three (3) months from the date of such retirement, this Option
shall be treated as a Nonqualified Stock Option, and
(f) For purpose of this Paragraph 4, a sick leave or other bona fide
leave of absence granted in accordance with the Corporation's usual
procedure which does not operate to interrupt continuous employment
for other benefits granted by the Corporation shall not be
considered a termination of employment or interruption of
continuous employment hereunder and an employee who is granted such
a leave of absence shall be considered to be continuously employed
during such period of leave; provided, that if the Code or the
regulations promulgated thereunder establish a more restrictive
rule defining termination of employment applicable to the option
granted herein, such rule shall be substituted herefor.
(5) The Optionee agrees, by the acceptance of this Option, for himself and
his executors and administrators, that if a registration statement
under the Securities Act of 1933 is not in effect at the time of the
exercise of any portion of this Option, with respect to the sale by the
Corporation and the resale by the Optionee of the shares issuable upon
such exercise, it shall be a condition precedent to the right to
purchase such shares that the notice of exercise shall be accompanied
by a written representation that the Optionee or his executor or
administrator is acquiring such shares for his own or such executor's
or administrator's account for investment and not with a view to the
distribution thereof.
(6) The Corporation shall be not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the
exercise of this Option until the admission of such shares to listing
on any stock exchange on which the Corporation's stock may then be
listed and until the Corporation takes such steps as may be required by
law and applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange as above
mentioned, or until, in the opinion of counsel for the Corporation, any
such listing or registration or other steps are not required.
(7) The shares issued may be authorized but unissued stock, or treasury
stock. and the number of shares with respect to which this Option may
be exercised, and the price payable with respect thereto, shall be
properly adjusted if the Corporation shall at any time declare a stock
split, issue any stock dividend, or make a reclassification of such
stock, so that the Optionee or his executors, administrators, legatees
or distributees entitled hereunder shall not be in any
<PAGE>
way in a better or worse position as to the number of shares acquired
and the aggregate amount paid therefore, solely from having
exercised this option with respect to any of said shares after,
rather than before, such stock split, stock dividend, or
reclassification.
(8) The granting of this Option shall not constitute or be evidence of any
agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Optionee for any
specified period. The Company continues to retain the absolute right to
terminate the employment relationship with the Optionee at any time,
with or without good cause.
(9) This Option shall be binding upon the Corporation and its successors
and assigns, and upon the Optionee and his administrators and executors.
(10) Whenever the Corporation is required to issue or transfer shares of its
Common Stock to Optionee pursuant hereto, the Corporation shall have
the right to require the Optionee to remit to the Corporation an amount
sufficient to satisfy all federal, state and local withholding tax
requirements, if any.
(11) The Optionee agrees, by the acceptance of this Option, to the amendment
of this Grant Agreement, the Notice of Grant of Stock Option and the
form of exercise of option provided by the Corporation, in any manner
requested by the Corporation pursuant to advice from the Securities and
Exchange Commission at any time during the term of this Option, and to
execute any and all instruments relative thereto when so requested by
the Corporation.
(12) Throughout this agreement, the masculine gender shall be deemed to
include the feminine.
(13) This Option is not transferable by the Optionee otherwise than by will
or by the laws of descent and distribution and during the lifetime of
the Optionee it is exercisable only by the Optionee.
<PAGE>
GRANT AGREEMENT
NONQUALIFIED STOCK OPTION
Thomas & Betts Corporation (the "Corporation"), for and in consideration of
the provisions and conditions as stated herein and in the Corporation's 1993
Management Stock Ownership Plan (the "Plan") and other good and valuable
consideration, does hereby grant to the employee (one of the key employees of
the Corporation) identified in the attached Notice of Grant of Stock Option
(the "Optionee") this option to purchase from the Corporation the number of
shares of Common Stock of the Corporation at the price per share set forth in
the Notice of Grant of Stock Option, which option is not intended to qualify
as an incentive stock option ("ISO") as that term is defined in Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
The option granted pursuant to this Grant Agreement (the "Option") shall be
subject to the following conditions:
(1) Subject to the provisions of Paragraph 4, the Option shall become
exercisable in three installments in accordance with the following
schedule and after the expiration of the following periods of time:
<TABLE>
<CAPTION>
Portion of Period from which
Installment Option Granted Option Granted
----------- -------------- -----------------
<S> <C> <C>
First One-third 12 months
Second One-third 24 months
Third One-third 36 months
</TABLE>
If the Optionee does not purchase the full number of shares which he
has at any time become entitled to purchase, he may purchase all of any
part of those shares at any subsequent time during the term of this
Option.
(2) The Option herein granted to the extent that it is exercisable may be
exercised by giving written notice to the Corporate Human Resources
Department or other designated person of the Corporation at its
principal office no later than the Expiration Date (as defined in
Paragraph 3). Such notice shall include a statement of the number of
shares with respect to which this Option is being exercised and the
exercise date, and shall be accompanied by full tender of the purchase
price payable which may be made in whole or in part either in cash or
by the exchange of such number of whole shares of Thomas & Betts
Corporation Common Stock owned by the Optionee whose fair market value
as of the close of the business day immediately preceding the specified
Exercise Date does not exceed the purchase price payable; PROVIDED,
HOWEVER, that the following holding periods shall have been satisfied
with respect to shares to be exchanged: (i) if the shares to be
exchanged were acquired by exercise of an ISO, such ISO shall have been
granted at least two years prior thereto; and (ii) if the shares to be
exchanged were acquired by exercise of an option, such Common Stock
shall have been owned by the Optionee for at least one year prior to
such payment; and FURTHER PROVIDED that the Committee shall have the
right, upon prior notice to the holders of options, to modify, suspend
or cancel the right to pay the purchase price in whole or in part by
exchange of shares at any time in the event the Committee determines
that there has been a
<PAGE>
change in tax or accounting consequences to the Corporation or to
Optionee Nothing in this agreement shall confer upon the Optionee any
rights as a stockholder prior to the time of the delivery to the
Optionee of a stock certificate for the shares purchased under this
agreement.
(3) Unless this Option expires earlier in accordance with any provision of
Paragraph 4, this Option shall expire on the date which is ten (10)
years from the Date of Grant (the "Expiration Date").
(4) If, prior to the Expiration Date, the Optionee (i) becomes totally and
permanently disabled as determined by the Corporation in its sole
discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or
is terminated as an employee of the Corporation, this option shall be
exercisable under the circumstances and for the time periods set forth
below, but only to the extent such time periods do not extend beyond
the Expiration Date:
(a) If the Optionee's employment terminates or is terminated for any
reason other than (i) retirement, (ii) the Optionee becoming
totally and permanently disabled, (iii) death, or (iv) under the
circumstances described in Paragraph 4(b), this Option may be
exercised within thirty (30) days of the date of such termination
to the extent exercisable in accordance with the provisions of
Paragraph 1;
(b) In the event that (i) the Optionee has an employment agreement with
the Corporation which provides for his continued employment
following a change in control ("Employment Agreement") and (ii) a
"Change in Control," as defined in Section 2 of such Employment
Agreement, occurs, this Option shall become fully exercisable upon
the "Effective Date," as defined in Section 1(a) of such Employment
Agreement, notwithstanding any provision in Paragraph 1 to the
contrary; in addition, if such Optionee's employment with the
Corporation is thereafter terminated under the circumstances
described in Section 7(d) of such Employment Agreement, this Option
shall remain exercisable at any time prior to the Expiration Date;
(c) If the Optionee retires at his normal or later retirement date or,
with the consent of the Corporation, takes early retirement, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within six (6) years of the date of
retirement;
(d) If the Optionee becomes totally and permanently disabled, this
Option may he exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within six (6) years of the date the
Optionee's service as an employee is terminated within the meaning
of the Code by reason of being totally and permanently disabled;
(e) If the Optionee dies while he is employed or within three (3) years
of his retirement in accordance with subparagraph (c) above, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within three (3) years of the Optionee's
date of death by the legal representative of the Optionee or any
<PAGE>
person who acquires this Option by bequest or inheritance; and
(f) For purpose of this Paragraph 4, a sick leave or other bona fide
leave of absence granted in accordance with the Corporation's usual
procedure which does not operate to interrupt continuous employment
for other benefits granted by the Corporation shall not be
considered a termination of employment or interruption of
continuous employment hereunder and an employee who is granted such
a leave of absence shall be considered to be continuously employed
during such period of leave; provided, that if the Code or the
regulations promulgated thereunder establish a more restrictive
rule defining termination of employment applicable to the option
granted herein, such rule shall be substituted here for.
(5) The Optionee agrees, by the acceptance of this Option, for himself and
his executors and administrators, that if a registration statement
under the Securities Act of 1933 is not in effect at the time of the
exercise of any portion of this Option, with respect to the sale by the
Corporation and the resale by the Optionee of the shares issuable upon
such exercise, it shall be a condition precedent to the right to
purchase such shares that the notice of exercise shall be accompanied
by a written representation that the Optionee or his executor or
administrator is acquiring such shares for his own or such executor's
or administrator's account for investment and not with a view to the
distribution thereof.
(6) The Corporation shall be not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the
exercise of this Option until the admission of such shares to listing
on any stock exchange on which the Corporation's stock may then be
listed and until the Corporation takes such steps as may be required by
law and applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange as above
mentioned, or until, in the opinion of counsel for the Corporation, any
such listing or registration or other steps are not required.
(7) The shares issued may be authorized but unissued stock, or treasury
stock, and the number of shares with respect to which this Option may
be exercised, and the price payable with respect thereto, shall be
properly adjusted if the Corporation shall at any time declare a stock
split, issue any stock dividend, or make a reclassification of such
stock, so that the Optionee or his executors, administrators, legatees
or distributees entitled hereunder shall not be in any way in a better
or worse position as to the number of shares acquired and the aggregate
amount paid therefore, solely from having exercised this option with
respect to any of said shares after, rather than before, such stock
split, stock dividend, or reclassification.
(8) The granting of this Option shall not constitute or be evidence of any
agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Optionee for any
specified period. The Company continues to retain the absolute right to
terminate the employment relationship with the Optionee at any time,
with or without good cause.
(9) This Option shall be binding upon the Corporation and its successors
and assigns, and upon the Optionee and his administrators and executors.
<PAGE>
(10) Whenever the Corporation is required to issue or transfer shares of
its Common Stock to Optionee pursuant hereto, the Corporation shall
have the right to require the Optionee to remit to the Corporation an
amount sufficient to satisfy all federal, state and local withholding
tax requirements, if any.
(11) The Optionee agrees, by the acceptance of this Option, to the
amendment of this Grant Agreement, the Notice of Grant of Stock Option
and the form of exercise of option provided by the Corporation, in any
manner requested by the Corporation pursuant to advice from the
Securities and Exchange Commission at any time during the term of this
Option, and to execute any and all instruments relative thereto when so
requested by the Corporation.
(12) Throughout this agreement, the masculine gender shall be deemed to
include the feminine.
(13) This Option is not transferable by the Optionee otherwise than by will
or by the laws of descent and distribution and during the lifetime of
the Optionee it is exercisable only by the Optionee.
<PAGE>
GRANT AGREEMENT
INCENTIVE STOCK OPTION
Thomas & Betts Corporation (the "Corporation"), for and in consideration of
the provisions and conditions as stated herein and in the Corporation's 1993
Management Stock Ownership Plan (the "Plan") and other good and valuable
consideration, does hereby grant to the employee (one of the key employees of
the Corporation) identified in the attached Notice of Grant of Stock Option
(the "Optionee") this option to purchase from the Corporation the number of
shares of Common Stock of the Corporation at the price per share set forth in
the Notice of Grant of Stock Option, which option, except as provided in
Paragraph 4, is intended to qualify as an incentive stock option ("ISO") as
that term is defined in Section 422(b) of the Internal Revenue Code of 1986,
as amended (the "Code").
The option granted pursuant to this Grant Agreement (the "Option") shall be
subject to the following conditions:
(1) Subject to the provisions of Paragraph 4, the Option shall become
exercisable in three installments in accordance with the following
schedule and after the expiration of the following periods of time:
<TABLE>
<CAPTION>
Portion of Period from which
Installment Option Grant Option Granted
----------- ------------ -----------------
<S> <C> <C>
First One-third 12 months
Second One-third 24 months
Third One-third 36 months
</TABLE>
If the Optionee does not purchase the full number of shares which he
has at any time become entitled to purchase, he may purchase all or any
part of those shares at any subsequent time during the term of this
Option.
(2) The Option herein granted to the extent that it is exercisable may be
exercised by giving written notice to the Corporate Human Resources
Department or other designated person of the Corporation at its
principal office no later than the Expiration Date (as defined in
Paragraph 3). Such notice shall include a statement of the number of
shares with respect to which this Option is being exercised and the
exercise date, and shall be accompanied by full tender of the purchase
price payable which may be made in whole or in part either in cash or
by the exchange of such number of whole shares of Thomas & Betts
Corporation Common Stock owned by the Optionee whose fair market value
as of the close of the business day immediately preceding the specified
Exercise Date does not exceed the purchase price payable; PROVIDED,
HOWEVER, that the following holding perioda shall have been satisfied
with respect to shares to be exchanged: (i) if the shares to be
exchanged were acquired under an ISO, such ISO shall have been granted
at least two years prior thereto; and (ii) if the shares to be
exchanged were acquired by exercise of an option, such Common Stock
shall have been owned by the Optionee for at least one year prior to
such payment, and FURTHER PROVIDED that the Committee shall have the
right, upon prior notice to the holders of options, to modify, suspend
or cancel the right to pay the purchase price
<PAGE>
in whole or in part by exchange of shares at any time in the event the
Committee determines that there has been a change in tax or accounting
consequences to the Corporation or to any Optionee. Nothing in this
agreement shall confer upon the Optionee any rights as a stockholder
prior to the time of the delivery to the Optionee of a stock
certificate for the shares purchased under this agreement.
(3) Unless this Option expires earlier in accordance with any provision of
Paragraph 4, this Option shall expire on the date which is ten (10)
years from the Date of Grant (the "Expiration Date").
(4) If, prior to the Expiration Date, the Optionee (i) becomes totally and
permanently disabled as determined by the Corporation in its sole
discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or
is terminated as an employee of the Corporation, this Option shall be
exercisable under the circumstances and for the time periods set forth
below, but only to the extent such time periods do not extend beyond
the Expiration Date:
(a) If the Optionee's employment terminates or is terminated for any
reason other than (i) retirement, (ii) the Optionee becoming
totally and permanently disabled, (iii) death, or (iv) under the
circumstances described in Paragraph 4(b), this Option may be
exercised within thirty (30) days of the date of such termination
to the extent exercisable in accordance with the provisions of
Paragraph 1;
(b) If the Optionee retires at his normal or later retirement date or,
with the consent of the Corporation, takes early retirement, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within six (6) years of the date of
retirement; provided, however, that if such exercise occurs more
than three (3) months after the date of such retirement, the
Option shall be treated as a Nonqualified Stock Option;
(c) If the Optionee becomes totally and permanently disabled, this
Option may be exercised in full, notwithstanding the provisions of
Paragraph 1, at any time within six (6) years of the date the
Optionee's service as an employee is terminated within the meaning
of the Code by reason of being totally and permanently disabled;
provided, however, that if such Exercise occurs more than one (1)
year after the date the Optionee's employment is terminated due to
such disability, this Option shall be treated as a Nonqualified
Stock Option;
(d) If the Optionee dies while he is employed or within three (3)
years of his retirement in accordance with subparagraph (c) above,
this Option may be exercised in full, notwithstanding the
provisions of Paragraph 1, at any time within three (3) years of
the Optionee's date of death by the legal representative of the
Optionee or any person who acquires this Option by bequest or
inheritance; provided, however, if the Optionee's date of death is
more than three (3) months from the date of such retirement, this
Option shall be treated as a Nonqualified Stock Option, and
(e) For purpose of this Paragraph 4, a sick leave or other bona fide
leave of absence
<PAGE>
granted in accordance with the Corporation's usual procedure which
does not operate to interrupt continuous employment for other
benefits granted by the Corporation shall not be considered a
termination of employment or interruption of continuous employment
hereunder and an employee who is granted such a leave of absence
shall be considered to be continuously employed during such period
of leave; provided, that if the Code or the regulations
promulgated thereunder establish a more restrictive rule defining
termination of employment applicable to the option granted herein,
such rule shall be substituted here for.
(5) The Optionee agrees, by the acceptance of this Option, for himself and
his executors and administrators, that if a registration statement
under the Securities Act of 1933 is not in effect at the time of the
exercise of any portion of this Option, with respect to the sale by the
Corporation and the resale by the Optionee of the shares issuable upon
such exercise, it shall be a condition precedent to the right to
purchase such shares that the notice of exercise shall be accompanied
by a written representation that the Optionee or his executor or
administrator is acquiring such shares for his own or such executor's
or administrator's account for investment and not with a view to the
distribution thereof.
(6) The Corporation shall be not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the
exercise of this Option until the admission of such shares to listing
on any stock exchange on which the Corporation's stock may then be
listed and until the Corporation takes such steps as may be required by
law and applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange as above
mentioned, or until, in the opinion of counsel for the Corporation, any
such listing or registration or other steps are not required.
(7) The shares issued may be authorized but unissued stock, or treasury
stock. and the number of shares with respect to which this Option may
be exercised, and the price payable with respect thereto, shall be
properly adjusted if the Corporation shall at any time declare a stock
split, issue any stock dividend, or make a reclassification of such
stock, so that the Optionee or his executors, administrators, legatees
or distributees entitled hereunder shall not be in any way in a better
or worse position as to the number of shares acquired and the aggregate
amount paid therefore, solely from having exercised this option with
respect to any of said shares after, rather than before, such stock
split, stock dividend, or reclassification.
(8) The granting of this Option shall not constitute or be evidence of any
agreement or understanding, express or implied, on the part of the
Corporation or any of its subsidiaries to employ the Optionee for any
specified period. The Company continues to retain the absolute right to
terminate the employment relationship with the Optionee at any time,
with or without good cause.
(9) This Option shall be binding upon the Corporation and its successors
and assigns, and upon the Optionee and his administrators and executors.
<PAGE>
(10) Whenever the Corporation is required to issue or transfer shares of
its Common Stock to Optionee pursuant hereto, the Corporation shall
have the right to require the Optionee to remit to the Corporation an
amount sufficient to satisfy all federal, state and local withholding
tax requirements, if any.
(11) The Optionee agrees, by the acceptance of this Option, to the
amendment of this Grant Agreement, the Notice of Grant of Stock Option
and the form of exercise of option provided by the Corporation, in any
manner requested by the Corporation pursuant to advice from the
Securities and Exchange Commission at any time during the term of this
Option, and to execute any and all instruments relative thereto when so
requested by the Corporation.
(12) Throughout this agreement, the masculine gender shall be deemed to
include the feminine.
(13) This Option is not transferable by the Optionee otherwise than by will
or by the laws of descent and distribution and during the lifetime of
the Optionee it is exercisable only by the Optionee.
<PAGE>
RESTRICTED STOCK AGREEMENT
This Restricted Stock Agreement (hereinafter "Agreement") is made as of the
2nd day of February, 2000, by and between THOMAS & BETTS CORPORATION
(hereinafter "Corporation"), a Tennessee corporation, and "Name", an employee
of the Corporation (hereinafter "Participant").
WHEREAS, the Corporation has adopted with the approval of its stockholders
the 1993 Management Stock Ownership Plan, attached as Exhibit A to the 1993
Proxy Statement and as amended from time to time thereafter (hereinafter
"Plan"); and
WHEREAS, the Committee under the Plan has awarded shares of the Corporation's
Common Stock to the Participant;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Corporation and the
Participant, intending to be legally bound, hereby agree as follows:
1. ISSUANCE OF RESTRICTED STOCK. Subject to the terms and conditions hereinafter
set forth, the Corporation has awarded to Participant a value equal to a total
of "Grant" shares of its Common Stock, par value $.10 per share (hereinafter
sometimes "Restricted Stock"). The shares of Restricted Stock actually given
pursuant to this award are evidenced by a certificate or certificates registered
in Participant's name.
The Committee, in its sole discretion, may award the above mentioned grant of
shares of Restricted Stock, in whole or in part, in cash for the purpose of
allowing Participant to satisfy federal, state or local tax obligations.
Participant agrees to cooperate fully with any rules and regulations of the
Committee to permit this award of cash in lieu of stock to occur.
2. TERMS AND CONDITIONS. The terms and conditions of the Plan are incorporated
by reference herein, and to the extent that any conflict may exist between any
term or provision of this Agreement and any term or provision of the Plan, the
term or provision of the Plan shall control.
3. INVESTMENT REPRESENTATION. The Participant agrees that he is acquiring said
shares for his own account and not with a view to distribution thereof and that
the shares of Restricted Stock acquired by the Participant will not be sold
except pursuant to an effective Registration Statement under the Securities Act
of 1933, as amended, or pursuant to an exemption from registration under said
Act.
4. RESTRICTION ON TRANSFER. Except as otherwise provided pursuant to or in
accordance with the terms and provisions of this Agreement or the Plan, the
shares of Restricted Stock shall not be sold, exchanged, assigned, transferred
or permitted to be transferred voluntarily, involuntarily, or by operation of
law, delivered, encumbered, discounted, pledged, hypothecated, or otherwise
disposed of for three (3) years i.e., until February 2, 2003, or such longer
period (and upon such terms and conditions) that the Committee, in its sole
discretion, permits the Participant to defer the Participant's ability to
dispose of the shares of Restricted Stock ("Restricted Period").
During the Restricted Period, certificates evidencing the Restricted Shares
shall bear the following legend: "These shares have been issued pursuant to
the Thomas & Betts Corporation ("Corporation") 1993 Management Stock
Ownership Plan ("Plan") and are subject to forfeiture to the Corporation in
accordance with the terms of the Plan and an Agreement between the
Corporation and the person in whose name the certificate is registered. These
shares may not be sold, pledged, exchanged, transferred, hypothecated or
otherwise disposed of except in accordance with the terms of said Plan and
said Agreement."
5. DEPOSIT OF RESTRICTED STOCK. In order to induce the Corporation to issue to
the Participant the Restricted Stock, Participant consents to the deposit with
the Secretary of the Corporation or such other person designated by the
Committee, the certificates evidencing the Restricted Stock, together with stock
powers or other instruments of transfer required by the Corporation or its
counsel appropriately endorsed in blank by him. Such deposits shall remain in
effect until the time the Corporation reacquires the Restricted Stock under and
pursuant to the terms and provisions of Section 6 hereof or until said
Restricted Stock shall be released from restrictions under the Plan and the
Agreement. Participant consents to the appointment of the Secretary of the
Corporation, in his official capacity, and his successors in office, or any
other person that may be appointed by the Committee under the Plan as Escrow
Agent for said shares during the Restricted Period. If during the Restricted
Period, Participant's employment with the Corporation is terminated, and the
Restricted Shares forfeited in accordance with Section 6, Participant authorizes
the Escrow Agent to cause such certificate or certificates to be canceled on the
stock record books of the Corporation. Participant agrees that the Escrow Agent
is acting merely as a depository and shall have no liability hereunder except as
a depository to retain the Restricted Shares and to dispose of them in
accordance with the terms of this Agreement and the Plan. If the Escrow Agent is
notified of any adverse claim or demand by any person, he is hereby authorized
to hold such
<PAGE>
certificates until the dispute shall have been settled by the parties and notice
submitted to him in writing by all persons so interested, or until the rights of
the parties have been finally adjudicated in a court of competent jurisdiction.
So long as the Restricted Shares are held in escrow, Participant shall be
entitled to all the rights of a stockholder with respect thereto except as may
be limited by the terms of the Plan and this Agreement.
6. FORFEITURE OF RESTRICTED STOCK. Subject at all times to the provisions of
this Agreement, if the employment of the Participant is terminated for any
reason before the shares of Restricted Stock have been released from the
restrictions on transfer as set forth in Section 4 hereof, such Restricted Stock
shall be forfeited to the Corporation unless the Committee shall determine in a
particular case that such forfeiture would not be in the best interest of the
Corporation. For purposes of this Section 6, "termination of employment" shall
mean termination of employment with the Corporation for any reason whatsoever,
whether voluntary or involuntary, including, but not limited to, death,
disability, retirement, insanity, or dismissal with or without just cause.
7. DELIVERY OF STOCK AND DOCUMENTS. In the event any shares of Restricted Stock
are forfeited to the Corporation, pursuant to the Plan or this Agreement, the
Participant shall, to the extent not already deposited with the Escrow Agent,
deliver to the Escrow Agent the following: the certificate or certificates
representing the Restricted Stock duly endorsed for transfer and bearing
whatever documentary stamps, if any, are necessary, and such assignments,
certificates of authority, tax releases, consents to transfer, instruments, and
evidences of title of the Participant and of his compliance with this Agreement
as may be reasonably required by the Corporation or by its counsel.
8. EMPLOYMENT OF PARTICIPANT. Nothing in this Agreement shall be construed as
constituting a commitment, guarantee, agreement, or understanding of any kind or
nature that the Corporation shall continue to employ the Participant, nor shall
this Agreement affect in any way the right of the Corporation to terminate the
employment of the Participant at any time.
9. STOCK DISTRIBUTIONS. Any shares of Common Stock of the Corporation received
by a recipient as a stock dividend, or as a result of stock splits,
recapitalizations, combinations, exchanges of shares, reorganizations, mergers,
consolidations or otherwise which are derived directly or indirectly from shares
of Restricted Stock shall have the same status, be subject to the same
agreements, and shall bear the same legend as the shares of Restricted Stock and
shall be delivered to the Escrow Agent to be held under the same terms and
conditions as the Restricted Stock.
10. NON-ALIENATION. No Restricted Stock shall be subject to alienation, sale,
assignment, pledge, encumbrance or charge and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same shall be void. No
right or benefit hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities or torts of the person entitled to such benefit.
11. RIGHTS OF STOCKHOLDER. Subject to the terms and provisions of the Tennessee
Business Corporation Act and of this Agreement, the Participant shall have all
the rights of a stockholder of the Corporation with respect to the Restricted
Stock, including the right to vote the Restricted Stock and to receive all
dividends or other distributions paid or made with respect thereto.
12. CHANGE OF CONTROL, MERGER OR CONSOLIDATION. In the event the Corporation
undergoes a change of control as defined in Paragraph 6 of the Plan or is not
the surviving company in a merger, consolidation, liquidation, reorganization or
other business combination or transaction, the rights of the Participant shall
be governed by Section 6 of the Plan.
13. BURDEN AND BENEFIT. The terms and provisions of this Agreement shall be
binding upon, and shall inure to the benefit of, the Participant and his
executors or administrators, heirs, and personal and legal representatives.
14. GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with the laws of the State of Tennessee.
15. MODIFICATIONS. No change or modification of this Agreement shall be valid
unless it is in writing and signed by the parties hereto.
16. ENTIRE AGREEMENT. This Agreement, together with the Plan, sets forth all of
the promises, agreements, conditions, understandings, warranties, and
representations between the parties hereto with respect to the shares of
Restricted Stock, and there are no promises, agreements, conditions,
understandings, warranties, or representations, oral or written, express or
implied, between them with respect to the shares of Restricted Stock other than
as set forth herein or therein.
17. GENDERS. The use of any gender herein shall be deemed to include the other
genders and the use of the singular herein shall be deemed to include the plural
and vice versa, wherever appropriate.
18. NOTICES. Any and all notices required herein shall be addressed: (i) if to
the Corporation, to the principal executive office of the Corporation; and (ii)
if to the Participant, to his address as reflected in the stock records of the
Corporation.
<PAGE>
19. SPECIFIC PERFORMANCE. The parties hereto agree that the shares of Restricted
Stock are unique, that the Participant's failure to perform the obligations
provided by this Agreement will result in irreparable damage to the Corporation,
and that specific performance of the Participant's obligations may be obtained
by a suit in equity.
20. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provisions were omitted.
IN WITNESS WHEREOF, the Corporation and the Participant have executed this
Agreement as of the day and year first above written.
ATTEST: THOMAS & BETTS CORPORATION
- ------------------------------- -------------------------------------
Vice President-General President and Chief Executive Officer
Counsel and Secretary
WITNESS: PARTICIPANT:
- ------------------------------- --------------------------------------
"Name"
<PAGE>
THOMAS & BETTS CORPORATION
EXECUTIVE INCENTIVE PLAN
1. PURPOSE
The purpose of the Thomas & Betts Corporation Executive Incentive Plan
(the "Plan") is to provide an incentive for corporate officers and other key
employees who are in a position to contribute materially to the success of the
Corporation and its subsidiaries.
2. DEFINITIONS
The following terms, as used herein, will have the meaning specified:
(a) "Award" means an incentive payment made pursuant to the Plan.
(b) "Board" means the Board of Directors of the Corporation as it may be
comprised from time to time.
(c) "Cause" means (i) a felony conviction of a Participant; (ii) the
commission by a Participant of an act of fraud or embezzlement against the
Corporation and/or a Subsidiary; (iii) willful misconduct or gross negligence
materially detrimental to the Corporation and/or a Subsidiary; (iv) the
Participant's continued failure to implement reasonable requests or directions
arising from actions of the Board after thirty (30) days' written notice to the
Participant; (v) the Participant's wrongful dissemination or use of confidential
or proprietary information; (vi) the intentional and habitual neglect by the
Participant of his or her duties to the Corporation and/or a Subsidiary; or
(vii) any other reasons consistent with the Corporation's and/or a Subsidiary's
policies and procedures regarding dismissals as they are adopted and implemented
from time to time.
(d) "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute, and the regulations promulgated thereunder.
(e) "Committee" means the Committee appointed to administer the Plan, as
provided in Section 4.
(f) "Corporation" means Thomas & Betts Corporation, or any successor
corporation.
(g) "Covered Employee" means a covered employee within the meaning of
Code Section 162(m)(3).
(h) "Employee" means executives and other key employees of the
Corporation and its Subsidiaries.
(i) "Participant" means an Employee selected from time to time by the
Committee to participate in the Plan.
(j) "Performance Adjustment" means a factor (or factors), as determined
by a schedule established by the Committee, that will, when multiplied by a
Participant's Target Award, determine the amount of a Participant's Award.
(k) "Performance Criterion or Criteria" means the business criteria
selected by the Committee to measure Corporation, group, division or Subsidiary
performance from one or more of the following:
(i) Corporate, group, division or Subsidiary sales;
<PAGE>
(ii) Corporate, group, division or Subsidiary return on
sales--operating profit divided by sales;
(iii) Corporate, group, division or Subsidiary economic value
added, net operating profit after taxes, return on net assets or return on
capital;
(iv) Cash flow-corporate--the change in the Corporation's net
invested position;
(v) Cash flow- corporate, group, division or Subsidiary--group,
division or Subsidiary contribution adjusted for certain changes in balance
sheet accounts;
(vi) Earnings per share;
(vii) Productivity--standard direct labor hours divided by direct
and indirect labor hours incurred;
(viii) Quality--demerits per thousand pieces audited;
(ix) Group, division or Subsidiary operating profit or
contribution income;
(x) Investment turnover--net sales divided by certain assets, e.g.
net receivables and inventory, less certain liabilities, e.g. accounts payable
and accrued liabilities;
(xi) Return on equity--net income of the Corporation divided by
average shareholders' equity;
(xii) Net asset investment--certain assets, e.g. accounts
receivable and goodwill, less certain liabilities, e.g. accounts payable and
dividends payable, divided by sales;
(xiii) Inventory turns; and
(ix) Customer service indices, e.g. fill rates, request index, and
performance to promise.
The Committee shall establish the weighting of each Performance Criterion,
for use in determining awards under the Plan, within 90 days of the beginning of
the fiscal year to which the Performance Criterion relates.
(l) "Maximum Award" means the level of performance on each Performance
Criterion, as approved by the Committee, that will result in a 100 percent
Performance Adjustment to a Participant's Target Award.
(m) "Subsidiary" means any corporation in which the Corporation, directly
or indirectly, controls 50 percent or more of the total combined voting power of
all classes of such corporation's stock.
(n) "Target Award" means, with respect to a Participant in any year, the
Participant's annual base salary multiplied by the percentage of salary
established by the Committee for that Participant.
3. AWARDS
(a) TARGET AWARD. A Target Award will be established by the Committee
for each Participant. A prorated Target Award will be assigned to a Participant
with less than twelve months of service. In the event a Participant's Target
Award is changed during the year, the Participant's higher Target Award will be
the basis
2
<PAGE>
for determining the Participant's Award for the year.
(b) PERFORMANCE CRITERIA. One or more Performance Criteria will be
established by the Committee for the Corporation and for each group, division or
Subsidiary each year. The Committee may use the same Performance Criteria each
year or may use different Performance Criteria from year to year.
(c) PERFORMANCE TARGET. One or more Performance Targets will be
established by the Committee for each Performance Criterion selected for each
year.
(d) PERFORMANCE ADJUSTMENT. The Award payable to any Participant will
vary from the Target Award depending upon whether, or the extent to which,
Performance Targets have been achieved. All such determinations regarding the
achievement of any Performance Target will be made by the Committee in its sole
and absolute discretion. The Committee may not increase the amount of
compensation that would otherwise be payable upon achievement of the Performance
Target or Targets, but it may reduce a Participant's award if it believes such
action would be in the best interest of the Corporation and its shareholders.
(i) Schedules. At the beginning of the year, the Committee will
establish a range for each Performance Criterion that correlates the percentage
of Target Award to specified levels of Corporation, group, division or
Subsidiary performance.
(ii) Award Determination. The Award for a Participant for a given
year will be calculated by multiplying the Participant's Target Award by the
Corporation, group, division or Subsidiary Performance Adjustments,
respectively.
(iii) Maximum Award. The maximum award payable to any Participant
in any year is $2.0 million, anything in this Plan to the contrary
notwithstanding.
(e) PAYMENT OF AWARDS. Awards will be paid in cash, stock, or a
combination of cash and stock after the Committee has certified the extent to
which the Performance Target or Targets have been met and as soon as practicable
after the close of the year for which they are made. If a Participant is
disabled for more than four months of the year, the Participant may be granted a
prorated Award as and to the extent determined by the Committee. If disability
lasts four months or less, there will be no reduction in the amount of the
Award. No Award will be payable to any Participant who is not an Employee on the
last day of the year, except that if, during the last eight months of the year,
the Participant dies, or becomes disabled, the Participant may be granted a
prorated Award as and to the extent determined by the Committee, and further
provided that if the Participant retires or is involuntarily terminated other
than for Cause, the Participant may be granted a prorated Award as and to the
extent determined by the Committee, provided that Performance Targets have been
met.
4. ADMINISTRATION
(a) COMMITTEE. The Plan and all Awards will be administered by the Human
Resources Committee of the Board of Directors (the "Committee"), which Committee
shall consist of not less than three members of such Board of Directors, and
shall be constituted so as to enable the Plan to comply with the administration
requirements of Code Section 162(m)(4)(C). The members of the Committee shall be
designated by the Board of Directors. A majority of the members of the Committee
shall constitute a quorum. The vote of a majority of a quorum shall constitute
action by the Committee.
(b) AUTHORITY. The Committee will have full and complete authority, in
its sole and absolute discretion,
3
<PAGE>
(i) to exercise all of the powers granted to it under the Plan, (ii) to
construe, interpret and implement the Plan and any related document, (iii) to
prescribe, amend and rescind rules relating to the Plan, (iv) to make all
determinations necessary or advisable in administering the Plan, and (v) to
correct any defect, supply any omission and reconcile any inconsistency in
the Plan.
The Committee may delegate to the officers or employees of the Corporation
and/or a Subsidiary the authority to execute and deliver such instruments and
documents, to do all such acts and things, and to take all such other steps
deemed necessary, advisable or convenient for the effective administration of
the Plan in accordance with its terms and purpose, except that the Committee may
not delegate any authority with respect to decisions regarding timing,
eligibility, amount or other material terms of any Awards.
(c) DETERMINATIONS. The actions and determinations of the Committee on
all matters relating to the Plan and any Awards will be final and conclusive.
(d) LIABILITY. No member of the Committee or the Board will be liable
for any action taken or determination made in good faith with respect to the
Plan or any Award thereunder, and the Corporation will defend Committee and
Board members for any actions taken or decisions made in good faith under the
Plan.
(e) PARTICIPANTS. The Committee will designate the corporate officers
who shall be Participants in the Plan, and it may designate group, division or
Subsidiary officers to be Participants.
(f) AWARDS. Subject to the terms of the Plan, the Committee will have
full and complete authority to determine, among other things, the Employees to
whom, and the time or times at which, Awards will be made and the requisite
conditions thereof.
(g) CODE SECTION 162(m). It is the intent of the Corporation that this
Plan and Awards hereunder satisfy, and be interpreted in a manner that, in the
case of Participants who are or may be Covered Employees, satisfies the
applicable requirements of Code Section 162(m) so that the Corporation's tax
deduction for remuneration in respect of this Plan for services performed by
such Covered Employees is not disallowed in whole or in part by the operation of
such Code Section. If any provision of this Plan or if any Award would otherwise
frustrate or conflict with the intent expressed in this Section 4(g), that
provision shall be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to Covered Employees.
5. MISCELLANEOUS
(a) NONASSIGNABILITY. No Award will be assignable or transferable
(including pursuant to a pledge or security interest) other than by will or by
the laws of descent and distribution.
(b) WITHHOLDING TAXES. Whenever payments under the Plan are to be made,
the Corporation and/or the Subsidiary will withhold therefrom an amount
sufficient to satisfy any applicable governmental withholding tax requirements
related thereto.
(c) AMENDMENT OR TERMINATION OF THE PLAN. The Board may from time to
time suspend or discontinue the Plan or revise, amend or terminate the Plan.
(d) NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Awards under the
4
<PAGE>
Plan, whether or not such persons are similarly situated. Without limiting
the generality of the foregoing, the Committee will be entitled, among other
things, to make non-uniform and selective determinations and to establish
non-uniform and selective Target Awards; provided, however, that the
Committee may not increase the amount of compensation that would otherwise be
payable upon achievement of the Performance Target or Targets.
(e) OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan will be
deemed in any way to limit or restrict the Corporation, its Subsidiaries, or the
Committee from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.
(f) PAYMENTS TO OTHER PERSONS. If payments are legally required to be
made to any person other than the person to whom any amount is available under
the Plan, payments will be made to the person to whom the Committee, or its
delegate, believes to be legally entitled to the payment. Any such payment will
be a complete discharge of the liability of the Committee.
(g) UNFUNDED PLAN. No provision of the Plan will require the Corporation
or its Subsidiaries, for the purpose of satisfying any obligations under the
Plan, to purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets; nor will the
Corporation or its Subsidiaries maintain separate bank accounts, books, records
or other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Participants will have no rights under the
Plan other than as unsecured general creditors of the Corporation and its
Subsidiaries, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they will have the same
rights as other employees under generally applicable law.
(h) LIMITS OF LIABILITY. Neither the Corporation or a Subsidiary, nor
any member of the Board, the Committee, or any other person participating in the
interpretation, administration or application of the Plan shall have any
liability to any party for any action taken, or not taken, in good faith under
the Plan.
(i) RIGHTS OF EMPLOYEES. Nothing contained in this Plan will confer upon
any Employee or Participant any right to continue in the employ or other service
of the Corporation or a Subsidiary, or constitute any contract or limit in any
way the right of the Corporation or a Subsidiary to change such person's
compensation or other benefits, or to terminate the employment or other service
of such person with or without Cause.
(j) SECTION HEADINGS. The section headings contained herein are for
convenience only, and in the event of any conflict, the text of the Plan, rather
than the section headings, will control.
(k) INVALIDITY. If any term or provision contained herein will to any
extent be invalid or unenforceable, such invalidity or unenforceability will not
affect any other provision or part hereof.
(l) APPLICABLE LAW. The Plan will be governed by the laws of the
jurisdiction in which the Corporation is incorporated as determined without
regard to the conflict of law principles thereof.
(m) EFFECTIVE DATE. The Plan shall be effective as of May 5, 1994 and,
as amended, from time to time thereafter.
5
<PAGE>
Exhibit 10.10
THOMAS & BETTS CORPORATION
EXECUTIVE RETIREMENT PLAN
(AS AMENDED DECEMBER 1, 1999)
<PAGE>
THOMAS & BETTS CORPORATION
EXECUTIVE RETIREMENT PLAN
AS AMENDED DECEMBER 1, 1999
INTRODUCTION
Thomas & Betts Corporation (the "Company") has adopted this Executive Retirement
Plan effective as of September 2, 1992, as amended on December 16, 1993 and as
further amended on December 1, 1999, to provide additional retirement income and
death benefit protection to certain officers of the Company in recognition of
their contribution to the Company in carrying out senior management
responsibilities. The terms and conditions of participation and benefits under
this Executive Retirement Plan are set out in this document.
All benefits payable under this Plan, which is intended to constitute a
non-qualified, unfunded deferred compensation plan for a select group of
management employees under Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), shall be paid out of the general assets of
the Company.
ARTICLE I. DEFINITIONS
1.01 "ACTUARIAL EQUIVALENT" shall mean the equivalent value when computed
based on the UP-84 Mortality Table and an interest rate equal to 100
percent of the interest rate which would be used by the Pension Benefit
Guaranty Corporation (under the pre-11/l/93 methodology) for valuing
immediate annuities for single employer plans that terminate on the
first day of the month in which the Eligible Employee's Benefit
payments commence (the "PBGC Interest Rate").
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1.02 "AFFILIATED COMPANY" shall mean any company not participating in the
Plan which is a member of a controlled group of corporations (as
defined in Section 414(b) of the Code) which also includes as a member
the Company; any trade or business under common control (as defined in
Section 414(c) of the Code) with the Company; any organization (whether
or not incorporated) which is a member of an affiliated service group
(as defined in Section 414(m) of the Code) which includes the Company;
and any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.
1.03 "AVERAGE MONTHLY COMPENSATION" shall mean the average monthly
Compensation of an Eligible Employee during any sixty (60) consecutive
months during his employment with the Company or an Affiliated Company
affording the highest such average. Compensation for this purpose shall
mean Compensation as defined in Section 1.10.
1.04 "BENEFICIARY" shall mean the person or persons designated by an
Eligible Employee as beneficiary in a time and manner determined by the
Committee. If the Eligible Employee fails to designate a Beneficiary or
if the Beneficiary predeceases the Eligible Employee, the Eligible
Employee's spouse shall be the Beneficiary or if no spouse survives the
Eligible Employee, the Eligible Employee's estate shall be the
Beneficiary. An Eligible Employee may change his designated Beneficiary
in a time and manner determined by the Committee.
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1.05 "BENEFIT" shall mean the payments payable under Article 2 of this Plan.
1.06 "BOARD OF DIRECTORS" shall mean the Board of Directors of Thomas &
Betts Corporation.
1.07 "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.08 "COMMITTEE" shall mean the Company's Human Resources Committee of the
Board of Directors, any successor or substitute committee thereto, or,
during any period of time when no such committee is in existence, the
Company's entire Board of Directors.
1.09 "COMPANY" shall mean the Thomas & Betts Corporation or any successor by
merger, purchase or otherwise, with respect to its employees and such
affiliated companies authorized by the Board of Directors, on such
terms and conditions as the Board may determine, to participate in the
Plan.
1.10 "COMPENSATION" shall mean the base cash compensation paid to an
Eligible Employee in respect of each month for services rendered to the
Company by such Eligible Employee, plus the amount paid pursuant to the
provisions of the Officer Profit Sharing Plan and the Management
Incentive Plan or such substitute or similar plans, determined prior to
any pre-tax contributions under a "qualified cash or deferred
arrangement" (as defined under Section 401(k) of the Code and its
applicable regulations) or under a "cafeteria plan" (as defined under
Section 125 of the Code and its applicable regulations)
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and prior to any amount which an Eligible Employee has elected to defer
under the Thomas & Betts Supplemental Executive Investment Plan.
1.11 "CREDITED SERVICE" shall mean with respect to an Eligible Employee
service determined pursuant to the provisions of Section 2.9 of the
Retirement Plan. Notwithstanding the foregoing, an Eligible Employee
may, subject to the approval by the Board of Directors, be granted
additional years of Credited Service either for purposes of determining
the amount of Benefits under the Plan or for purposes of satisfying the
service eligibility requirements necessary for Benefits under the Plan
or both. The number of years of Credited Service so granted, if any,
shall be set forth in Appendix A.
1.12 "EFFECTIVE DATE" shall mean September 2, 1992.
1.13 "ELIGIBLE EMPLOYEE" shall mean an employee who occupies a position of
senior management with the Company who has been approved by the
Committee and who is listed on Appendix A, as amended from time to
time. No employee who is a party to a Supplemental Executive Retirement
Contract (the "SERC") shall be so approved by the Committee unless such
employee has executed, in form satisfactory to the Committee, a written
agreement terminating all of the obligations of the Company under the
SERC and canceling any entitlements thereunder in respect of such
employee.
1.14 "INVESTMENT PLAN" shall mean the Thomas & Betts Corporation Employees'
Investment Plan.
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1.15 "NORMAL RETIREMENT DATE" shall mean the first day of the calendar month
following an Eligible Employee's 65th birthday.
1.16 "PLAN" shall mean the Thomas & Betts Corporation Executive Retirement
Plan, as amended from time to time.
1.17 "RETIREE" shall mean an Eligible Employee who has completed 5 or more
years of Credited Service and attained age 55, or if such Eligible
Employee commenced employment with the Company prior to December 1,
1997, has completed 5 or more years of Credited Service and attained
age 50, and in each case, who either voluntarily terminates employment
with the Company and all Affiliated Companies at least 60 months
following September 2, 1992 or after the Company's request or demand
terminates employment with the Company and all Affiliated Companies
after September 2, 1992. For purposes of determining whether employment
commenced prior to December 1, 1997, "Company" shall not include Augat,
Inc. or any other Affiliated Company which became authorized to
participate in this Plan after November 30, 1997.
1.18 "RETIREMENT PLAN" shall mean the Thomas & Betts Retirement Pension Plan
for Salaried Employees, as amended from time to time.
1.19 "10 YEAR CERTAIN AND LIFE ANNUITY" shall mean an annuity which provides
a benefit payable during the Retiree's life and, if such Retiree dies
during the 10 year period after the date such benefit began, a lump-sum
payment shall be made to the Retiree's Beneficiary in respect of the
balance of the payments for such 10 year period.
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ARTICLE 2. AMOUNT OF PAYMENT OF BENEFITS
2.01 Payment of Benefit
Except as otherwise provided in Section 2.07 hereof, Benefits shall be
payable by the Company only with respect to an Eligible Employee who
becomes a Retiree, subject to the provisions of Section 3.07. Such
Benefits shall be payable from the general assets of the Company.
2.02 Amount of Benefit
The monthly amount of the Benefit payable in the form of a 10 Year
Certain and Life Annuity shall be equal to:
(a) 2.5 percent of the Eligible Employee's Average Monthly
Compensation multiplied by the first 20 years of his Credited
Service plus 1.5 percent of the Eligible Employee's Average
Monthly Compensation multiplied by the next 15 years of his
Credited Service
MINUS
(b) The sum of (i) and (ii) where
(i) equals the monthly amount of benefit which is or
would be payable to the Eligible Employee, assuming
such benefit commenced on his date of termination of
employment pursuant to the provisions of the
Retirement Plan in the form of a 100% Joint and
Survivor Annuity (an Eligible Employee who is
unmarried at the time the Benefit is determined shall
be
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deemed, for purposes of the Plan, to have a survivor
annuitant born on the same date as the Eligible
Employee), and
(ii) equals the monthly amount of benefit payable under a
prior employer's retirement program as set forth in
Appendix A.
The Committee shall determine, in good faith, the appropriate amount of offset
under Section 2.02(b)(ii) to be used in calculating any Benefit under this Plan
(including, without limitation, converting such monthly benefit under Section
2.02(b)(ii) to an appropriate benefit form) and each Eligible Employee shall
cooperate with the Committee by providing any information (certifiable or
otherwise) necessary to make such determination.
2.03 Form of Payment
(a) Unless a Retiree has elected an optional form of benefit, as
provided herein, the automatic form of payment under this Plan
deemed to have been elected by such Retiree upon becoming an
Eligible Employee shall be a 10 Year Certain and Life Annuity,
providing for monthly payments to the Retiree for his lifetime
with a guaranteed minimum of one hundred twenty (120) monthly
payments and if the Retiree dies prior to receiving the full
one hundred twenty (120) monthly payments, the remainder of
the guaranteed payments shall be commuted and paid in one lump
sum to the named Beneficiary in full discharge of the
obligation of the Plan. In the absence of a named Beneficiary,
the commuted value of the remaining guaranteed payments will
be paid to the Retiree's estate.
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(b) Any Eligible Employee may, upon becoming an Eligible Employee,
elect in writing that his Benefit be paid in the form of a
100% Joint and Survivor Annuity of Actuarial Equivalent value
to the Benefit otherwise payable under Section 2.03(a) above,
providing for a reduced monthly benefit during his lifetime
with 100% of such reduced monthly benefit continuing to his
surviving spouse to whom he was married on the date his
Benefit payments commenced for the remainder of such spouse's
lifetime. If the Retiree and the spouse to whom he was married
on the date his Benefit payments commenced die before
receiving one hundred twenty (120) monthly payments, the
remainder of the one hundred twenty (120) guaranteed payments
will be commuted and paid in one lump sum to the named
beneficiary of the last surviving annuitant in full discharge
of the obligation of the Plan. This optional form of benefit
shall become effective on the first day of the month for which
the Retiree's Benefit is first payable. If the Retiree's
spouse dies before the first day of the month for which the
Retiree's Benefit is first payable, this optional form of
payment shall be revoked and payments shall be made pursuant
to the provisions of Section 2.03(a) above.
(c) Any Eligible Employee may, upon becoming an Eligible Employee,
elect in writing that his Benefit be paid to him (or his
Beneficiary if he dies prior to payment under paragraph (d)
below) in one single payment of Actuarial Equivalent value to
the Benefit otherwise payable under Section 2.03(a) above.
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(d) Payments shall commence as of the first day of the month
following the Eligible Employee's termination of employment or
as soon as administratively practicable thereafter.
(e) Any Eligible Employee may change his payment form election by
making a new payment form election at any time; provided,
however, that no such election shall be effective unless it
shall have been made and submitted to the Committee prior to
the last day of the calendar year prior to the calendar year
in which the Eligible Employee terminates employment with the
Company and each Affiliated Company.
2.04 Commencement of Benefit on or after Normal Retirement Date
A Retiree who terminates employment on or after his Normal Retirement
Date shall receive his Benefit commencing on the first day of the month
following his termination of employment, subject to the provisions of
Section 3.07. In that case, his Benefit shall be equal to the Benefit
determined pursuant to the provisions of Section 2.02 on the basis of
his Average Monthly Compensation and Credited Service on the date of
his termination of employment.
2.05 Commencement of Benefit Before Normal Retirement Date
(a) Unless the provisions of Section 2.05(b) below are applicable,
a Retiree whose employment terminates for any reason prior to
his Normal Retirement Date shall receive a Benefit commencing
on the first day of the month following his
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termination of employment, subject to the provisions of
Section 3.07. In such case, his Benefit shall be equal to the
Benefit determined under the provisions Section 2.02 on the
basis of his Average Monthly Compensation and Credited Service
on the date of his termination of employment; provided,
however, the portion of his Benefit determined under the
provisions of Section 2.02(a) shall be reduced by 3.6% for
each year and 1/12 of 3.6% for each month of a fractional year
by which the date the Retiree's Benefit begins prior to the
60th anniversary of his birth.
(b) A Retiree who terminates employment at the Company's request
prior to his Normal Retirement Date shall, subject to the
approval of the Committee and the provisions of Section 3.07,
receive a special early Benefit commencing on the first day of
the month following his termination of employment. The special
early Benefit shall be equal to:
(i) his Benefit determined pursuant to the provisions of
Section 2.02 on the basis of his Average Monthly
Compensation and Credited Service on his date of
termination of employment; provided, however, the
portion of his Benefit determined under the
provisions of Section 2.02(a) shall be calculated on
the basis of the Credited Service he accrued to his
date of termination of employment plus any additional
service he would have accrued pursuant to the
provisions of Section 1.11 after his termination of
employment if he had remained in the employ of the
Company until his 60th birthday; increased by
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(ii) (A) in the case of any Benefit payable in the
form described in Sections 2.03(a) or (b),
the Social Security cost of living
percentage increase granted on Social
Security benefits paid in the year of such
Retiree's termination of employment and on
each anniversary of such Retiree's
termination of employment occurring prior to
his Normal Retirement Date, the Benefit
determined under the provisions of Section
2.02(a) and paragraph (b) of this Section
2.05 shall be increased by the Social
Security cost of living percentage increase
granted on Social Security benefits paid in
such calendar year; provided, however, the
total number of such cost of living
increases applied to a Retiree's Benefit
under this subparagraph (ii) shall not
exceed five, and the cost of living increase
percentage applied to a Retiree's Benefit
under this subparagraph (ii) each year shall
not exceed 5%; or
(B) in the case of any Benefit payable in the
form described in Section 2.03(c), a
projected and compounded deemed Social
Security cost of living percentage increase
equal to 5% of such Benefit for the year of
such Retiree's termination and 5% of such
Benefit, as cumulatively increased, for each
anniversary of such Retiree's termination
occurring prior to his Normal Retirement
Date; provided, however, the total number of
such deemed cost of living
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increases applied to a Retiree's Benefit
under this subparagraph (ii)(B) shall not
exceed five.
2.06 Disability Benefit
An Eligible Employee who has not reached his Normal Retirement Date and
who ceases to be employed by the Company and each Affiliated Company on
account of disability to be credited with Credited Service if (i) such
Eligible Employee has completed 5 years of Credited Service (computed
in the same manner described in Section 1.17) and has reached his 55th
birthday, or if such Eligible Employee commenced employment with the
Company prior to December 1, 1997, his 50th birthday, or (ii) such
employment cessation occurs after the date specified in Appendix A with
respect to such Eligible Employee; PROVIDED, HOWEVER, such Credited
Service shall only continue if such Eligible Employee is eligible for
and is continuously receiving disability benefits under the Company's
long-term disability program. There shall also be included in his
Credited Service any applicable waiting period for disability benefits
under the Company's long-term disability plan; provided that after
expiration of such period the Eligible Employee becomes entitled to
such disability benefits. Upon reaching age 65, such disabled Eligible
Employee shall be entitled to a disability Benefit in an amount
determined under Section 2.02, based on his Average Monthly
Compensation at the time he ceased employment on account of disability
and his Credited Service based on Section 1.11 and the preceding
provisions of this Section 2.06. For purposes of Section 2.06(i),
"Company" shall not include Augat, Inc. or any other Affiliated Company
which became authorized to participate in this Plan after November 30,
1997.
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2.07 Pre-Retirement Death Benefit
(a) If (i) prior to his employment termination, an Eligible
Employee dies after he has completed 5 or more years of
Credited Service and reached his 55th birthday, or if such
Eligible Employee commenced employment with the Company prior
to December 1, 1997, his 50th birthday, (ii) an Eligible
Employee dies prior to his termination of employment, but
after the date specified in Appendix A with respect to such
Eligible Employee, or (iii) an Eligible Employee dies while
accruing Credited Service under Section 2.06, a spouse's
Benefit shall be payable to his surviving spouse. Such
spouse's Benefit shall be a lump sum payment which is
Actuarially Equivalent to the amount of monthly benefit the
spouse would have received if the Benefit which the Eligible
Employee would have received under Section 2.02 of this Plan,
reduced pursuant to the provision of Section 2.05(a) of this
Plan, had commenced on the Eligible Employee's date of death
in the form of a 100% joint and survivor annuity and the
Eligible Employee had died immediately thereafter. Such
spouse's benefit shall be paid as soon as practicable
following such Eligible Employee's date of death. For purposes
of Section 2.07(a)(i), "Company" shall not include Augat, Inc.
or any other Affiliated Company which became authorized to
participate in this Plan after November 30, 1997.
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2.08 Restoration of Service
If an Eligible Employee who retired or otherwise terminated employment
is restored to employment with the Company or an Affiliated Company,
the monthly payments under the Plan shall be discontinued and, upon
subsequent retirement or termination of employment with the Company or
any Affiliated Company, the Eligible Employee's Benefit shall be
computed in accordance with the provisions of this Article 2, as
applicable, and shall be reduced by the actuarial equivalent value of
the Benefit payments he received prior to his subsequent retirement.
2.09 Designation of Beneficiary
For purposes of Sections 2.03 and 2.07, each Eligible Employee shall
file a written designation of Beneficiary with the Committee upon
qualifying for participation hereunder. Such designation shall remain
in force until revoked by the Eligible Employee by filing a new
beneficiary form with the Committee.
2.10 Receipt of Single-Sum Payment
If any Retiree has received a single sum payment under Section 2.03(c)
above, such Retiree's Beneficiary shall have no further interest in the
Plan or any benefits payable thereunder.
ARTICLE 3. GENERAL PROVISIONS
3.01 Administration
The administration of the Plan, the exclusive power to interpret it,
and the responsibility for carrying out its provisions are vested in
the Committee. The Committee shall have
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full discretionary authority to interpret the Plan and resolve all
matters arising in connection with the Plan. The Committee may adopt
procedural rules and may employ and rely on such legal counsel,
actuaries, accountants and agents as it may deem advisable to assist in
the administration of the Plan. Decisions of the Committee shall be
conclusive and binding on all persons. The expenses of the Committee
attributable to the administration of this Plan shall be paid directly
by the Company.
3.02 Funding
(a) All amounts payable in accordance with this Plan shall
constitute a general unsecured obligation of the Company. Such
amounts, as well as any administrative costs relating to the
Plan, shall be paid out of the general assets of the Company,
unless the provisions of paragraph (b) below are applicable.
(b) The Board of Directors may, for administrative reasons,
establish a grantor trust for the benefit of Eligible
Employees in the Plan. The assets of said trust will be held
separate and apart from other Company funds and shall be used
exclusively for the purposes set forth in the Plan and the
applicable trust agreement, subject to the following
conditions:
(i) the creation of said trust shall not cause the Plan
to be other than "unfunded" for purposes of Title I
of ERISA;
(ii) the Company shall be treated as the "grantor" of said
trust for purposes of Section 671 and 677 of the
Internal Revenue Code; and
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(iii) said trust agreement shall provide that its assets
may be used to satisfy claims of the Company's
general creditors, provided that the rights of such
general creditors are enforceable under federal and
state law.
3.03 No Contract of Employment
The establishment of the Plan shall not be construed as conferring any
legal right upon any person for a continuation of employment, nor shall
it interfere with the right of the Company to discharge any employee.
3.04 Competency
If the Committee shall find that any person to whom any amount is or
was payable hereunder is unable to care for his affairs because of
illness or accident, or has died, then the Company, if it so elects,
may direct that any payment due him or his estate (unless a prior claim
therefore has been made by a duly appointed legal representative) or
any part thereof be paid or applied for the benefit of such person or
for the benefit of his spouse, children or other dependents, an
institution maintaining or having custody of such person, any other
person deemed by the Committee to be a proper recipient on behalf of
such person otherwise entitled to payment, or any of them, in such
manner and proportion as the Company may deem proper. Any such payment
shall be in complete discharge of the liability of the Company
therefor.
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3.05 Withholding Taxes
The Company shall have the right to deduct from each payment to be made
under the Plan any required withholding taxes.
3.06 Nonalienation
Except insofar as may otherwise be required by law, no amount payable
at any time under the Plan shall be subject in any manner to alienation
by anticipation, sale, transfer, assignment, bankruptcy, pledge,
attachment, charge or encumbrance of any kind nor in any manner be
subject to the debts or liabilities of any person and any attempt to so
alienate or subject any such amount, whether presently or thereafter
payable, shall be void. If any person shall attempt to, or shall,
alienate, sell, transfer, assign, pledge, attach, charge or otherwise
encumber any amount payable under the Plan, or any part thereof, or if
by reason of his bankruptcy or other event happening at any such time
such amount would be made subject to his debts or liabilities or would
otherwise not be enjoyed by him, then the Committee, if it so elects,
may direct that such amount be withheld and that the same or any part
thereof be paid or applied to or for the benefit of such person, his
spouse, children or other dependents, or any of them, in such manner
and proportion as the Committee may deem proper.
3.07 Forfeiture for Cause
In the event that an Eligible Employee or Retiree shall at any time be
convicted for a crime involving dishonesty or fraud on the part of such
Eligible Employee or Retiree in his relationship with the Company or an
Affiliated Company, all benefits that would
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otherwise be payable to him under the Plan shall be forfeited. If a
Retiree shall at any time be under indictment for any such crime any
Benefit amounts payable to such Retiree shall be suspended pending
conviction, dismissal or acquittal in respect thereof. If the Retiree
is not convicted, the suspended amounts shall be paid to him (with
simple interest accruing at the PBGC Interest Rate) within thirty days
after the date of the dismissal or acquittal. For this purpose, any
so-called ALFORD plea or plea of NOLO CONTENDERE shall be deemed to
constitute an acquittal.
3.08 Mergers/Transfers
This Plan shall be binding upon and inure to the benefit of the Company
and its successors and assignees and the Eligible Employee, his
designees and his estate. Nothing in this Plan shall preclude the
Company from consolidating or merging into or with, or transferring all
or substantially all of its assets to, another corporation which
assumes this Plan and all obligations of the Company hereunder. Upon
such a consolidation, merger or transfer of assets and assumption, the
term "Company" shall refer to such other corporation and this Plan
shall continue in full force and effect.
3.09 Change of Control
Notwithstanding any other provision of the Plan, in the case of an
Eligible Employee who has an employment agreement with the Company
which provides for his or her continued employment following a change
of control ("Employment Agreement"), the following provisions shall
apply in the event that such Eligible Employee's employment with the
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Company is terminated under the circumstances described in Section 7(d)
of his or her Employment Agreement:
(a) Such Eligible Employee, if not a Retiree as defined in Section
1.17, shall be deemed to be a Retiree and shall be entitled to
a Benefit determined in accordance with Section 2.02,
provided, however, that Section 2.02(a)(ii) shall not apply;
(b) For purposes of Section 2.02(a)(i), such Eligible Employee's
years of Credited Service shall be increased by a period of
time equal to the Remainder of the Employment Period (as
defined in Section 7(d)(i)(D) of the Employment Agreement);
and
(c) The Actuarial Equivalent value of such Eligible Employee's
Benefit (determined in accordance with the foregoing
provisions of this Section 3.085) shall be paid to him or her
in a lump sum within 30 days after the date of termination of
his or her employment.
3.10 Calculations
Whenever, under this Plan, it is necessary to determine whether one
benefit is less than, equal to, or larger than another, whether or not
such benefits are provided under this Plan, such determination shall be
made by the Company's independent consulting actuary, using mortality
and interest (unless otherwise specified in this Plan) and any other
assumptions normally used at the time by such actuary in determining
actuarial equivalents under the Retirement Plan.
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3.11 Elections
All elections, designations, requests, notices, instructions, and other
communications from an Eligible Employee, Retiree, or other person to
the Committee required or permitted under the Plan shall be in such
form as is prescribed from time to time by the Committee, shall be
mailed by Certified or Registered mail, Return Receipt Requested, or
personally delivered to the principal offices of the Corporation, and
shall be deemed to have been given and delivered only upon actual
receipt thereof at such location.
3.12 Acceleration of Payment
Notwithstanding any other provision of the Plan to the contrary, the
Company shall make payments hereunder to a Retiree or Beneficiary
before such payments are otherwise due if the Committee determines,
based on a change in the tax or revenue laws of the United States of
America, a published ruling or similar announcement issued by the
Internal Revenue Service, a regulation issued by the Secretary of the
Treasury or his delegate, a decision by a court of competent
jurisdiction involving an Eligible Employee, Retiree or Beneficiary, or
a closing agreement made under Code Section 7121 that is approved by
the Internal Revenue Service and involves an Eligible Employee, Retiree
or Beneficiary, that an Eligible Employee, Retiree or Beneficiary has
recognized or will recognize income for federal income tax purposes
with respect to amounts that are or will be payable to him under the
Plans before they are paid to him. In such cases, any such Retiree or
Beneficiary so affected shall receive the remaining Benefit payments
payable to him and, where appropriate, his Beneficiary in one single
payment of Actuarial
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Equivalent value to such remaining payments. Upon receipt of such
accelerated payment the provisions of Section 2.10 shall apply to any
Beneficiary of such Retiree.
3.13 Construction
(a) The Plan is intended to constitute an unfunded deferred
compensation arrangement for a select group of management or
highly compensated employees and therefore exempt from the
requirements or Sections 201, 301 and 401 of ERISA. All rights
hereunder shall be governed by and construed in accordance
with the laws of the State of Tennessee and, except to the
extent otherwise herein provided, in accordance with the
provisions of the Retirement Plan.
(b) The masculine pronoun shall mean the feminine wherever
appropriate.
(c) The captions preceding the sections and articles hereof have
been inserted solely as a matter of convenience and in no way
define or limit the scope or intent of any provisions of the
Plan.
3.14 Insurance Products
The Company may require each Eligible Employee to assist it in
obtaining life insurance policies on the lives of each Eligible
Employee, which policies would be owned by, and be payable to, the
Company. The Eligible Employee may be required to complete an
application for life insurance, furnish underwriting information
including medical examinations by a life insurance company-approved
examiner, and authorize release of medical history to the life
insurance company's underwriter, as designated by the
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Company. An Eligible Employee shall have no right or interest in such
policies or the proceeds thereof.
3.15 Nature of Obligation
No Eligible Employee, Retiree or Beneficiary shall have any interest in
any specific asset of the Company or any Affiliated Company as a result
of the Plan. Nothing contained herein shall be deemed to create a trust
of any kind or any fiduciary relationship between the Company (or any
Affiliated Company) and any Eligible Employee, Retiree or Beneficiary.
Any right to receive any Benefit under the Plan shall only be the right
of a general unsecured creditor.
3.16 Legal Fees
In the event that any claim by an Eligible Employee for payment of any
benefit under the Plan is disputed by the Company or the trustee of any
"rabbi" trust created in connection therewith, or any other dispute in
respect of the Plan or any such trust arises between any Eligible
Employee, the Company and/or such trustee, any such Eligible Employee
shall be promptly reimbursed for all reasonable attorney fees and
expenses, after satisfaction by the Eligible Employee of a lifetime
deductible equal to $25,000, incurred by any such Eligible Employee (i)
in pursuing any such claim, or (ii) in connection with any such other
dispute.
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ARTICLE 4. AMENDMENT, TERMINATION, OR PARTICIPANT REMOVAL
The Board of Directors reserves the right to modify or to amend, in whole or in
part, or to terminate this Plan at any time. However, no modification, amendment
or termination of the Plan shall reduce the Benefit being paid to a Retiree as
of the date of any such amendment or termination. In respect of any Eligible
Employee, no modification or amendment shall adversely affect such Eligible
Employee, unless such Eligible Employee consents to such modification or
amendment in writing, and, if the Plan is terminated by the Company, each
Eligible Employee shall be entitled to a Benefit calculated under Article 2
above, based on such Eligible Employee's service and compensation to the date of
such plan termination.
Also, with respect to an Eligible Employee who is not a Retiree pursuant to
Section 1.17 of the Plan, if such Eligible Employee is removed as a participant
from the Plan by the Committee, then such former Eligible Employee shall have no
rights to any Benefits under the Plan, but rather such former Eligible Employee
shall only have those rights that are available to such former Eligible Employee
under the Company's other benefit plans.
-23-
<PAGE>
IN WITNESS WHEREOF, THOMAS & BETTS CORPORATION has caused this Plan, as
amended, to be duly executed this 1st day of December, 1999.
Attest: THOMAS & BETTS CORPORATION
/s/ Jerry Kronenberg By: /s/ Clyde R. Moore
- ---------------------------------- --------------------------------------
Jerry Kronenberg Clyde R. Moore
Vice President-General Counsel and President and Chief Executive Officer
Secretary
(Corporate Seal)
-24-
<PAGE>
<PAGE>
EXHIBIT 10.11
THOMAS & BETTS CORPORATION
NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
(EFFECTIVE MAY 5, 1999)
1. PURPOSE. The purpose of the Thomas & Betts Corporation Nonemployee
Directors Stock Option Plan (the "Plan") is to promote the long-term success of
Thomas & Betts Corporation (the "Corporation") by providing a means for each
nonemployee director to increase his or her holdings of common stock of the
Corporation through the annual grant of a nonqualified stock option ("Option" or
"Options, as appropriate).
2. TERM. The Plan shall be effective May 5, 1999 and shall remain in
effect until terminated by the Corporation's Board of Directors (the
"Board"). After termination of the Plan, no future Options may be granted,
but previously granted Options shall remain outstanding in accordance with
their applicable terms and conditions and the terms and conditions of the
Plan.
3. PLAN ADMINISTRATION. Committees appointed by the Board (each, a
"Committee") shall be responsible for administering the Plan. With respect to
any determination for which approval of the specific transaction (and not the
Plan as a whole) is necessary or advisable for purposes of Section 16(b) of the
Securities Exchange Act of 1934 (the "1934 Act"), the Committee shall be
comprised solely of two or more members of the Board, each of whom meets the
definition of a "nonemployee director" as set forth in Rule 16b-3(b)(3) under
the 1934 Act, or any successor rule. Except as provided in the preceding
sentence, the Committee shall be the Corporate Governance Committee of the
Board, unless otherwise determined by the Board. Subject to the terms of the
Plan, the Committee shall have full and exclusive power to interpret the Plan
and to adopt such rules, regulations and guidelines for carrying out the Plan as
it may deem necessary or proper, all of which power shall be exercised in the
best interests of the Corporation.
4. ELIGIBILITY. Each member of the Board who is neither an officer nor an
employee of the Corporation or any of its subsidiaries or affiliates shall be
eligible to receive one or more Options under the Plan; provided, however, that
a member of the Board who has entered into an agreement with the Corporation
which provides that he or she is not eligible to receive any additional
remuneration in connection with his or her services as a member of the Board
shall not be eligible to receive an Option under the Plan during the term of
such agreement. A member of the Board who is eligible to receive an Option under
the Plan is hereinafter referred to as a "Nonemployee Director."
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. Options may be granted
under the Plan to purchase in the aggregate for distribution pursuant to the
terms of the Plan a maximum of 100,000 shares of the issued and outstanding
common stock of the Corporation, $0.10 par value (the "Common Stock"), subject
to adjustment as provided in Section 6. If any Option granted under the Plan
expires or terminates for any reason without having been exercised in full, the
Common Stock subject to, but not delivered under, such Option shall become
available for the grant of other Options under the Plan. Any shares of Common
Stock issued under the Plan will consist of authorized and unissued shares.
<PAGE>
6. ADJUSTMENTS AND REORGANIZATIONS. In the event of any stock dividend,
stock split, combination or exchange of shares, merger, consolidation, spin-off
or other distribution (other than normal cash dividends) of Corporation assets
to shareholders, or any other change affecting shares, such proportionate
adjustments, if any, as the Committee in its discretion may deem appropriate to
reflect such change shall be made with respect to (i) the aggregate number of
shares that may be issued under the Plan, (ii) the number of shares (stated in
Section 7(b)) subject to each Option to be granted under the Plan, (iii) the
number of shares subject to each outstanding Option granted under the Plan, and
(iv) the per share purchase price for any outstanding Options under the Plan.
Any such adjustment shall be made only as necessary to maintain the
proportionate interest of each Nonemployee Director who has received, or is
eligible to receive, an Option under the Plan and preserve, without exceeding,
the value of each Option.
7. OPTIONS. Each Option granted to a Nonemployee Director under the Plan
shall be subject to the following terms.
(a) GRANT OF OPTION. Effective May 5, 1999, each Nonemployee Director
shall receive an annual grant of an Option as of the date he or she is elected,
and each date he or she is re-elected, to the Board.
(b) SHARES SUBJECT TO OPTION. The number of shares of Common Stock
subject to each Option granted under Section 7(a) shall be 800 (subject to
adjustment as provided in Section 6); provided, however, that such number shall
be adjusted PRO RATA in the case of an Option granted to a Nonemployee Director
elected at other than an annual meeting of shareholders, based on the number of
full or partial calendar months between the date of grant and the month in which
the next annual meeting of the shareholders of the Corporation will be held. In
no event, however, may any Nonemployee Director acquire under the Plan more than
one percent of the shares of Common Stock outstanding as of May 5, 1999.
(c) PURCHASE PRICE. The purchase price of each share of Common Stock
subject to an Option shall be Fair Market Value (as defined in Section 8) on the
date of grant.
(d) TERM. Subject to earlier termination as provided in Sections 7(f),
(g) and (h), the term of each Option shall be ten years from the date of its
grant.
(e) EXERCISE. Each Option shall be fully exercisable on the date of
grant. An Option may be exercised in whole or in part at any time, or from time
to time, but not later than the date the Option expires. No fractional shares
shall be issued under the Plan.
The purchase price shall be payable:
(1) in U.S. currency; or
(2) in shares of Common Stock previously acquired by the
Nonemployee Director; provided that if such shares of Common Stock were acquired
through the exercise of an option, such shares shall have been held by the
Nonemployee Director for a period of at least one year on the date of exercise;
Page 2 of 7
<PAGE>
(3) by delivering a properly executed notice of exercise
of the Option to a broker designated by the Corporation, with irrevocable
instructions to the broker promptly to deliver to the Corporation the amount of
sale or loan proceeds necessary to pay the exercise price of the Option; or
(4) in any combination of paragraphs (1), (2) and (3) above.
In the event the purchase price is paid, in whole or in part,
with shares of Common Stock, the portion of the purchase price so paid shall be
equal to the closing sales price as reported on the composite tape for
securities listed on the New York Stock Exchange on the business day immediately
preceding the date of exercise of the Option.
(f) EXERCISE UPON RETIREMENT OR DISABILITY OF NONEMPLOYEE DIRECTOR.
If a Nonemployee Director shall retire in accordance with the retirement
policy of the Board, or if a Nonemployee Director's membership on the Board
is terminated as a consequence of disability (within the meaning of section
22(e)(3) of the Internal Revenue Code of 1986, as amended), his or her Option
or Options may be exercised at any time prior to the earlier of (i) the
expiration date of such Option, or (ii) six years after the date of such
termination of membership on the Board. In the event of the Nonemployee
Director's disability, his or her Option or Options may be so exercised by
his or her legal representative.
(g) EXERCISE UPON DEATH OF NONEMPLOYEE DIRECTOR. If a Nonemployee
Director shall die during his or her membership on the Board or within three
years of his or her retirement in accordance with Section 7(f), his or her
Option or Options may be exercised by the Nonemployee Director's estate,
personal representative or beneficiary who acquired the right to exercise such
Option by bequest or inheritance, at any time prior to the earlier of (i) the
expiration date specified in such Option, or (ii) three years after the date of
death.
(h) END OF BOARD MEMBERSHIP FOR ANY OTHER REASON. If a Nonemployee
Director's membership on the Board terminates for any reason (such as, without
limitation, failure to be re-elected by the Corporation's shareholders) other
than by retirement, disability or death, his or her Option or Options may be
exercised by the Nonemployee Director at any time prior to the earlier of (i)
the expiration date specified in such Option, or (ii) three months after the
date of such termination of membership on the Board.
(i) TRANSFERABILITY. A Nonemployee Director may transfer an Option
for no consideration to (1) a member of his or her immediate family (as defined
in Rule 16a-1(e) under the 1934 Act), a niece, a nephew, a former spouse, or any
person sharing the Nonemployee Director's household (other than a tenant or
employee) ("Permitted Transferees"), (2) a trust in which one or more Permitted
Transferees in the aggregate have more than 50% of the beneficial interest, (3)
a foundation in which one or more Permitted Transferees (and the Nonemployee
Director) in the aggregate control the management of assets, and (4) any other
entity in which one or more Permitted Transferees (and the Nonemployee Director)
in the aggregate own more than 50% of the voting interests. Except as provided
in the preceding sentence, or by will or the laws of descent and distribution,
an Option shall not be assignable or transferable by the Nonemployee Director,
and during the lifetime of the Nonemployee Director, the Option shall be
exercisable only by him or her or by his or her guardian or legal
representative. Any Option transferred by a Nonemployee Director shall not be
assignable or transferable by the transferee,
Page 3 of 7
<PAGE>
and the transferee shall remain subject to all the terms and conditions of the
Option prior to such transfer. If the Nonemployee Director is married at the
time of exercise and if the Nonemployee Director so requests at the time of
exercise, the shares of Common Stock shall be registered in the name of the
Nonemployee Director and the Nonemployee Director's spouse, jointly, with right
of survivorship.
8. FAIR MARKET VALUE. "Fair Market Value" for all purposes under the Plan
shall mean the average of the high and low sales prices of Common Stock as
reported on the composite tape for securities listed on the New York Stock
Exchange for the date in question, or if no sales of Common Stock were made on
said Exchange on that date, the average of the high and low sales prices of
Common Stock as reported on said composite tape for the preceding day on which
sales of Common Stock were made on said Exchange.
9. OPTION AGREEMENTS. Options under the Plan shall be evidenced by
agreements that set forth the terms, conditions and limitations for each Option.
The Committee need not require the execution of any such agreement by the
recipient, in which case the delivery of the Option to the respective
Nonemployee Director will constitute his or her acceptance and agreement to the
terms of the Option.
10. PLAN AMENDMENT. The Board may amend the Plan as it deems necessary or
appropriate; provided, however that no such amendment shall cause the terms and
conditions of Options to fail to be fixed in advance, within the meaning of
Securities and Exchange Commission interpretations under Section 16(b) of the
1934 Act.
11. UNFUNDED PLAN. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Corporation and any participant
or other person. To the extent any person holds any rights by virtue of an
Option granted under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Corporation.
12. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of Tennessee and applicable federal law.
13. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors
and assigns of a Nonemployee Director, including, without limitation, the
estate of the Nonemployee Director and the executor, administrator or trustee
of such estate, or any receiver or trustee in bankruptcy or representative of
the Nonemployee Director's creditors.
14. RIGHTS AS A SHAREHOLDER. Neither a Nonemployee Director nor his or her
successor or successors in interest shall have any rights as a shareholder with
respect to a share of Common Stock subject to an Option until he or she becomes
the holder of record.
15. RETENTION AS DIRECTOR. Nothing contained in the Plan or any Option
agreement under the Plan shall interfere with or limit in any way the right of
the shareholders of the Corporation or the Board to remove any Nonemployee
Director from the Board pursuant to the Charter or the bylaws of the
Corporation, nor confer upon any Nonemployee Director any right to continue in
the service of the Corporation.
Page 4 of 7
<PAGE>
GRANT AGREEMENT
NONEMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION
This Nonqualified Stock Option Agreement is made by and between Thomas
& Betts Corporation (the "Corporation") and the nonemployee director of the
Corporation identified in the attached Notice of Grant of Stock Option (the
"Optionee").
WHEREAS, the Corporation desires to afford the Optionee an opportunity
to purchase shares of common stock of the Corporation ("Shares") as hereinafter
provided, in accordance with the provisions of the Thomas & Betts Corporation
Nonemployee Directors' Stock Option Plan (the "Plan");
NOW, THEREFORE, for and in consideration of the provisions and
conditions as stated herein and in the Plan, and for other good and valuable
consideration, it is agreed as follows:
(1) GRANT OF OPTION. Subject to the terms and conditions contained herein
and in the Plan, the Corporation hereby grants the Optionee the right and option
(the "Option") to purchase the number of Shares specified in the attached Notice
of Grant of Stock Option, subject to adjustment pursuant to Paragraph 8, at the
price per share set forth in the attached Notice of Grant of Stock Option,
subject to adjustment pursuant to Paragraph 8. This Option is not intended to
qualify as an incentive stock option ("ISO") as that term is defined in Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
(2) VESTING AND EXERCISABILITY. This Option shall be fully vested and
exercisable on the date of grant set forth in the attached Notice of Grant of
Stock Option (the "Date of Grant").
(3) METHOD OF EXERCISE. This Option may be exercised by giving written
notice to the Corporation's Director of Compensation or other designated person
of the Corporation at its principal office, or to the broker designated by the
Corporation (the "Designated Broker") no later than the Expiration Date (as
defined in Paragraph 4).
Notices of exercise provided to the Corporation shall include a
statement of the number of Shares with respect to which this Option is being
exercised, and shall be accompanied by full tender of the purchase price payable
which may be made in whole or in part either in U.S. currency or by tendering
such number of whole Shares owned by the Optionee, the fair market value of
which as of the close of the business day immediately preceding the date of
exercise does not exceed the purchase price payable; provided, however, that if
the Shares to be tendered were acquired by exercise of an option, such Shares
shall have been owned by the Optionee for at least one year prior to such
payment.
Notices of exercise provided to the Designated Broker shall be in such
form and satisfy such conditions as the Designated Broker shall require.
Nothing in this Agreement shall confer upon the Optionee any rights as
a stockholder with respect to a Share prior to the time he or she becomes the
holder of record of such Share.
Page 5 of 7
<PAGE>
(4) EXPIRATION DATE. Unless this Option expires earlier in accordance with
any provision of Paragraph 5, this Option shall expire (no longer be
exercisable) on the date which is ten years from the Date of Grant (the
"Expiration Date").
(5) TERMINATION OF BOARD MEMBERSHIP. If, prior to the Expiration Date, the
Optionee (i) becomes totally and permanently disabled (as defined in the Plan)
("Disabled"), (ii) retires, (iii) dies, or (iv) otherwise terminates membership
on the Board, this Option shall be exercisable under the circumstances and for
the time periods set forth below, but only to the extent such time periods do
not extend the Expiration Date.
(a) RETIREMENT. If the Optionee retires in accordance with the
retirement policy of the Board of Directors of the Corporation (the "Board"),
this Option may be exercised at any time within six years of the date of such
retirement.
(b) DISABILITY. If the Optionee becomes Disabled, this Option may be
exercised at any time within six years of the date the Optionee's membership on
the Board is terminated by reason of being Disabled.
(c) DEATH. If the Optionee dies during his membership on the Board or
within three years of his retirement in accordance with subparagraph (a) above,
this Option may be exercised at any time within three years of the Optionee's
date of death by the legal representative of the Optionee or any person who
acquires this Option by bequest or inheritance.
(d) TERMINATION FOR REASON OTHER THAN RETIREMENT, DISABILITY OR DEATH.
If the Optionee's membership on the Board terminates for any reason other than
(i) retirement in accordance with subparagraph (a) above, (ii) becoming
Disabled, or (iii) death, this Option may be exercised within three months of
the date of such termination.
(6) REGISTRATION. The Optionee agrees, by the acceptance of this Option,
for himself or herself and his or her successors and assigns, that if a
registration statement under the Securities Act of 1933 is not in effect at the
time of the exercise of any portion of this Option, with respect to the sale by
the Corporation and the resale by the Optionee of the Shares issuable upon such
exercise, it shall be a condition precedent to the right to purchase such Shares
that the notice of exercise shall be accompanied by a written representation
that the Optionee or his or her successor or assign is acquiring such Shares for
his or her own or such successor or assign's account for investment and not with
a view to the distribution thereof.
(7) LISTING. The Corporation shall not be required to issue or deliver any
Shares purchased upon the exercise of this Option until the admission of such
Shares to listing on any stock exchange on which the Corporation's stock may
then be listed and until the Corporation takes such steps as may be required by
law and applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange as above mentioned, or
until, in the opinion of counsel for the Corporation, any such listing or
registration or other steps are not required.
(8) SHARES/ADJUSTMENT. The Shares issued upon exercise of this Option will
be authorized but unissued stock. The number of Shares with respect to which
this Option may be exercised, and the price payable with respect thereto, shall
be proportionately adjusted in the
Page 6 of 7
<PAGE>
event of any stock dividend, stock split, combination or exchange of Shares,
merger, consolidation, spin-off or other change affecting the Shares; provided,
however, such proportional adjustment shall be made to the extent, if any, the
committee responsible for administering this aspect of the Plan deems
appropriate to maintain the proportionate interest of the Optionee or his or her
successors or assigns and preserve, without exceeding, the value of this Option.
(9) RETENTION AS DIRECTOR. The granting of this Option shall not interfere
with or limit in any way the right of the shareholders of the Corporation or the
Board to remove the Optionee from the Board pursuant to the Charter or bylaws of
the Corporation, nor confer upon the Optionee any right to continue in the
service of the Corporation.
(10) SUCCESSORS AND ASSIGNS. This Option shall be binding upon the
Corporation and its successors and assigns, and upon the Optionee, and his or
her successors and assigns, including, without limitation, the Optionee's
administrators and executors and any alternate payee under a qualified domestic
relations order.
(11) TRANSFERABILITY. The Optionee may transfer this Option for no
consideration to (1) the Optionee's child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, and
sister-in-law, including adoptive relationships, and any person sharing the
Optionee's household (other than a tenant or employee) ("Permitted
Transferees"), (2) a trust in which one or more Permitted Transferees in the
aggregate have more than 50% of the beneficial interest, (3) a foundation in
which one or more Permitted Transferees (and the Optionee) in the aggregate
control the management of assets, and (4) any other entity in which one or more
Permitted Transferees (and the Optionee) in the aggregate own more than 50% of
the voting interests. The Optionee shall provide the Director of Compensation of
the Corporation (or other designated person of the Corporation) advance notice
of any transfer pursuant to the preceding sentence. Except as provided in this
Paragraph 11, or by will or the laws of decent and distribution, this Option
shall not be assignable or transferable by the Optionee, and during the lifetime
of the Optionee, this Option shall be exercisable only by the Optionee or his or
her legal guardian or legal representative. Any Option transferred by the
Optionee shall not be assignable or transferable by the transferee, and the
transferee shall remain subject to all the terms and conditions of the Option
prior to such transfer.
If the Optionee is married at the time of exercise and if the Optionee
so requests at the time of exercise, the Shares shall be registered in the name
of the Optionee and the Optionee's spouse, jointly, with right of survivorship.
(12) GOVERNING LAW. The validity, construction and effect of this Agreement
shall be determined in accordance with applicable federal law, and otherwise by
the laws of the State of Tennessee, without giving effect to the principles of
conflicts of laws.
Page 7 of 7
<PAGE>
EXHIBIT 10.13
THOMAS & BETTS CORPORATION
NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
(EFFECTIVE MAY 5, 1999)
1. PURPOSE. The purpose of the Thomas & Betts Corporation Nonemployee
Directors Stock Option Plan (the "Plan") is to promote the long-term success of
Thomas & Betts Corporation (the "Corporation") by providing a means for each
nonemployee director to increase his or her holdings of common stock of the
Corporation through the annual grant of a nonqualified stock option ("Option" or
"Options, as appropriate).
2. TERM. The Plan shall be effective May 5, 1999 and shall remain in
effect until terminated by the Corporation's Board of Directors (the
"Board"). After termination of the Plan, no future Options may be granted,
but previously granted Options shall remain outstanding in accordance with
their applicable terms and conditions and the terms and conditions of the
Plan.
3. PLAN ADMINISTRATION. Committees appointed by the Board (each, a
"Committee") shall be responsible for administering the Plan. With respect to
any determination for which approval of the specific transaction (and not the
Plan as a whole) is necessary or advisable for purposes of Section 16(b) of the
Securities Exchange Act of 1934 (the "1934 Act"), the Committee shall be
comprised solely of two or more members of the Board, each of whom meets the
definition of a "nonemployee director" as set forth in Rule 16b-3(b)(3) under
the 1934 Act, or any successor rule. Except as provided in the preceding
sentence, the Committee shall be the Corporate Governance Committee of the
Board, unless otherwise determined by the Board. Subject to the terms of the
Plan, the Committee shall have full and exclusive power to interpret the Plan
and to adopt such rules, regulations and guidelines for carrying out the Plan as
it may deem necessary or proper, all of which power shall be exercised in the
best interests of the Corporation.
4. ELIGIBILITY. Each member of the Board who is neither an officer nor an
employee of the Corporation or any of its subsidiaries or affiliates shall be
eligible to receive one or more Options under the Plan; provided, however, that
a member of the Board who has entered into an agreement with the Corporation
which provides that he or she is not eligible to receive any additional
remuneration in connection with his or her services as a member of the Board
shall not be eligible to receive an Option under the Plan during the term of
such agreement. A member of the Board who is eligible to receive an Option under
the Plan is hereinafter referred to as a "Nonemployee Director."
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. Options may be granted
under the Plan to purchase in the aggregate for distribution pursuant to the
terms of the Plan a maximum of 100,000 shares of the issued and outstanding
common stock of the Corporation, $0.10 par value (the "Common Stock"), subject
to adjustment as provided in Section 6. If any Option granted under the Plan
expires or terminates for any reason without having been exercised in full, the
Common Stock subject to, but not delivered under, such Option shall become
available for the grant of other Options under the Plan. Any shares of Common
Stock issued under the Plan will consist of authorized and unissued shares.
<PAGE>
6. ADJUSTMENTS AND REORGANIZATIONS. In the event of any stock dividend,
stock split, combination or exchange of shares, merger, consolidation, spin-off
or other distribution (other than normal cash dividends) of Corporation assets
to shareholders, or any other change affecting shares, such proportionate
adjustments, if any, as the Committee in its discretion may deem appropriate to
reflect such change shall be made with respect to (i) the aggregate number of
shares that may be issued under the Plan, (ii) the number of shares (stated in
Section 7(b)) subject to each Option to be granted under the Plan, (iii) the
number of shares subject to each outstanding Option granted under the Plan, and
(iv) the per share purchase price for any outstanding Options under the Plan.
Any such adjustment shall be made only as necessary to maintain the
proportionate interest of each Nonemployee Director who has received, or is
eligible to receive, an Option under the Plan and preserve, without exceeding,
the value of each Option.
7. OPTIONS. Each Option granted to a Nonemployee Director under the Plan
shall be subject to the following terms.
(a) GRANT OF OPTION. Effective May 5, 1999, each Nonemployee Director
shall receive an annual grant of an Option as of the date he or she is elected,
and each date he or she is re-elected, to the Board.
(b) SHARES SUBJECT TO OPTION. The number of shares of Common Stock
subject to each Option granted under Section 7(a) shall be 800 (subject to
adjustment as provided in Section 6); provided, however, that such number shall
be adjusted PRO RATA in the case of an Option granted to a Nonemployee Director
elected at other than an annual meeting of shareholders, based on the number of
full or partial calendar months between the date of grant and the month in which
the next annual meeting of the shareholders of the Corporation will be held. In
no event, however, may any Nonemployee Director acquire under the Plan more than
one percent of the shares of Common Stock outstanding as of May 5, 1999.
(c) PURCHASE PRICE. The purchase price of each share of Common Stock
subject to an Option shall be Fair Market Value (as defined in Section 8) on the
date of grant.
(d) TERM. Subject to earlier termination as provided in Sections 7(f),
(g) and (h), the term of each Option shall be ten years from the date of its
grant.
(e) EXERCISE. Each Option shall be fully exercisable on the date of
grant. An Option may be exercised in whole or in part at any time, or from time
to time, but not later than the date the Option expires. No fractional shares
shall be issued under the Plan.
The purchase price shall be payable:
(1) in U.S. currency; or
(2) in shares of Common Stock previously acquired by the
Nonemployee Director; provided that if such shares of Common Stock were acquired
through the exercise of an option, such shares shall have been held by the
Nonemployee Director for a period of at least one year on the date of exercise;
Page 2 of 7
<PAGE>
(3) by delivering a properly executed notice of exercise
of the Option to a broker designated by the Corporation, with irrevocable
instructions to the broker promptly to deliver to the Corporation the amount of
sale or loan proceeds necessary to pay the exercise price of the Option; or
(4) in any combination of paragraphs (1), (2) and (3) above.
In the event the purchase price is paid, in whole or in part,
with shares of Common Stock, the portion of the purchase price so paid shall be
equal to the closing sales price as reported on the composite tape for
securities listed on the New York Stock Exchange on the business day immediately
preceding the date of exercise of the Option.
(f) EXERCISE UPON RETIREMENT OR DISABILITY OF NONEMPLOYEE DIRECTOR.
If a Nonemployee Director shall retire in accordance with the retirement
policy of the Board, or if a Nonemployee Director's membership on the Board
is terminated as a consequence of disability (within the meaning of section
22(e)(3) of the Internal Revenue Code of 1986, as amended), his or her Option
or Options may be exercised at any time prior to the earlier of (i) the
expiration date of such Option, or (ii) six years after the date of such
termination of membership on the Board. In the event of the Nonemployee
Director's disability, his or her Option or Options may be so exercised by
his or her legal representative.
(g) EXERCISE UPON DEATH OF NONEMPLOYEE DIRECTOR. If a Nonemployee
Director shall die during his or her membership on the Board or within three
years of his or her retirement in accordance with Section 7(f), his or her
Option or Options may be exercised by the Nonemployee Director's estate,
personal representative or beneficiary who acquired the right to exercise such
Option by bequest or inheritance, at any time prior to the earlier of (i) the
expiration date specified in such Option, or (ii) three years after the date of
death.
(h) END OF BOARD MEMBERSHIP FOR ANY OTHER REASON. If a Nonemployee
Director's membership on the Board terminates for any reason (such as, without
limitation, failure to be re-elected by the Corporation's shareholders) other
than by retirement, disability or death, his or her Option or Options may be
exercised by the Nonemployee Director at any time prior to the earlier of (i)
the expiration date specified in such Option, or (ii) three months after the
date of such termination of membership on the Board.
(i) TRANSFERABILITY. A Nonemployee Director may transfer an Option
for no consideration to (1) a member of his or her immediate family (as defined
in Rule 16a-1(e) under the 1934 Act), a niece, a nephew, a former spouse, or any
person sharing the Nonemployee Director's household (other than a tenant or
employee) ("Permitted Transferees"), (2) a trust in which one or more Permitted
Transferees in the aggregate have more than 50% of the beneficial interest, (3)
a foundation in which one or more Permitted Transferees (and the Nonemployee
Director) in the aggregate control the management of assets, and (4) any other
entity in which one or more Permitted Transferees (and the Nonemployee Director)
in the aggregate own more than 50% of the voting interests. Except as provided
in the preceding sentence, or by will or the laws of descent and distribution,
an Option shall not be assignable or transferable by the Nonemployee Director,
and during the lifetime of the Nonemployee Director, the Option shall be
exercisable only by him or her or by his or her guardian or legal
representative. Any Option transferred by a Nonemployee Director shall not be
assignable or transferable by the transferee,
Page 3 of 7
<PAGE>
and the transferee shall remain subject to all the terms and conditions of the
Option prior to such transfer. If the Nonemployee Director is married at the
time of exercise and if the Nonemployee Director so requests at the time of
exercise, the shares of Common Stock shall be registered in the name of the
Nonemployee Director and the Nonemployee Director's spouse, jointly, with right
of survivorship.
8. FAIR MARKET VALUE. "Fair Market Value" for all purposes under the Plan
shall mean the average of the high and low sales prices of Common Stock as
reported on the composite tape for securities listed on the New York Stock
Exchange for the date in question, or if no sales of Common Stock were made on
said Exchange on that date, the average of the high and low sales prices of
Common Stock as reported on said composite tape for the preceding day on which
sales of Common Stock were made on said Exchange.
9. OPTION AGREEMENTS. Options under the Plan shall be evidenced by
agreements that set forth the terms, conditions and limitations for each Option.
The Committee need not require the execution of any such agreement by the
recipient, in which case the delivery of the Option to the respective
Nonemployee Director will constitute his or her acceptance and agreement to the
terms of the Option.
10. PLAN AMENDMENT. The Board may amend the Plan as it deems necessary or
appropriate; provided, however that no such amendment shall cause the terms and
conditions of Options to fail to be fixed in advance, within the meaning of
Securities and Exchange Commission interpretations under Section 16(b) of the
1934 Act.
11. UNFUNDED PLAN. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Corporation and any participant
or other person. To the extent any person holds any rights by virtue of an
Option granted under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Corporation.
12. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of Tennessee and applicable federal law.
13. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors
and assigns of a Nonemployee Director, including, without limitation, the
estate of the Nonemployee Director and the executor, administrator or trustee
of such estate, or any receiver or trustee in bankruptcy or representative of
the Nonemployee Director's creditors.
14. RIGHTS AS A SHAREHOLDER. Neither a Nonemployee Director nor his or her
successor or successors in interest shall have any rights as a shareholder with
respect to a share of Common Stock subject to an Option until he or she becomes
the holder of record.
15. RETENTION AS DIRECTOR. Nothing contained in the Plan or any Option
agreement under the Plan shall interfere with or limit in any way the right of
the shareholders of the Corporation or the Board to remove any Nonemployee
Director from the Board pursuant to the Charter or the bylaws of the
Corporation, nor confer upon any Nonemployee Director any right to continue in
the service of the Corporation.
Page 4 of 7
<PAGE>
GRANT AGREEMENT
NONEMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION
This Nonqualified Stock Option Agreement is made by and between Thomas
& Betts Corporation (the "Corporation") and the nonemployee director of the
Corporation identified in the attached Notice of Grant of Stock Option (the
"Optionee").
WHEREAS, the Corporation desires to afford the Optionee an opportunity
to purchase shares of common stock of the Corporation ("Shares") as hereinafter
provided, in accordance with the provisions of the Thomas & Betts Corporation
Nonemployee Directors' Stock Option Plan (the "Plan");
NOW, THEREFORE, for and in consideration of the provisions and
conditions as stated herein and in the Plan, and for other good and valuable
consideration, it is agreed as follows:
(1) GRANT OF OPTION. Subject to the terms and conditions contained herein
and in the Plan, the Corporation hereby grants the Optionee the right and option
(the "Option") to purchase the number of Shares specified in the attached Notice
of Grant of Stock Option, subject to adjustment pursuant to Paragraph 8, at the
price per share set forth in the attached Notice of Grant of Stock Option,
subject to adjustment pursuant to Paragraph 8. This Option is not intended to
qualify as an incentive stock option ("ISO") as that term is defined in Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
(2) VESTING AND EXERCISABILITY. This Option shall be fully vested and
exercisable on the date of grant set forth in the attached Notice of Grant of
Stock Option (the "Date of Grant").
(3) METHOD OF EXERCISE. This Option may be exercised by giving written
notice to the Corporation's Director of Compensation or other designated person
of the Corporation at its principal office, or to the broker designated by the
Corporation (the "Designated Broker") no later than the Expiration Date (as
defined in Paragraph 4).
Notices of exercise provided to the Corporation shall include a
statement of the number of Shares with respect to which this Option is being
exercised, and shall be accompanied by full tender of the purchase price payable
which may be made in whole or in part either in U.S. currency or by tendering
such number of whole Shares owned by the Optionee, the fair market value of
which as of the close of the business day immediately preceding the date of
exercise does not exceed the purchase price payable; provided, however, that if
the Shares to be tendered were acquired by exercise of an option, such Shares
shall have been owned by the Optionee for at least one year prior to such
payment.
Notices of exercise provided to the Designated Broker shall be in such
form and satisfy such conditions as the Designated Broker shall require.
Nothing in this Agreement shall confer upon the Optionee any rights as
a stockholder with respect to a Share prior to the time he or she becomes the
holder of record of such Share.
Page 5 of 7
<PAGE>
(4) EXPIRATION DATE. Unless this Option expires earlier in accordance with
any provision of Paragraph 5, this Option shall expire (no longer be
exercisable) on the date which is ten years from the Date of Grant (the
"Expiration Date").
(5) TERMINATION OF BOARD MEMBERSHIP. If, prior to the Expiration Date, the
Optionee (i) becomes totally and permanently disabled (as defined in the Plan)
("Disabled"), (ii) retires, (iii) dies, or (iv) otherwise terminates membership
on the Board, this Option shall be exercisable under the circumstances and for
the time periods set forth below, but only to the extent such time periods do
not extend the Expiration Date.
(a) RETIREMENT. If the Optionee retires in accordance with the
retirement policy of the Board of Directors of the Corporation (the "Board"),
this Option may be exercised at any time within six years of the date of such
retirement.
(b) DISABILITY. If the Optionee becomes Disabled, this Option may be
exercised at any time within six years of the date the Optionee's membership on
the Board is terminated by reason of being Disabled.
(c) DEATH. If the Optionee dies during his membership on the Board or
within three years of his retirement in accordance with subparagraph (a) above,
this Option may be exercised at any time within three years of the Optionee's
date of death by the legal representative of the Optionee or any person who
acquires this Option by bequest or inheritance.
(d) TERMINATION FOR REASON OTHER THAN RETIREMENT, DISABILITY OR DEATH.
If the Optionee's membership on the Board terminates for any reason other than
(i) retirement in accordance with subparagraph (a) above, (ii) becoming
Disabled, or (iii) death, this Option may be exercised within three months of
the date of such termination.
(6) REGISTRATION. The Optionee agrees, by the acceptance of this Option,
for himself or herself and his or her successors and assigns, that if a
registration statement under the Securities Act of 1933 is not in effect at the
time of the exercise of any portion of this Option, with respect to the sale by
the Corporation and the resale by the Optionee of the Shares issuable upon such
exercise, it shall be a condition precedent to the right to purchase such Shares
that the notice of exercise shall be accompanied by a written representation
that the Optionee or his or her successor or assign is acquiring such Shares for
his or her own or such successor or assign's account for investment and not with
a view to the distribution thereof.
(7) LISTING. The Corporation shall not be required to issue or deliver any
Shares purchased upon the exercise of this Option until the admission of such
Shares to listing on any stock exchange on which the Corporation's stock may
then be listed and until the Corporation takes such steps as may be required by
law and applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange as above mentioned, or
until, in the opinion of counsel for the Corporation, any such listing or
registration or other steps are not required.
(8) SHARES/ADJUSTMENT. The Shares issued upon exercise of this Option will
be authorized but unissued stock. The number of Shares with respect to which
this Option may be exercised, and the price payable with respect thereto, shall
be proportionately adjusted in the
Page 6 of 7
<PAGE>
event of any stock dividend, stock split, combination or exchange of Shares,
merger, consolidation, spin-off or other change affecting the Shares; provided,
however, such proportional adjustment shall be made to the extent, if any, the
committee responsible for administering this aspect of the Plan deems
appropriate to maintain the proportionate interest of the Optionee or his or her
successors or assigns and preserve, without exceeding, the value of this Option.
(9) RETENTION AS DIRECTOR. The granting of this Option shall not interfere
with or limit in any way the right of the shareholders of the Corporation or the
Board to remove the Optionee from the Board pursuant to the Charter or bylaws of
the Corporation, nor confer upon the Optionee any right to continue in the
service of the Corporation.
(10) SUCCESSORS AND ASSIGNS. This Option shall be binding upon the
Corporation and its successors and assigns, and upon the Optionee, and his or
her successors and assigns, including, without limitation, the Optionee's
administrators and executors and any alternate payee under a qualified domestic
relations order.
(11) TRANSFERABILITY. The Optionee may transfer this Option for no
consideration to (1) the Optionee's child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, and
sister-in-law, including adoptive relationships, and any person sharing the
Optionee's household (other than a tenant or employee) ("Permitted
Transferees"), (2) a trust in which one or more Permitted Transferees in the
aggregate have more than 50% of the beneficial interest, (3) a foundation in
which one or more Permitted Transferees (and the Optionee) in the aggregate
control the management of assets, and (4) any other entity in which one or more
Permitted Transferees (and the Optionee) in the aggregate own more than 50% of
the voting interests. The Optionee shall provide the Director of Compensation of
the Corporation (or other designated person of the Corporation) advance notice
of any transfer pursuant to the preceding sentence. Except as provided in this
Paragraph 11, or by will or the laws of decent and distribution, this Option
shall not be assignable or transferable by the Optionee, and during the lifetime
of the Optionee, this Option shall be exercisable only by the Optionee or his or
her legal guardian or legal representative. Any Option transferred by the
Optionee shall not be assignable or transferable by the transferee, and the
transferee shall remain subject to all the terms and conditions of the Option
prior to such transfer.
If the Optionee is married at the time of exercise and if the Optionee
so requests at the time of exercise, the Shares shall be registered in the name
of the Optionee and the Optionee's spouse, jointly, with right of survivorship.
(12) GOVERNING LAW. The validity, construction and effect of this Agreement
shall be determined in accordance with applicable federal law, and otherwise by
the laws of the State of Tennessee, without giving effect to the principles of
conflicts of laws.
Page 7 of 7
<PAGE>
EX-12
EXHIBIT 12
THOMAS & BETTS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
For The Years Ended
----------------------------------------------------------------------------------
January 2, January 3, December 28, December 29, December 31,
2000 1999 1997 1996 1995
---------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations
Before income taxes $159,736 $124,908 $233,507 $106,395 $148,365
Add:
Interest on indebtedness 67,227 50,896 51,431 50,131 32,625
Amortization of debt expense 729 239 610 1,335 1,496
Portion of rents representative
of the interest factor 10,923 10,835 11,796 11,585 10,935
Deduct: Interest capitalized and
Undistributed earnings from less-
than-50-percent-owned persons (15,215) (13,204) (11,278) (4,217) (2,848)
-------- -------- -------- -------- --------
Earnings as adjusted 223,400 173,674 286,066 165,229 190,573
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fixed charges:
Interest on indebtedness 67,227 50,896 51,431 50,131 32,625
Amortization of debt expense 729 239 610 1,335 1,496
Portion of rents representative
of the interest factor 10,923 10,835 11,796 11,585 10,935
-------- -------- -------- -------- --------
Total fixed charges $ 78,879 $ 61,970 $ 63,837 $ 63,051 $ 45,056
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to
fixed charges 2.8x 2.8x 4.5x 2.6x 4.2x
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
EX-12
<PAGE>
FINANCIAL HIGHLIGHTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
PERCENT
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 CHANGE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,522,008 $2,230,351 13.1
Special charges(1) $ - $ 108,487 (100.0)
Net earnings (after special charges) $ 148,307 $ 87,501 69.5
Net earnings per common share
Basic $ 2.57 $ 1.54 66.9
Diluted $ 2.56 $ 1.54 66.2
Average shares outstanding
Basic 57,690 56,677 1.8
Diluted 57,912 56,990 1.6
Cash dividends declared per common share $ 1.12 $ 1.12 0.0
Shareholders' equity $1,094,132 $1,015,105 7.8
Capital expenditures $ 133,083 $ 126,733 5.0
Employees 21,489 19,330 11.2
Shareholders of record 4,050 4,374 (7.4)
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Special charges of $108.5 million pretax in 1998 consisted of
restructuring costs and other charges. Excluding those charges, earnings per
share would have been $2.90 basic and $2.89 diluted in 1998.
Our single-minded focus is to rapidly restore our operations to that standard.
Do we regret the short-term impacts of theses system conversions?
Certainly, and we have taken aggressive steps to ensure that they do not
recur. But the price of industry leadership - of being first to adopt new
technology and new methods - is to recognize that enormous change is rarely
easy to hazard-free. With that in mind, we remain intensely committed to
fulfilling the promise of these operational improvements that will lead to
increasing value for shareholders in the years to come.
AN AGENDA OF POSITIVE CHANGE
Now, for the positive changes we undertook. In 1999 we tightened the
strategic focus on our product lines; executed important acquisitions that
brought valuable diversity to our electrical segment; and invested in the
operational and technological resources to fortify our position ast he
industry leader in the ongoing e-commerce revolution. New acquisitions and
divestitures of several existing product lines were completed with a view
toward expanding on what we do best, and removing ourselves from business
segments where we could not be a market leader. In addition, we saw growing
market acceptance of our MPI and ETI electronic technologies.
BROADENING A STRONG FOUNDATION
For several years Thomas & Betts has pursued a prudently aggressive acquisition
strategy, guided by the belief that a broad and diverse product portfolio is
essential to sustained growth. As you will read in the roundtable discussion
that follows, we expect the B2B e-commerce revolution to make product breadth
and scope even more critical in the years ahead.
In 1999 we successfully integrated and leveraged the assets of Kaurel
Group, a late-1998 acquisition that more than doubled the size of our
commercial and industrial lighting offerings and provided an important
operational foothold in Europe. In January we closed our purchase of Ocal,
whose line of PVC-coated conduit and components for corrosive environments
enhances our ability to serve the needs of heavy industry.
The third quarter brought the addition of L.E. Mason and Shamrock Conduit
Products. Mason is the market leader in weatherproof electrical boxes and
covers that enjoys a significant presence in the residential and
do-it-yourself (DIY) markets. The Shamrock acquisition broadened our
leadership in the manufacture of conduit fittings, particularly specialized
large-radius elbows used in commercial and industrial construction. All four
of these acquisitions have, to date, performed well above our initial
expectations.
3
<PAGE>
FINANCIAL CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Six-Year Summary of Selected Financial Data 18
- ------------------------------------------------------------------
Management's Discussion and Analysis 19
- ------------------------------------------------------------------
Consolidated Statements of Earnings 28
- ------------------------------------------------------------------
Consolidated Balance Sheets 29
- ------------------------------------------------------------------
Consolidated Statements of Cash Flows 30
- ------------------------------------------------------------------
Consolidated Statements of Shareholders' Equity 31
- ------------------------------------------------------------------
Notes to Consolidated Financial Statements 32
- ------------------------------------------------------------------
Company Report on Financial Statements 54
- ------------------------------------------------------------------
Independent Auditors' Report 54
- ------------------------------------------------------------------
Quarterly Review 55
- ------------------------------------------------------------------
</TABLE>
17
<PAGE>
SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
DOLLARS AND SHARES IN THOUSANDS
(EXCEPT PER SHARE DATA) 1999 1998(a) 1997 1996(b) 1995(c) 1994(d)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONAL DATA
Net sales $ 2,522,008 $ 2,230,351 $ 2,259,508 $ 2,134,387 $ 1,876,403 $ 1,677,249
Costs and expenses
Cost of sales 1,847,262 1,581,215 1,567,286 1,525,121 1,339,305 1,202,930
Marketing, general and administrative 427,192 366,463 353,029 344,941 289,474 259,627
Research and development 47,959 48,690 52,977 47,482 44,083 40,543
Amortization of intangibles 19,643 17,364 17,355 15,323 11,314 12,345
Merger expense - - - 30,558 - -
Provision (recovery) - restructured
operations (11,632) 62,096 - 24,501 18,700 79,011
- ------------------------------------------------------------------------------------------------------------------------------------
2,330,424 2,075,828 1,990,647 1,987,926 1,702,876 1,594,456
Earnings from operations 191,584 154,523 268,861 146,461 173,527 82,793
Other expense - net 31,848 29,615 35,354 40,066 25,162 28,218
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing
operations
before income taxes 159,736 124,908 233,507 106,395 148,365 54,575
Income taxes 11,429 37,407 71,229 32,940 41,917 12,484
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 148,307 87,501 162,278 73,455 106,448 42,091
Net earnings $ 148,307 $ 87,501 $ 162,278 $ 73,455 $ 106,448 $ 108,024
Net return on sales 5.9% 3.9% 7.2% 3.4% 5.7% 6.4%
Return on average
shareholders' equity 14.1% 8.7% 17.2% 8.4% 12.7% 14.4%
FINANCIAL POSITION
(at year-end)
Current assets $ 1,163,935 $ 1,058,402 $ 846,472 $ 997,863 $ 786,828 $ 759,452
Current liabilities $ 513,445 $ 587,549 $ 473,234 $ 515,740 $ 422,170 $ 364,711
Working capital $ 650,490 $ 470,853 $ 373,238 $ 482,123 $ 364,658 $ 394,741
Current ratio 2.27 to 1 1.80 to 1 1.79 to 1 1.93 to 1 1.86 to 1 2.08 to 1
Property, plant and
equipment-net $ 666,528 $ 631,022 $ 574,052 $ 543,237 $ 475,536 $ 398,507
Long-term debt $ 935,731 $ 790,963 $ 503,077 $ 645,096 $ 353,666 $ 354,552
Shareholders' equity $ 1,094,132 $ 1,015,105 $ 999,304 $ 888,647 $ 870,096 $ 808,982
Total assets $ 2,652,686 $ 2,499,587 $ 2,094,288 $ 2,175,342 $ 1,706,003 $ 1,595,312
COMMON STOCK DATA
Average shares outstanding
Basic 57,690 56,677 56,178 54,520 53,955 52,323
Diluted 57,912 56,990 56,551 54,973 54,185 52,621
Cash dividends declared $ 65,127 $ 66,307 $ 66,752 $ 62,112 $ 63,880 $ 50,508
Percent of net earnings 44% 76% 41% 85% 60% 47%
Per share
Earnings from continuing operations
Basic $ 2.57 $ 1.54 $ 2.89 $ 1.35 $ 1.97 $ 0.80
Diluted $ 2.56 $ 1.54 $ 2.87 $ 1.34 $ 1.96 $ 0.80
Net earnings
Basic $ 2.57 $ 1.54 $ 2.89 $ 1.35 $ 1.97 $ 2.06
Diluted $ 2.56 $ 1.54 $ 2.87 $ 1.34 $ 1.96 $ 2.05
Cash dividends declared $ 1.12 $ 1.12 $ 1.12 $ 1.12 $ 1.12 $ 1.12
Shareholders' equity $ 18.89 $ 17.88 $ 17.71 $ 16.23 $ 16.08 $ 15.25
Market price range $ 28-53 7/16 $33 11/16-64 $41-58 11/16 $34 3/4-45 7/8 $31 3/4-37 5/8 $29 1/8-35 5/8
OTHER DATA
Capital expenditures $ 133,083 $ 126,733 $ 118,926 $ 109,108 $ 132,838 $ 99,515
Depreciation $ 78,404 $ 77,969 $ 79,183 $ 77,098 $ 65,970 $ 64,192
Employees at year-end 21,489 19,330 17,829 15,523 13,406 12,308
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Restated to include the results of Telecommunication Devices, Inc., acquired
July 2, 1998, and Augat Inc., acquired December 11, 1996, and accounted for as
poolings of interests, except cash dividends per share, which reflect the
Corporation's historical per share amount.
(a) Includes special charges of $108.5 million pretax ($1.36 basic and $1.35
diluted per share). Net sales exclude sales of businesses contributed to
the Exemplar/Thomas & Betts joint venture at the end of 1997.
(b) Includes special charges of $97.1 million pretax ($1.23 basic and $1.22
diluted per share).
(c) Includes special charges of $23.0 million pretax ($0.29 basic and diluted
per share).
(d) Net earnings for 1994 included after-tax earnings from discontinued
operations (Vitramon, Inc.) of $7.4 million, a pretax gain from the sale of
Vitramon of $99.1 million, a pretax restructuring charge of $79.0 million
and a pretax operating write-down of $10.6 million for previously vacated
facilities. Those items offset each other on an after-tax basis.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Thomas & Betts Corporation ("Thomas & Betts" or the
"Corporation") had net sales in 1999 of $2,522 million, 13.1%
higher than in 1998 and 11.6% above 1997. Results for all
three years include the 1998 acquisition of Telecommunications
Devices, Inc. (TDI) accounted for as a pooling of interests.
Excluding the impacts of acquisitions and divestitures from
all years, 1999 sales rose 2.3% over 1998 and 1998 sales rose
0.5% over 1997.
Three significant factors affect the comparability of
sales during the reporting period. In November 1998 the
Corporation acquired Kaufel Group Ltd. (Kaufel), a
manufacturer and marketer of emergency-lighting products. In
its first full year, Kaufel contributed $195.8 million to 1999
sales, an increase of $165.6 million over its 1998
contribution. In September 1999 the Corporation divested
itself of three cable-television amplifier businesses with
sales for nine months of 1999 totaling $64.5 million. Also,
sales for 1999 and 1998 do not include sales from businesses
contributed at year-end 1997 to the Exemplar/Thomas & Betts
(ET&B) joint venture that were included in 1997's results. In
addition, the Corporation completed several smaller
acquisitions over the three-year period.
Results for 1999 include the contributions of three
acquisitions. The Corporation acquired Ocal, Inc. (Ocal) in
January 1999 and Shamrock Conduit Products, Inc. (Shamrock) in
September 1999. Both of those acquisitions were accounted for
using the purchase-accounting method and their results are
included from the date that Thomas & Betts acquired each
company. Additionally, Thomas & Betts acquired L. E. Mason Co.
(Mason) in August 1999 and accounted for that transaction as
an immaterial pooling of interests. The three 1999
acquisitions accounted for $76.8 million of 1999 sales.
Additional details of those acquisitions follow in the
discussion of Liquidity and Financial Resources.
For 1999, sales realized outside the U.S. accounted for
32.5% of the Corporation's total sales compared with 28.3% and
23.5% in 1998 and 1997, respectively. Sales outside the U.S.
have increased due to acquisitions of companies with non-U.S.
sales and the Corporation's efforts to increase foreign sales.
Thomas & Betts views its business in three segments that
are divided along the lines of the end-user markets to which
it sells. The Electrical segment manufactures and sells a
broad package of electrical connectors, components and
accessories, primarily fasteners, fittings, connectors, boxes
and covers, metal framing, grounding materials and lighting
products for use in industrial, commercial, residential and
utility installation, construction and maintenance
applications. Sales of the Electrical segment grew 21.5% in
1999, to $1,358.6 million, following an increase of 9.6% in
1998 compared with 1997. Sales from Kaufel were the largest
driver of the segment's sales growth in 1999, increasing that
segment's sales in 1999 over 1998 by 14.8%. Acquisitions
contributed all of the segment's 1999 growth, more than
offsetting slight volume declines in sales to industrial
markets and commercial construction customers that were due,
in part, to sales losses or deferrals resulting from
installation of a new order management system. In 1998, volume
gains accounted for over one-half of the segment's growth with
several product-line acquisitions and favorable pricing also
adding to the year-over-year improvement.
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
The Electronic Original Equipment Manufacturer (OEM) segment
manufactures and markets electronic cable assemblies,
connectors and various electronic components for use in
high-speed computer, mobile communications and automotive
applications, all involving miniaturization, surface-mounts,
electromagnetic interference and multiplexing. Sales of the
Electronic OEM segment grew 8.0%, to $686.7 million, in 1999
over 1998, but were 15.5% lower in 1998 than in 1997. At
year-end 1997, Thomas & Betts contributed certain businesses
to ET&B. Sales of those contributed businesses were included
in 1997 segment sales, but were excluded from 1998 and 1999
sales. In the absence of the impact of the joint-venture
deconsolidation, 1998's OEM sales were 4.6% lower than in
1997.
OEM demand for the Corporation's products improved over
the course of 1999 and volume increases offset moderate price
declines to fuel all of the segment's growth in 1999 over
1998. Price decreases were most pronounced in mobile
communications battery packs. While this segment realizes the
greatest percentage of its sales outside of the U.S. of the
Corporation's segments, foreign currency did not have a
meaningful impact on the rate of sales growth in 1999, but did
cause 1998 reported sales to be 1.0% lower than 1997's level.
Thomas & Betts continued to penetrate the market with its
innovative Metallized Particle InterconnectTM (MPITM)
technology. For 1999, sales of the MPI product line more than
doubled, contributing $44.2 million of sales, up from $20.3
million in 1998 and $1.6 million in 1997.
As previously discussed, at year-end 1997 Thomas & Betts
contributed assets, which generated 1997 sales of
approximately $86 million, to ET&B. Under terms of the
joint-venture agreement, Thomas & Betts has a 49% ownership
interest in ET&B, and retains 100% interest in the income
generated by the assets it contributed plus a 49% interest in
income generated by jointly developed business. The
Corporation accounts for its investment in ET&B under the
equity method. The establishment of the joint venture did not
change segment earnings or consolidated net earnings from what
they would have been if the business was fully consolidated,
but did reduce net sales, costs and expenses by the amounts
attributable to the contributed assets.
The Communications segment produces and sells a package of
drop-line hardware, connectors, fasteners, grounding materials
and various electronic components for use in cable television
(CATV), telecommunications and data communications
applications. In 1999's third quarter, the Corporation
completed sales of its three cable amplifier product lines to
sharpen its focus within the cable television business on its
core hardware product lines. The three product lines had 1999
sales of $64.5 million and generated a pretax loss of $11.9
million on those sales. Those same businesses had sales of
$44.7 million and $52.0 million in 1998 and 1997,
respectively.
Communications sales of $260.3 million were 0.1% lower in
1999 compared with 1998, and were 9.3% lower excluding 1999
and 1998 sales of the divested product lines. Sales in 1998
were also slightly below the prior-year level.
Sales from business activities that cannot be classified
in the aforementioned three segments totaled $216.4 million in
1999, 0.2% higher than in 1998. In 1998, those same sales
decreased 4.0% from 1997's level. In 1998, lower demand for
heating units brought on by unusually warm winter weather and
a shift in steel structure product mix resulted in lower
sales.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Several complex factors, two of which were related to the
installation of new information technology systems, impacted
1999 expenses. Those systems' conversions involved the
Corporation's financial reporting and order management
functions. The Corporation undertook both conversions as part
of a global effort to align the Corporation's core information
technology systems with its strategic plans and its
organization structure. That effort was undertaken in order to
meet the information, analysis and decision-making needs of
the Corporation and to prepare the Corporation for Web-based
electronic commerce.
By the third quarter of 1999 the Corporation had virtually
completed implementation of its new financial systems.
Management believes the magnitude of the implementation and
the rapid timetable on which it was achieved were directly or
indirectly responsible for a number of accounting charges and
credits that are more fully described in Note 5 to the
financial statements. The Corporation recorded full-year
charges and credits in 1999 by general area and amount for:
(1) relocation of facilities, $16.6 million; (2) new systems'
impacts, $13.0 million; (3) promotional costs, $11.9 million;
and (4) accounting/estimating changes, $9.8 million.
The fourth-quarter 1999 North American roll-out of the
Thomas & Betts Order Processing System (TOPS) disrupted the
Corporation's North American order processing and shipping
capabilities in late 1999. Those disruptions were in addition
to European implementation issues that gave rise to $7.7
million of expense earlier in the year. The Corporation
estimated that the TOPS implementation delayed approximately
$20 million of shipments until 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 Corporation sought to minimize the new system's
impact on customer service. Management estimated the total
operating income impact of those lost and deferred sales and
additional costs was approximately $36 million.
Also in 1999, Thomas & Betts recorded charges of $9.5
million related to TDI, which the Corporation acquired in July
1998. The events giving rise to those charges are described in
Note 5 to the financial statements.
Expenses for 1998 included pretax special charges of
$108.5 million primarily related to a program to reduce costs
through manufacturing relocations. Those charges had a
negative after-tax impact of $77.0 million, or $1.35 per
diluted share, on 1998 net earnings, and are described in Note
4 to the financial statements. The charges were recorded as
$30.3 million of cost of sales, $16.1 million of marketing,
general and administrative expense and $62.1 million provision
for restructured operations. In many cases individual
factories involved in the cost-reduction effort manufactured
product lines for more than one of the Corporation's
reportable segments, and restructuring costs were therefore
excluded from the measurement of segment results.
Expected savings from the cost-reduction program are net
of (1) the associated operating cost increases expected to be
incurred at the destination facilities and (2) in 1998 and
1999, project expenses. Ongoing net savings upon full
implementation of the program are expected in the form of
reduced salaries and benefits ($17 million), manufacturing
labor and benefits ($47 million) and depreciation expense ($1
million) offset by higher freight and other overhead costs ($5
million). The Corporation estimates that actions implemented
under the plan resulted in savings of $27.3 million in 1999
net of project expenses of $13.3 million in that year and $1.0
million in 1998 net of project expenses of $6.2 million in
that year. Thomas & Betts anticipates an incremental net
pretax benefit in 2000 of $29.5 million.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Project expenses were not accruable as part of the 1998
special charges, and included primarily equipment and
personnel relocation costs. The Corporation expects to spend
another $3.3 million as it completes its cost-reduction plans
in early 2000. In addition to project expenses, the
Corporation incurred $19.1 million in related capital projects
in 1999 and $5.4 million in 1998.
The 1999 consolidated gross margin percent was 26.8% of
sales compared with 29.1% and 30.6% in 1998 and 1997,
respectively. The lower gross margin percent in 1999 compared
with earlier years resulted from the loss of gross margin due
to charges, primarily to write-down inventory and recognize
promotional sales discounts, recorded following implementation
of the new financial systems described elsewhere and in Note 5
to the financial statements and to TOPS implementation issues.
The lower gross margin percent in 1998 compared with 1997 was
due to the impact of special charges on 1998's gross margin
percent.
Marketing, general and administrative (MG&A) expense was
16.9% of sales in 1999, versus 16.4% and 15.6% in 1998 and
1997, respectively. MG&A rose as a percent of 1999 sales
compared with earlier years due primarily to the charges
recorded following implementation of the new financial systems
and additional expense associated with the TOPS
implementation. The increase in MG&A expense as a percent of
sales in 1998 versus 1997 was due to the inclusion of $16.1
million of special charges in 1998's expense, primarily to
reserve for the cost of exiting the Corporation's vacant
headquarters building.
Thomas & Betts spent 1.9% of sales on research and
development (R&D) in 1999, compared with 2.2% and 2.3% in 1998
and 1997, respectively. Most R&D activity took place in the
Electronic OEM and Communications segments with efforts in
1999 focused on developing additional products based on MPI
and elastomeric technologies. Amortization expense rose in
both 1999 and 1998 compared with the respective prior year due
to additional amortization of goodwill related to
acquisitions.
Restructure and special-charge reserves established in
1998 and 1996 were reduced by $11.6 million and $1.6 million,
respectively, in 1999, primarily because of decisions not to
execute all of the originally planned phases of certain
projects for economic reasons.
Income from unconsolidated companies includes equity
income from the Corporation's joint ventures and other equity
investments. Those include ET&B, an investment in Leviton
Manufacturing Co. and the Elastimold offshore joint ventures.
Income from unconsolidated companies for 1999 decreased to
$23.8 million from 1998's level of $26.2 million, due
primarily to charges for pricing adjustments and increased
accounts receivable and inventory reserves at ET&B. These
changes were partially offset by improved equity income from
other joint ventures.
The large increase in income from unconsolidated companies
in 1998 over 1997 was due primarily to the start-up of ET&B.
Income from unconsolidated companies is attributed to the
Corporation's business segments as follows: income from
Leviton and the Elastimold joint ventures to the Electrical
segment and income from ET&B to the Electronic OEM segment.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Interest expense rose in 1999 versus both 1998 and 1997
due primarily to higher outstanding debt and also due to a
general increase in the rate of interest charged on
floating-rate debt.
Other expense (income)-net includes losses on sales of
accounts receivable pursuant to a receivables securitization
program and foreign-currency losses or gains partially offset
by foreign-exchange contract gains and other income. The
Corporation recorded other income in 1999 as a result of a
termination fee related to a proposed acquisition that more
than offset related transaction costs and losses on sales of
accounts receivable. The increase in this expense from 1997 to
1998 was primarily due to a full year's losses on sales of
accounts receivable under the Corporation's
asset-securitization program, which was initiated in December
1997.
The effective income tax rate for 1999 includes a $30.7
million reduction in tax provision that resulted from approval
of tax refund claims and completion of prior-year audits
prompting adjustments of tax reserves. That reduction resulted
in an effective tax rate of 7.2% for 1999. The effective
income tax rate for 1998 of 29.9% was 0.6 percentage points
below the rate for 1997. Thomas & Betts has been able to
maintain a tax rate below the statutory rate because of tax
benefits derived from operations in Puerto Rico and other
proactive tax-saving initiatives.
The Corporation evaluates its business segments on the
basis of segment earnings, with segment earnings defined as
earnings before interest, taxes, restructure and special
charges and certain other expenses. The magnitude of charges
and credits recorded following the financial systems
conversion as well as the impact of the TOPS implementation
heavily impacted the 1999 operating results of all segments
and the comparability of those results to results of prior
years. Earnings of the Electrical segment decreased 9.0% in
1999, and rose 9.8% in 1998 from 1997's level. The increase
from 1997 to 1998 was due to sales growth, somewhat offset by
lower margins on the mix of products sold. Earnings of the
Electronic OEM segment were 56.0% lower in 1999 compared with
1998's performance, and were 12.5% lower in 1998 than in 1997.
Performance in 1998 was due to lower sales, but improved
margins within the segment. Communications segment earnings
declined 127.3% in 1999 from 1998 and 30.2% in 1998 from 1997,
with the majority of the decrease in both years attributable
to losses generated by amplifier product lines divested by the
Corporation in 1999. Earnings related to all other sales rose
6.9% in 1999 compared with 1998 and 30.6% in 1998 compared
with 1997, as a result of enhancements made in the
manufacturing processes for steel structures and heating
units.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
LIQUIDITY AND FINANCIAL RESOURCES
- --------------------------------------------------------------------------------
Cash provided by operating activities decreased in 1999 versus
1998 and in 1998 versus 1997 due to increased working capital.
The 1999 increase in accounts receivable was primarily due to
sales volume increases, including sales of acquired companies;
processing lead times for billing adjustments; slower
collections related to the year-end TOPS implementation; and
targeted increases in payment terms. The late 1998 acquisition
of Kaufel, in addition to information and financial systems
conversions, accounted for the majority of 1998's increased
working capital. In December 1997, the Corporation initiated a
program to sell accounts receivable under an
asset-securitization program. The commencement of that program
provided an increase in cash of $145.2 million in 1997.
Receivables sold under the program were $177.1 million and
$172.5 million at year-end 1999 and 1998, respectively.
Shipping delays due to the TOPS implementation were
primarily responsible for the 1999 year-over-year increase in
inventory levels, while accounts payable increased primarily
as a result of successful efforts to extend payment terms.
Both inventory and accounts payable also increased due to
recent acquisitions.
Management has developed and is executing plans to deal
with those issues which gave rise to increased receivables and
inventory, and expects to reduce investment in those working
capital items in 2000.
Purchases of property, plant and equipment of $133.1
million in 1999 were 5.0% higher than 1998's level. Spending
in 1998 increased 6.6% from the year earlier. Projects in all
three years included restructuring-related spending to
consolidate the operations of recent acquisitions, expansion
of production capabilities, efficiency-related improvements
and new systems software.
During the years covered by this report, Thomas & Betts
made selective acquisitions to broaden its business worldwide.
While the Corporation will continue to evaluate acquisitions,
especially of companies serving the electrical component
market place, it expects to slow the pace of acquisitions in
2000 as compared with recent years. Also, following evaluation
of the performance of acquisitions in its various business
segments, the Corporation is unlikely to pursue acquisitions
of Electronic OEM product lines in the near future. Thomas &
Betts may finance any future acquisitions through the issuance
of private or public debt or equity, internally generated
funds or a combination of those sources.
Thomas & Betts completed three acquisitions during 1999
for approximately $17 million of cash, 869,722 shares of the
Corporation's common stock and $16.7 million of assumed debt.
Those acquisitions were: (1) in January, Ocal, a manufacturer
of PVC-coated conduit bodies; (2) in August, Mason, a
manufacturer of weatherproof electrical boxes and covers,
conduit bodies, fittings and residential outdoor lighting; and
(3) in September, Shamrock, a manufacturer of steel and
aluminum conduit elbows, couplings and conduit nipples used by
electrical contractors. The Ocal and Shamrock acquisitions
were accounted for using the purchase method of accounting,
and together gave rise to $12.5 million of goodwill. The Mason
acquisition was accounted for as an immaterial pooling of
interests, and consequently, current-year financial statements
have been restated to include the results of that operation.
Those three acquisitions accounted for $76.8 million of 1999
sales.
In January 1999, Thomas & Betts announced a proposed
stock-for-stock merger with AFC Cable Systems, Inc. (AFC).
That merger did not proceed, as AFC received a superior offer
in August and terminated its agreement with the Corporation.
As called for in the merger agreement, Thomas & Betts received
a termination fee of $16 million from AFC and that income,
less associated transaction expenses, was included in other
expense-net.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Thomas & Betts completed nine acquisitions during 1998 for
approximately $168 million of cash, 1,461,000 shares of the
Corporation's common stock and $99 million of assumed debt.
Two of those acquisitions were of significant size: Kaufel, a
manufacturer of emergency lighting products, and TDI, a
manufacturer of mobile communications battery packs. All 1998
acquisitions, with the exception of TDI, were accounted for
using the purchase method, and in aggregate, gave rise to
$73.5 million of goodwill. Acquisitions accounted for as
purchases in 1998 represented $58.8 million of that year's
sales.
Thomas & Betts completed six acquisitions during 1997 for
approximately $19 million of cash, 793,560 shares of the
Corporation's common stock and $16 million of assumed debt.
The largest of those was the July acquisition of Diamond
Communications Products, Inc., a manufacturer of drop hardware
for the worldwide communications industry. The six
acquisitions completed in 1997 represented $57.6 million of
that year's sales and together gave rise to $14.6 million of
goodwill.
Total debt increased $82.8 million in 1999 compared with
1998, following a rise of $342.9 million in 1998 from 1997,
reflecting debt issued and assumed for acquisitions, in
particular the 1998 acquisition of Kaufel, and to fund
increases in working capital. Thomas & Betts maintains a
commercial paper program, which is backed by $560 million of
revolving-credit agreements. At year-end 1999, $148.8 million
of commercial paper was outstanding. Management believes that
its external financial resources and internally generated
funds are sufficient to meet the Corporation's capital needs
for the foreseeable future.
Cash and marketable securities decreased $21.7 million in
1999. Thomas & Betts maintains a portfolio of marketable
securities and cash equivalents in Puerto Rico, which at
year-end 1999 was valued at $36.9 million. Although those
investments represent currently available funds, they remain
invested until the Corporation can repatriate the investments
free of tollgate tax.
YEAR-2000 READINESS PROGRAM
- --------------------------------------------------------------------------------
Thomas & Betts has had no disruption to its operations to date
as a result of the Year-2000 (Y2K) issue. The Y2K issue is the
result of computer programs being written using two digits
rather than four to define the applicable year. As a result,
computer programs that have time-sensitive software are at
risk to recognize a date using "00" as the year 1900 rather
than the year 2000. The Corporation completed a corporate-wide
program to ensure its systems and products were Y2K compliant
during 1999.
The total cost to modify existing software for Y2K
compliance, expended over the period 1997-1999, was
approximately $2 million. In many instances, the Corporation
installed new software with greatly enhanced functionality
that also solved potential Y2K compliance issues and
capitalized the costs of those installations.
The Corporation has contingency plans to address
situations that may result if the Corporation encounters a Y2K
issue in a critical operating system. Those contingency plans
cover the critical order processing and distribution systems
as well as plant operating systems. If both the Corporation's
Y2K solutions and contingency plans fail for a critical system
for a prolonged period, the impact on the Corporation would be
material.
Despite assurances from outside parties of their timely
readiness, the Corporation cannot ensure that its suppliers,
vendors and customers have resolved all Y2K issues. Given the
responses from suppliers and the Corporation's experience thus
far in 2000, Thomas & Betts believes it is highly unlikely
that a large number of outside parties will experience any
significant problems due to unresolved Y2K issues. In the
event that a large number of customers suffer Y2K compliance
issues over a prolonged period, the impact on the Corporation
would be material.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
MARKET RISK AND FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
Thomas & Betts is exposed to market risk from changes in
foreign-exchange rates, raw material commodity prices and
interest rates. The Corporation may enter into various hedging
transactions to reduce those risks and allow management to
focus on core business issues and challenges. The Corporation
does not enter into foreign-currency or interest-rate
transactions or commodity-price contracts for speculative
purposes.
Thomas & Betts primarily enters into forward
foreign-exchange contracts to reduce the impact on earnings
and cash flow from non-functional currency-denominated assets,
liabilities and transactions, predominately inter-company and
third-party receivables and payables. Gains and losses
resulting from hedging instruments offset the losses or gains
on the underlying assets, liabilities and transactions being
hedged. The Corporation's contracts generally have maturity
dates of less than 90 days, and the Corporation maintains a
high correlation between the hedges and the underlying assets,
liabilities or transactions 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 as other income or expense.
Assuming a hypothetical 10% adverse change in all foreign
currencies, with the resulting functional currency gains and
losses translated into U.S. dollars at the spot rate, the loss
in fair value of exchange contracts held on January 2, 2000,
would have been $16.4 million. Those losses would be offset by
gains on the underlying assets, liabilities and transactions
being hedged.
Thomas & Betts will occasionally enter into interest-rate
swaps to reduce the impact of changes in interest rates on
portions of its floating-rate debt. During the period covered
by this report, there were no interest-rate swaps outstanding.
As of January 2, 2000, the fair value of the Corporation's
long-term debt, estimated using quoted market prices or
discounted future cash flows based on the Corporation's
current incremental borrowing rates for similar types of
borrowing arrangements, was $908.7 million. That fair value
was $30.8 million lower than the carrying value of debt at
January 2, 2000. The potential change in fair value resulting
from a hypothetical 10% decrease in interest rates amounted to
$24.5 million at January 2, 2000.
Thomas & Betts is exposed to risk from fluctuations in
prices for commodities used to manufacture its products,
primarily copper, zinc, aluminum, gold and silver. Some of
that risk is hedged through the use of futures and swap
contracts that fix the price the Corporation will pay for the
commodity. The use of such commodity contracts effectively
protects Thomas & Betts against changes in the price of the
commodity to the extent of the notional amount under the
contract. Since the maturities of those contracts are highly
correlated with the actual purchases of the commodities, the
reported cost-of-sales amounts reflect the commodities' costs,
including the effects of commodity hedges.
As of January 2, 2000, the net unrealized gain on all
commodity contracts held was $1.2 million. A hypothetical 10%
decrease in all commodity market prices would reduce that
unrealized gain to $0.4 million. The Corporation would
normally only record those gains at the time the commodity is
actually purchased, and the gain would be reported as a part
of cost of sales.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
NEW ACCOUNTING STATEMENTS
- --------------------------------------------------------------------------------
In 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities." Statement No. 133 requires the
recognition at fair value of all derivatives as either assets
or liabilities in the Consolidated Balance Sheet. Under
certain conditions, a derivative can be designated as a hedge
allowing the deferral of fair value gains or losses until the
offsetting gains or losses on the hedged item are recognized.
At times Thomas & Betts enters into derivative instruments to
hedge risks associated with commodity fluctuations. Statement
No. 133, as amended, is effective for the first quarter of
2001. Thomas & Betts does not believe that adoption will have
a material effect on its future results of operations or
financial position.
ADDITIONAL DISCLOSURE
- --------------------------------------------------------------------------------
Thomas & Betts is committed to complying with all applicable
laws and to pursuing actions and practices that promote a
safer, healthier environment. The Corporation expended
approximately $2 million, $2 million and $3 million for
environmental remediation and corrective matters for the years
1999, 1998 and 1997, respectively, with payments related to
matters covered under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (the
"Superfund Act") being less than $0.7 million in any year.
On January 1, 1999, 11 of 15 member countries of the
European Union established fixed-conversion rates between
their existing sovereign currencies and the euro, and began an
effort to fully adopt the euro as their common legal currency
by January 1, 2002.
Thomas & Betts has successfully programmed its information
technology and other systems to accommodate euro-denominated
transactions. To date, the euro conversion has not materially
impacted those systems or the Corporation's competitive
position, currency-exchange risk, material contracts, tax
position or accounting policies.
27
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
IN THOUSANDS (EXCEPT PER SHARE DATA) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $2,522,008 $2,230,351 $2,259,508
Costs and Expenses
Cost of sales 1,847,262 1,581,215 1,567,286
Marketing, general and administrative 427,192 366,463 353,029
Research and development 47,959 48,690 52,977
Amortization of intangibles 19,643 17,364 17,355
Provision (recovery) - restructured operations (11,632) 62,096 -
- -----------------------------------------------------------------------------------------------------------------
2,330,424 2,075,828 1,990,647
Earnings from operations 191,584 154,523 268,861
Income from unconsolidated companies 23,776 26,172 13,909
Interest expense - net 60,995 45,756 44,795
Other expense (income) - net (5,371) 10,031 4,468
- -----------------------------------------------------------------------------------------------------------------
Earnings before income taxes 159,736 124,908 233,507
Income taxes 11,429 37,407 71,229
- -----------------------------------------------------------------------------------------------------------------
Net Earnings $ 148,307 $ 87,501 $ 162,278
- -----------------------------------------------------------------------------------------------------------------
Net Earnings Per Common Share:
Basic $ 2.57 $ 1.54 $ 2.89
Diluted $ 2.56 $ 1.54 $ 2.87
Average shares outstanding:
Basic 57,690 56,677 56,178
Diluted 57,912 56,990 56,551
Cash dividends declared per share $ 1.12 $ 1.12 $ 1.12
</TABLE>
See notes to consolidated financial statements.
28
<PAGE>
CONSOLIDATED BALANCE SHEETS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
January 2, January 3,
IN THOUSANDS 2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 70,553 $ 64,028
Marketable securities 14,217 42,478
Receivables - net 470,532 404,784
Inventories 537,401 469,641
Deferred income taxes 44,410 61,829
Prepaid expenses 26,822 15,642
- ---------------------------------------------------------------------------------------------------------------
Total Current Assets 1,163,935 1,058,402
Property, Plant and Equipment
Land 28,190 22,309
Buildings 256,538 232,380
Machinery and equipment 972,341 908,253
- ---------------------------------------------------------------------------------------------------------------
1,257,069 1,162,942
Less accumulated depreciation 590,541 531,920
- ---------------------------------------------------------------------------------------------------------------
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 $2,652,686 $2,499,587
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $ 31,921 $ 75,068
Current maturities of long-term debt 3,774 22,589
Accounts payable 300,242 262,483
Accrued liabilities 159,401 155,815
Income taxes 1,917 55,674
Dividends payable 16,190 15,920
- ---------------------------------------------------------------------------------------------------------------
Total Current Liabilities 513,445 587,549
Long-Term Liabilities
Long-term debt 935,731 790,963
Other long-term liabilities 88,828 93,788
Deferred income taxes 20,550 12,182
Shareholders' Equity
Common stock 5,782 5,677
Additional paid-in capital 332,480 322,019
Retained earnings 795,208 710,474
Unearned compensation-restricted stock (3,439) (4,534)
Accumulated other comprehensive income (35,899) (18,531)
- ---------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 1,094,132 1,015,105
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $2,652,686 $2,499,587
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
29
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $148,307 $ 87,501 $ 162,278
Adjustments:
Depreciation and amortization 98,047 95,333 96,538
Provision (recovery) - restructured operations (11,632) 62,096 -
Accrued merger and other special charges 28,003 46,393 -
Undistributed earnings from unconsolidated companies (15,215) (13,204) (11,278)
Deferred income taxes 26,634 (26,139) 19,771
Changes in operating assets and liabilities, net:
Receivables (86,078) (60,145) 77,817
Inventories (85,745) (50,477) (25,687)
Accounts payable 28,306 (11,677) 23,260
Accrued liabilities (25,456) (38,487) (60,198)
Income taxes payable (21,177) 6,694 9,144
Other (3,843) (9,459) 77
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 80,151 88,429 291,722
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of and investments in businesses (17,049) (169,349) (19,326)
Purchases of property, plant and equipment (133,083) (126,733) (118,926)
Proceeds from sale of property, plant and equipment 9,315 5,337 6,098
Proceeds from divestitures of businesses 16,390 - -
Marketable securities acquired (6,825) (38,781) (81,365)
Proceeds from matured marketable securities 34,658 48,816 64,807
Other - - (1,000)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (96,594) (280,710) (149,712)
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in borrowings with
original maturities less than 90 days (37,162) 22,602 432
Proceeds from long-term debt and other borrowings 200,591 256,560 170,730
Repayment of long-term debt and other borrowings (79,819) (11,148) (354,394)
Stock options exercised 3,211 10,553 25,945
Cash dividends paid (64,857) (65,788) (62,648)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 21,964 212,779 (219,935)
Effect of exchange-rate changes on cash 1,004 (1,695) (4,030)
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 6,525 18,803 (81,955)
Cash and cash equivalents - beginning of year 64,028 45,225 127,180
- -----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents - end of year $ 70,553 $ 64,028 $ 45,225
- -----------------------------------------------------------------------------------------------------------------
Cash payments for interest $ 66,103 $ 46,600 $ 55,088
Cash payments for income taxes $ 39,191 $ 46,050 $ 42,552
</TABLE>
See notes to consolidated financial statements.
30
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Accumulated
Other
Common Stock Paid-In Retained Restricted Comprehensive Comprehensive
IN THOUSANDS Shares Amount Capital Earnings Stock Income Income Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 29, 1996 54,764 $ 284,860 $ - $589,323 $(2,011) $ 16,475 $ - $ 888,647
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings - - - 162,278 - - 162,278 162,278
Other comprehensive income:
Unrealized gain adjustment on
securities net of taxes of $(30) - - - - - - (87) (87)
Cumulative translation
adjustment - - - - - - (18,586) (18,586)
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income - - - - - (18,673) (18,673) -
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income - - - - - - 143,605 -
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends declared - - - (66,752) - - - (66,752)
Business acquisitions and
investments 62 3,610 - - - - - 3,610
Stock options and incentive awards 910 25,945 - - - - - 25,945
Unearned compensation - - - - (2,910) - - (2,910)
Immaterial pooling of interests 731 2,728 - 4,431 - - - 7,159
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 28, 1997 56,467 317,143 - 689,280 (4,921) (2,198) - 999,304
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings - - - 87,501 - - 87,501 87,501
Other comprehensive income:
Unrealized gain adjustment on
securities net of taxes of $67 - - - - - 198 198
Cumulative translation
adjustment - - - - - - (16,531) (16,531)
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income - - - - - (16,333) (16,333) -
Comprehensive income - - - - - - 71,168 -
Stock converted to $0.10 par
value - (311,497) 311,497 - - - - -
Dividend declared - - - (66,307) - - - (66,307)
Stock options and incentive
awards 307 31 10,522 - - - - 10,553
Unearned compensation - - - - 387 - - 387
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at January 3, 1999 56,774 5,677 322,019 710,474 (4,534) (18,531) - 1,015,105
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings - - - 148,307 - - 148,307 148,307
Other comprehensive income:
Unrealized gain adjustment
on securities net of taxes of
$(150) - - - - - - (278) (278)
Minimum pension liability (651) (651)
Cumulative translation adjustment - - - - - - (16,439) (16,439)
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income - - - - - (17,368) (17,368) -
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income - - - - - - 130,939 -
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends declared - - - (65,127) - - - (65,127)
Business acquisitions 86 9 3,541 - - - - 3,550
Stock options and incentive awards 177 18 6,418 - - - - 6,436
Unearned compensation - - - - 1,095 - - 1,095
Immaterial pooling of interests 784 78 502 1,554 - - - 2,134
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at January 2, 2000 57,821 $ 5,782 $332,480 $795,208 $(3,439) $(35,899) $ - $1,094,132
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Preferred Stock: Authorized 1,000,000 shares, par value $0.10 per share. None
issued; 300,000 shares reserved for the Corporation's Shareholders' Rights Plan.
Common Stock: Authorized 250,000,000 shares, par value $0.10 per share.
See notes to consolidated financial statements.
31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
1. NATURE OF OPERATIONS
- --------------------------------------------------------------------------------
Thomas & Betts Corporation (Thomas & Betts or the Corporation)
is a leading manufacturer of connectors and components for
worldwide electrical and electronics markets. With
international headquarters in Memphis, Tennessee, Thomas &
Betts operates over 250 manufacturing, distribution and office
facilities around the globe in 25 countries. Thomas & Betts
designs, manufactures and sells components used in assembling,
maintaining or repairing electrical, electronic and
communications systems. The Corporation's products include:
(1) electrical components and accessories for industrial,
commercial, utility and residential construction, renovation
and maintenance applications and for applications within other
companies' products, primarily in North America, but also in
Europe and other areas of the world; (2) electromechanical
components, connectors and subsystems for use in high-speed
applications involving miniaturization, surface-mounts,
electromagnetic interference and multiplexing that are sold to
the information processing, mobile communications and
automotive industries in North America, Europe and Asia for
use within other manufacturers' products; (3)
electromechanical components, subsystems and accessories used
to maintain, construct and repair cable television,
telecommunications and data communications networks worldwide;
(4) transmission poles and towers primarily for North American
customers; and (5) heating units and accessories for North
American and European markets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of the Corporation and its
domestic and foreign subsidiaries. All 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. Under generally accepted accounting principles
(GAAP), there is a presumption that the equity method should
be used to account for those investments. If the Corporation
were to determine that it no longer had the ability to
exercise significant influence over the operating and
financial policies of those companies, GAAP would require the
Corporation to use the cost method rather than the equity
method to account for those investments. The Corporation
regularly monitors its relationships with those companies.
USE OF ESTIMATES: The preparation of financial statements in
conformity with GAAP 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 1999 and
1997 are for 52-week periods, and results for 1998 are for a
53-week period.
REVENUE RECOGNITION: The Corporation records revenue at the
time of shipment of products to customers. Sales discounts,
quantity rebates, allowances and warranty costs are estimated
based on experience and recorded in the period in which the
sale is recorded. Certain customers have a right to return
goods under certain circumstances and those returns, which are
reasonably estimable, are accrued for at the time of shipment.
32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of
subsidiaries whose functional currencies are other than the
U.S. dollar are translated at exchange rates in effect at the
end of the year, and their income and expense items are
translated at average monthly exchange rates. Exchange gains
or losses resulting from foreign currency translations, except
those in highly inflationary economies, are accumulated as
part of a separate component of shareholders' equity titled
"Accumulated Other Comprehensive Income." The net change in
this amount due to foreign currency translation is identified
as a "cumulative translation adjustment" in determining
comprehensive income. Also included in the cumulative
translation adjustment are the effects of exchange rate
changes on intercompany transactions of a long-term investment
nature and those transactions designated as hedges of net
foreign investments.
FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK: When
deemed appropriate, the Corporation enters into
forward-foreign-exchange contracts to hedge
foreign-currency-transaction exposures for periods consistent
with those committed exposures. Those 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 those counterparties is anticipated.
Foreign-exchange contracts generally have maturities which do
not exceed one year. The Corporation maintains a high
correlation 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 as other
income or expense. Gains and losses on certain contracts that
hedge specific foreign-currency-denominated commitments are
deferred and recognized in the period in which the transaction
is completed. Unrealized gains are reported as prepaid
expenses and unrealized losses are reported as accrued
liabilities.
As of January 2, 2000, and January 3, 1999, the
Corporation had outstanding forward contracts of $164.3
million and $60.5 million, respectively, for the sale or
purchase of principally Canadian, Japanese and European
currencies, all maturing within 160 days. Deferred contract
gains and losses at January 2, 2000, and January 3, 1999, were
not significant.
The Corporation is exposed to risk from fluctuating prices
for commodities used to manufacture its products: primarily
copper, zinc, aluminum, gold and silver. Some of that risk is
hedged through the use of futures and swap contracts that fix
the price the Corporation will pay for the commodity. Cost of
sales reflects the commodity cost including the effects of the
commodity hedge. As of January 2, 2000, the Corporation had
$6.6 million of those contracts outstanding maturing through
December 2000. The maturities of the contracts highly
correlate with the actual purchases of the commodity. The
amounts paid or received are calculated based on the notional
amounts under the contracts. The use of such commodity
contracts effectively protects the Corporation against changes
in the price of the commodity to the extent of the notional
amount under the contract. Recording the fair value of
commodity contracts as of January 2, 2000, would have resulted
in a $1.2 million gain. That value will change as commodity
prices change and will be recorded only at the time the
underlying commodity is actually purchased.
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 those agreements is
accrued monthly, consistent with the terms of the agreements
and market interest rates. Those agreements are with financial
institutions having at least a single-A credit rating, which
minimizes non-performance risk. As of January 2, 2000, the
Corporation had no outstanding interest-rate swaps.
33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
RECEIVABLES: Receivables are stated net of allowances for
doubtful accounts and returns and allowances of $31.8 million
at January 2, 2000, and $23.6 million at January 3, 1999.
The Corporation has an asset securitization program which
permits the Corporation to continually sell accounts
receivable to a maximum purchaser's investment of $200.0
million. The investment varies, based on the level of eligible
accounts receivable and restrictions on concentrations of
receivables. Sales under that program are accounted for as
sales of assets under the provisions of Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities." The sold accounts receivable are reflected as
reductions of the receivables balance in the accompanying
consolidated balance sheets. At January 2, 2000, and January
3, 1999, net receivables of $177.1 million and $172.5 million,
respectively, had been sold under that program. The discount
rate on the receivables sold in December 1999 was
approximately 6.2%.
INVENTORIES: Inventories are stated at the lower of cost or
market. Cost is determined using the last-in, first-out (LIFO)
method for approximately 71% and 79% of the Corporation's
inventories at January 2, 2000, and January 3, 1999,
respectively, and the first-in, first-out (FIFO) method for
the remainder of inventories. If the FIFO method had been used
to value all inventories, those values would have been lower
by $32.6 million and $21.2 million at January 2, 2000, and
January 3, 1999, respectively. The LIFO valuation method had
the effect of increasing net earnings by $7.1 million, $3.3
million and $1.0 million in 1999, 1998, and 1997,
respectively.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment
are stated at cost. Expenditures for maintenance and repair
are charged to expense 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 five to 45 years for buildings, three
to 10 years for machinery and equipment, and 10 years for land
improvements.
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. Those assets are being amortized on a straight-line
basis over various periods not exceeding 40 years. Goodwill is
re-evaluated when business events and circumstances indicate
that the carrying amount may not be recoverable. Re-evaluation
is based on projections of related undiscounted future cash
flows. As of January 2, 2000, and January 3, 1999, accumulated
amortization of intangible assets was $133.2 and $115.8
million, respectively.
INCOME TAXES: The Corporation uses the asset and liability
method of accounting for income taxes. That 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 amounted to
$112.7 million at January 2, 2000. Those earnings are
considered to be indefinitely reinvested, and, accordingly, no
provision for U.S. federal or state income taxes has been
provided thereon.
EARNINGS PER SHARE: Basic earnings per share are computed by
dividing net earnings by the weighted-average number of shares
of common stock outstanding during the year. Diluted earnings
per share are computed by dividing net earnings by the sum of
(1) the weighted-average number of shares of common stock
outstanding during the period and (2) the dilutive effect of
the assumed exercise of stock options using the treasury stock
method. Options for 866,000 and 393,000 shares of common stock
in 1999 and 1998, respectively, were excluded because their
effect was anti-dilutive.
34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share
computations:
<TABLE>
<CAPTION>
IN THOUSANDS (EXCEPT PER SHARE DATA) 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings $148,307 $87,501 $162,278
---------------------------------------------------------------------------------------------------------
Basic
Average shares outstanding 57,690 56,677 56,178
Basic earnings per share $ 2.57 $ 1.54 $ 2.89
Diluted
Average shares outstanding 57,690 56,677 56,178
Plus additional shares from the assumed exercise
of stock options 222 313 373
---------------------------------------------------------------------------------------------------------
57,912 56,990 56,551
---------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 2.56 $ 1.54 $ 2.87
---------------------------------------------------------------------------------------------------------
</TABLE>
ENVIRONMENTAL COSTS: Environmental expenditures that relate to
current operations are expensed or capitalized, as
appropriate. Remediation costs that relate to an existing
condition caused by past operations are accrued when it is
probable that those costs will be incurred and can be
reasonably estimated based on evaluations of currently
available facts related to each site.
Under the requirements of The Comprehensive Environmental
Response Compensation and Liability Act of 1980 (the
"Superfund Act") and certain other laws, the Corporation is
potentially liable for the cost of clean-up at various
contaminated sites identified by the United States
Environmental Protection Agency and other agencies. The
Corporation has been notified that it is named a potentially
responsible party (PRP) at various sites for study and
clean-up costs. In some cases there are several named PRPs and
in others there are hundreds. The Corporation generally
participates in the investigation or clean-up of potentially
contaminated sites through cost-sharing agreements with terms
which vary from site to site. Costs are typically allocated
based upon the volume and nature of the materials sent to the
site. However, under the Superfund Act and certain other laws,
as a PRP, the Corporation can be held jointly and severally
liable for all environmental costs associated with the site.
When the Corporation becomes aware of a potential
liability at a particular site, it conducts studies to
estimate the amount of the liability. If determinable, the
Corporation accrues what it considers to be the most accurate
estimate of its liability at that site, taking into account
the other participants involved in the site and their ability
to pay. The Corporation has acquired facilities subject to
environmental liability where, in one case, the seller has
committed to indemnify the Corporation for those liabilities,
and, in another, subject to an asset purchase agreement, the
seller assumed responsibility for paying its proportionate
share of the environmental clean-up costs.
The Corporation has and is in the process of further
evaluating properties acquired with recent acquisitions, and
may have liability associated with contamination at those
properties. As of January 2, 2000, and January 3, 1999 the
Corporation's reserve for future environmental costs was $23
million and $29 million, respectively. In addition to payments
made, the Corporation's environmental reserve was reduced by
$5.5 million to reflect changes in estimates of technological
advances and increased experience with remediation at certain
treatment sites. 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 liability with respect
to the aforementioned environmental matters will be material
to its financial or competitive position or results of
operation.
35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
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.
RECLASSIFICATIONS: The 1998 and 1997 financial statements were
reclassified to conform to the 1999 presentation. Those
reclassifications had no effect on earnings in any year.
3. MERGERS, ACQUISITIONS AND DIVESTITURES
- --------------------------------------------------------------------------------
1999 - ACQUISITIONS AND DIVESTITURES: The Corporation
completed three acquisitions during 1999 for a total
consideration of $70.7 million, consisting of $17.0 million of
cash, $16.7 million of debt assumed, and 869,722 of shares of
the Corporation's common stock. Two of those acquisitions were
accounted for using the purchase method of accounting.
Accordingly, results of those operations have been included in
the consolidated statement of earnings since the date of the
acquisition. The aggregate purchase price was allocated to the
acquired assets based on their respective fair values with the
excess of $12.5 million allocated to goodwill to be amortized
over 40 years. Those two acquisitions added $28.9 million to
sales in 1999. The third acquisition was accounted for as an
immaterial pooling of interests with the results of that
acquisition included in the Corporation's results as of the
beginning of 1999 without restating prior-year results. This
acquisition contributed $47.9 million to sales in 1999.
The Corporation sold its Megaflex, Photon and broadband RF
amplifier product lines for a pretax loss of $2.2 million.
Those three lines produced 1999 sales of $64.5 million through
the third quarter of 1999 prior to divestiture.
1998 - ACQUISITIONS: In November 1998, the Corporation
purchased Kaufel Group Ltd., (Kaufel) an international company
headquartered in Montreal, Canada, specializing in the design,
manufacture and distribution of emergency and other lighting
products and systems for the industrial and commercial
markets, for a cash price of approximately $100 million, and
the assumption of approximately $60 million of outstanding
debt. The acquisition was accounted for using the purchase
method, with the aggregate purchase price allocated to the
acquired assets based on their respective fair values and the
excess of approximately $37 million allocated to goodwill. The
goodwill is being amortized on a straight-line basis over 40
years. The Kaufel acquisition added $30.2 million to the
Corporation's sales in 1998.
The Corporation completed eight other acquisitions in
addition to Kaufel, for a total consideration of $107 million,
consisting of $68.2 million of cash and $38.8 million of debt
assumed, plus 1,461,000 of shares of the Corporation's common
stock. Seven of those acquisitions were accounted for using
the purchase method of accounting, with the aggregate purchase
price allocated to the acquired assets based on their
respective fair values and the excess of $36.5 million
allocated to goodwill. The goodwill is being amortized on a
straight-line basis over 40 years. Those seven acquisitions
added $28.6 million to sales in 1998.
The acquisition of Telecommunication Devices, Inc. (TDI)
on July 2, 1998, was accounted for as a pooling of interests,
and the Corporation's financial statements were restated to
include the results of that acquisition for all periods
presented, except for dividends per share which reflect the
Corporation's historical per share amount. The Corporation
acquired all of the outstanding stock of TDI and affiliated
companies for 1,461,000 shares of the Corporation's common
stock.
1997 - ACQUISITIONS: The Corporation completed six
acquisitions during 1997 for a total consideration of $62
million, consisting of approximately $19 million of cash and
793,560 shares of the Corporation's common stock. Two of those
acquisitions were accounted for as immaterial
36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
poolings of interests, and the results of those acquisitions
have been included in the Corporation's results as of the
beginning of 1997 without restating prior years' results. The
remaining four acquisitions were accounted for under the
purchase method of accounting. The six acquisitions
represented $57.6 million of sales reported by the Corporation
in 1997. The excess of the purchase price over the fair value
of the acquired assets in the purchase acquisitions was $14.6
million and was recorded as goodwill.
1997 - EXEMPLAR/THOMAS & BETTS JOINT VENTURE: In December
1997, the Corporation formed a joint venture with Exemplar
Manufacturing Company, a privately-owned business based in
Ypsilanti, Michigan, to manufacture and sell power
distribution, battery cable and wiring systems to the U.S.
automotive industry. In exchange for a 49% interest in the
ownership of the joint venture, the Corporation contributed
net assets with a carrying value of approximately $41 million;
no gain or loss was recognized as a result of that
transaction. The joint-venture agreement provides that each
party retains a 100% income interest in earnings generated by
its respective contributed business. Income from jointly
developed business will be allocated in accordance with the
ownership percentages. Sales generated in 1997 by the assets
contributed by the Corporation to this joint venture were
$85.9 million.
LEVITON MANUFACTURING CO.: In August 1994, the Corporation
completed the purchase of a minority interest (29.1% of the
outstanding common stock representing 23.55% of the voting
common stock) in Leviton Manufacturing Co., Inc., a leading
U.S. manufacturer of wiring devices, for approximately $51
million consisting of cash and common stock. Leviton's chief
executive officer opposed the Corporation's acquisition. The
chief executive officer, with his wife, owns approximately
50.5% of Leviton's outstanding common stock (76.45% of
Leviton's voting common stock) through a voting trust (a
majority sufficient for the approval of all corporate actions
that Leviton might undertake; however, the majority is not
sufficient to permit either federal income tax consolidation
or pooling of interests accounting treatment in a merger). The
remainder of the outstanding common stock, all of which is
non-voting, is owned by approximately 19 other Leviton family
members. The opposition of the chief executive officer to the
Corporation's investment has resulted in litigation between
Leviton and the Corporation, consisting of the Corporation's
proceeding in Delaware in February 1995 to compel Leviton to
make additional financial and other information available to
the Corporation, and of Leviton's subsequent action against
the Corporation and other parties in New York seeking damages
and other relief in connection with the transaction in which
the Corporation acquired its Leviton investment. The
Corporation does not have and has not sought representation on
Leviton's board of directors, which would be opposed by
Leviton's chief executive officer, and does not receive copies
of Leviton's board minutes.
Notwithstanding the existence of an adversarial
relationship with the controlling shareholder of Leviton, the
Corporation has developed relationships with certain key
members of Leviton management and believes that those
relationships and other factors support management's
conclusion that the Corporation has the ability to exercise
significant influence over Leviton's financial and operating
policies. The Corporation owns more than 20% of Leviton's
voting stock, and there are no restrictions to the
Corporation's ability to exercise the attributes of ownership
(situations have not arisen to date in which the Corporation
has had an opportunity to vote its Leviton shares in a matter
that would demonstrate significant influence over Leviton's
financial and operating policies). In addition, because the
Corporation is a non-family shareholder, the Corporation
believes that it has a greater ability than other shareholders
to challenge actions by Leviton management that the
Corporation considers adverse to shareholders' interests.
Senior management responsible for Leviton's day-to-day
operations and operating and financial policies has engaged in
an ongoing dialogue over the past three and one-half years
with the Corporation, and they have acknowledged that the
Corporation's presence as a Leviton shareholder has influenced
the manner
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
in which Leviton conducts business. Further, Leviton has taken
certain actions following discussions with the Corporation
that have been consistent with the Corporation's requests and
suggestions. The Corporation's equity in earnings of Leviton
have ranged between approximately 5-10% of consolidated pretax
earnings over the last three years. Should the Corporation
determine that it no longer has the ability to influence the
operating and financial policies of Leviton, the Corporation,
in compliance with GAAP, will adopt the cost method on a
prospective basis.
4. RESTRUCTURING AND SPECIAL CHARGES
- --------------------------------------------------------------------------------
During the third quarter of 1998, the Corporation recorded
pretax restructuring and special charges of $108.5 million
primarily related to a program to reduce costs through
manufacturing relocations. Those cost-reduction plans involved
consolidating several facilities and product-line operations,
terminating employees at affected locations, downsizing
administrative functions and writing down idle facilities. The
charges were comprised of a $62.1 million provision for
restructuring operations and $46.4 million of other special
charges, of which $30.3 million was charged to cost of sales
and $16.1 million to marketing, general and administrative
expense. The components of those charges were:
<TABLE>
<CAPTION>
1999 1999
Original 1998 1998 Ending Charges & Remaining
IN MILLIONS Provision Charges Balance Adjustments Balance
---------------------------------------------------------------------------------------------------------
<S> <S> <S> <S> <S> <S>
Severance and employee-related costs $ 26.6 $ (7.6) $19.0 $(15.4) $ 3.6
Property, plant and equipment write-offs 25.7 (7.0) 18.7 (18.1) 0.6
Other facility exit costs 9.8 (2.8) 7.0 (5.8) 1.2
---------------------------------------------------------------------------------------------------------
Provision for restructured operations 62.1 (17.4) 44.7 (39.3) 5.4
---------------------------------------------------------------------------------------------------------
Inventory write-offs related to restructuring 25.6(1) (14.4) 11.2 (10.6) 0.6
Costs related to previously idled facilities
Write-downs 4.7(1) (1.5) 3.2 (2.2) 1.0
Carrying costs 10.4(2) (0.7) 9.7 (0.2) 9.5
Other 5.7(2) - 5.7 (4.3) 1.4
---------------------------------------------------------------------------------------------------------
Special charges 46.4 (16.6) 29.8 (17.3) 12.5
---------------------------------------------------------------------------------------------------------
Total $108.5 $(34.0) $74.5 $(56.6) $17.9
---------------------------------------------------------------------------------------------------------
</TABLE>
Charged to (1) cost of sales, and (2) marketing, general and
administrative expense.
Severance and other employee-related costs involve actions
that are expected to result in a net reduction of
approximately 325 jobs, including administrative positions at
plants and corporate headquarters. As of January 2, 2000, the
Corporation had realized a net reduction of approximately 296
jobs. The property, plant and equipment write-offs reduced to
fair value the carrying amount of fixed assets that were not
to be relocated in conjunction with their associated
manufacturing process. Assets written down as part of the
cost-reduction program remain classified as property, plant
and equipment until idled; the adjusted carrying value of the
assets still in use was $25.3 million. The effect of
suspending depreciation on facilities idled in 1999 and 1998
was $0.2 and $0.1 million of depreciation expense reduction,
respectively.
Inventory write-offs primarily relate to items that became
obsolete due to modifications of manufacturing processes for
product lines being relocated; items not cost-effective to
relocate; and, to a lesser degree, inventory associated with
discontinued products.
Charges related to previously idled and written down
facilities were based on management's current estimates of
costs necessary to ultimately dispose of, and satisfy
obligations related to, such facilities. The majority of those
are lease-related costs, which will generally be incurred
ratably over an eight-year period.
38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Those previously idled facilities, which had carrying
values of $6.3 million at the end of 1999 and $7.1 million at
the end of 1998, are expected to be sold, although in a few
cases they may be donated or leased to third parties.
Restructure and special charge reserves established during
1998 were reduced by $6.3 million and $0.3 million
respectively during 1999 because of decisions not to execute
all originally planned phases of certain projects for economic
reasons.
The cost-reduction program commenced in 1998 was
approximately 90% complete by year-end 1999, with disposal of
remaining idle facilities anticipated by the end of 2000.
Certain other costs, primarily relating to the relocation of
inventory, equipment and personnel, were not accruable until
incurred. Such costs, which were not included in the $108.5
million provision, amounted to $13.3 million in 1999 and $6.2
million in 1998. Future revenues are not expected to be
significantly affected, since the cost-reduction program is
primarily intended to relocate operations rather than
discontinue operations.
During the fourth quarter of 1996, the Corporation
recorded a restructuring charge of $24.5 million related to
the integration of Augat and initiatives affecting Augat's and
other of the Corporation's operations. Restructuring
initiatives included 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 forces and manufacturing
operations. Those initiatives are now substantially complete.
The following table summarizes the original 1996
restructuring provision and subsequent activity:
<TABLE>
<CAPTION>
1999 1999
Original 1997 1998 Charges & Ending
IN MILLIONS Provision Charges Charges Adjustments Balance
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Severance and employee-related costs $15.7 $(14.6) $(1.1) $ - $ -
Plant, property and equipment write-offs 6.6 (0.7) (0.9) (5.0) -
Other facility exit costs 2.2 (0.1) (0.5) (1.4) 0.2
---------------------------------------------------------------------------------------------------------
Total $24.5 $(15.4) $(2.5) $(6.4) $0.2
---------------------------------------------------------------------------------------------------------
</TABLE>
Decisions were made not to execute all of the originally
planned phases of the 1996 restructure plan. This resulted in
a reduction in 1996 restructure reserves in the year 1999 of
$5.4 million and of special charge reserve reversals of $1.3
million. Amounts remaining at the end of 1999 noted in the
table above are expected to be used primarily for idle
facility carrying costs. Management believes those reserves
are adequate to cover the estimated remaining costs associated
with that restructure plan.
5. ONE-TIME ITEMS AND OTHER CHARGES AND CREDITS
- --------------------------------------------------------------------------------
In late 1997 the Corporation embarked on a global effort to
align core information technology systems with strategic plans
and organization structure in order to meet information,
analysis and decision-making needs and to prepare for
Web-based electronic commerce. As part of that overall plan,
in January 1998, the Corporation began converting its legacy
financial reporting software system to an Oracle-based
financial reporting system. The conversion was prompted to
ensure Year 2000 compliance, to accommodate the increased
size, complexity and organization structure of the Corporation
and to avoid potential control problems arising from
non-integrated financial systems. Management believes the
magnitude of the implementation and the rapid timetable on
which it was achieved were directly or indirectly responsible
for a number of charges and credits.
39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
By the third quarter of 1999 the Corporation had virtually
completed implementation of its Oracle-based system. With the
new system's improved capabilities, during the third quarter
management identified charges and credits which (a) arose from
the extensive systems conversion processes or (b) were then
detectable as a result of both more effective analytical
capabilities with the new system and decentralization of the
accounting control function. Those charges and credits, which
are more fully described below, resulted from (i) system
start-up problems and user errors, (ii) diversion of key
accounting personnel to the design, implementation and
trouble-shooting activities for the new system, (iii)
simultaneous changes in other information technology systems,
(iv) concurrent integration of acquisitions into the reporting
structure, and (v) initial problems encountered in
implementing organizational structure changes, including the
decentralization of the accounting control function into the
divisions within the Corporation's reporting segments. During
the third quarter, the Corporation recorded charges and
credits and made other adjustments identified by the new
financial reporting system.
In addition, several unusual events occurred in the third
quarter of 1999. The aggregate effects of those unusual events
and the adjustments described above are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS
-----------------------------------------------------------------------------------------
Pretax After Taxes
-----------------------------------------------------------------------------------------
<S> <C> <C>
Tax refunds and reduction in taxes payable(a) $ - $ 30,700
Acquisition and divestiture income(b) 8,615 5,021
TDI inventory adjustments(c) (9,542) (5,916)
Other adjustments(d) (51,619) (34,156)
-----------------------------------------------------------------------------------------
Total $(52,546) $ (4,351)
-----------------------------------------------------------------------------------------
</TABLE>
These charges and credits arose as follows:
(a) $12.5 million of the reduction in tax provision
resulted from approval of tax refund claims filed for
previous years and $18.2 million resulted from
favorable completion of several tax audits during the
third quarter of 1999 and a favorable worldwide
reassessment of tax exposures.
(b) Acquisition and divestiture income and expense amounts
include the transaction income and expense associated
with two unconsummated acquisitions, a completed
acquisition and divestiture of three amplifier product
lines. During the third quarter of 1999 the planned
merger with AFC Cable Systems, Inc. (AFC) was
terminated by AFC to enable it to accept another
offer. As a result, the Corporation received a $16
million cash termination fee from AFC. Partially
offsetting that termination fee income were costs
associated with that terminated transaction and a
second unconsummated acquisition.
<TABLE>
<CAPTION> Income (Loss) Impacts for
IN THOUSANDS Aquisition/Divestiture Activity
---------------------------------------------------------------------------------------------------------
Pretax After Taxes
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Termination fee from AFC Cable, net of related costs and costs
associated with another unconsummated acquisition $12,483 $ 7,739
Transaction costs related to a pooling of interests
with L.E. Mason Co. (1,708) (1,058)
Net loss on disposition of three amplifier product lines (2,160) (1,660)
---------------------------------------------------------------------------------------------------------
Earnings impact from acquisition and divestiture activity $ 8,615 $ 5,021
---------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
(c) These adjustments relate to Telecommunications
Devices, Inc. (TDI), which was acquired in July 1998.
In the second quarter of 1999, the Corporation
reported alleged wrongdoing of executives in TDI's
battery pack operations in Dundee, Scotland. Following
the discovery of alleged wrongdoing in Dundee and in
connection with a review of all TDI operations, the
Corporation conducted physical counts of battery pack
operations in its Romeoville, Illinois plant.
Unfavorable adjustments of $9.5 million resulted from
physical inventory counts taken in the third quarter
of 1999.
(d) These adjustments predominately relate directly or
indirectly to information technology systems'
conversions, and can be categorized as:
1. SYSTEMS' CONVERSION ISSUES RELATED TO OPERATIONS
IN EUROPE that gave rise to a charge of
$7.7 million for credits issued in 1999.
2. CONVERSION ISSUES RELATED TO THE ELECTRICAL SEGMENT
that gave rise to cumulative adjustments in the
third quarter of 1999 of $10.2 million.
3. OTHER CONVERSION ISSUES. As the Oracle system
matured, management deployed account analysis
capabilities and exception reports and reassigned
accounting personnel who had been working on the
Oracle system implementation to decentralized
accounting and control functions. The deployment
of those resources to the divisions resulted in
the identification of a number of decreases in
various balance sheet accounts totaling net
charges of $18.1 million. Restructuring and
special charge reserves were reduced by $7.9
million because of decisions not to execute all
the originally planned phases of certain projects
for economic reasons. In addition, reserve balance
adjustments and write-downs were made, totaling
$23.5 million.
The cumulative impact on the balance sheet during 1999
related to the aforementioned one-time items and other charges
and credits was as follows:
<TABLE>
<CAPTION>
IN THOUSANDS Increase (Decrease)
--------------------------------------------------------------------------------
<S> <C>
Accounts receivable $(27,891)
Inventory (19,563)
Notes payable (16,000)
Accounts payable 2,067
Accrued liabilities 19,025
Taxes payable (32,369)
Deferred tax liability (15,826)
Shareholders' equity (4,351)
--------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
6. INCOME TAXES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
The components of earnings before income taxes were:
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $114,917 $ 99,949 $184,252
Foreign 44,819 24,959 49,255
---------------------------------------------------------------------------------------------------------
Total $159,736 $124,908 $233,507
---------------------------------------------------------------------------------------------------------
The components of income tax expense were:
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
Current
Federal $(22,420) $ 44,149 $32,892
Foreign 12,946 19,942 17,695
State and local (6,393) 1,786 622
---------------------------------------------------------------------------------------------------------
Total current (15,867) 65,877 51,209
---------------------------------------------------------------------------------------------------------
Deferred
Domestic 17,589 (21,507) 19,408
Foreign 9,707 (6,963) 612
---------------------------------------------------------------------------------------------------------
Total deferred 27,296 (28,470) 20,020
---------------------------------------------------------------------------------------------------------
Income taxes $ 11,429 $ 37,407 $71,229
---------------------------------------------------------------------------------------------------------
The reconciliation between the federal statutory tax rate
and the Corporation's effective tax rate was:
1999 1998 1997
---------------------------------------------------------------------------------------------------------
Federal statutory tax rate 35.0% 35.0% 35.0%
Increase (reduction) resulting from:
State tax - net of federal tax benefit (2.5) 0.3 0.4
Partially tax-exempt income (6.5) (9.2) (6.3)
Goodwill 2.4 3.4 2.0
Non-taxable income of company acquired in pooling of interests (0.4) (0.6) (0.5)
Tax refund claims (7.8) - -
Tax exams and reassessment of tax exposure (11.4) - -
Change in valuation allowance - - (1.9)
Other (1.6) 1.0 1.8
---------------------------------------------------------------------------------------------------------
Effective tax rate 7.2% 29.9% 30.5%
---------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
The components of the Corporation's net deferred tax assets
were:
<TABLE>
<CAPTION>
January 2, January 3,
IN THOUSANDS 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Special-charge-related reserves $ 14,355 $ 34,611
Accrued employee benefits 7,893 7,244
Other accruals 22,550 20,457
Asset reserves 8,855 11,429
Tax credit and loss carryforwards 35,295 21,214
Pension benefits 7,679 7,168
Other 10,983 20,557
Valuation allowance (5,250) (5,355)
---------------------------------------------------------------------------------------------------------
Net deferred tax assets 102,360 117,325
---------------------------------------------------------------------------------------------------------
Deferred tax liabilities
Property, plant and equipment (47,761) (40,257)
Other (30,739) (27,421)
---------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (78,500) (67,678)
---------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 23,860 $ 49,647
---------------------------------------------------------------------------------------------------------
</TABLE>
The valuation allowance for deferred tax assets decreased
by $0.1 million in 1999 due to the utilization of foreign net
operating loss carryforwards. The remaining valuation
allowance at January 2, 2000, related to net operating loss
carryforwards and foreign tax credit carryforwards. At January
2, 2000, the Corporation had approximately $6 million of tax
credits which, if unused, would expire by 2003, and
approximately $230 million of loss carryforwards, $45 million
of which, if unused, would expire by 2005, $16 million by 2010
and $169 million beyond 2010.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
The Corporation's financial instruments include cash and cash
equivalents, marketable securities, short-term borrowings,
long-term debt, commodity swaps and foreign-currency
contracts. The carrying amounts of those financial instruments
generally approximated their fair values at January 2, 2000,
and January 3, 1999, except that, based on the borrowing rates
currently available to the Corporation under current market
conditions, the fair value of long-term debt was approximately
$908.7 million and $832.6 million at January 2, 2000, and
January 3, 1999, respectively.
The cost bases and fair market values of marketable
securities at January 2, 2000, and January 3, 1999, were:
<TABLE>
<CAPTION>
Amortized Gross Gross Fair
Cost Unrealized Unrealized Market
IN THOUSANDS Basis Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 2, 2000
Mortgage-backed $13,242 $1,097 $(122) $14,217
- ---------------------------------------------------------------------------------------------------------------------------
January 3, 1999
Certificates of deposit $25,705 $ - $ - $25,705
Mortgage-backed 15,370 1,472 (69) 16,773
- ---------------------------------------------------------------------------------------------------------------------------
Total $41,075 $1,472 $ (69) $42,478
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The mortgage-backed securities held at January 2, 2000,
had expected maturities ranging from four to 20 years.
43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
8. LONG-TERM DEBT
- --------------------------------------------------------------------------------
The Corporation's long-term debt at January 2, 2000, and
January 3, 1999, was:
<TABLE>
<CAPTION>
January 2, January 3,
IN THOUSANDS 2000 1999
------------------------------------------------------------------------------------------------
<S> <C> <C>
Notes payable with a weighted-average interest rate
at January 2, 2000, of 6.84%, due through 2008 $598,654 $ 448,418
Commercial paper with a weighted-average interest rate
at January 2, 2000, of 6.36% 148,764 134,399
Other bank borrowings with a weighted-average interest rate
at January 2, 2000, of 6.25% 60,571 131,900
Non-U.S. borrowings with a weighted-average interest rate
at January 2, 2000, of 5.29%, due through 2008 106,276 71,858
Industrial revenue bonds with a weighted-average interest rate
at January 2, 2000, of 5.26%, due through 2010 19,055 19,455
Other 6,185 7,522
-------------------------------------------------------------------------------------------------
939,505 813,552
Less current portion 3,774 22,589
-------------------------------------------------------------------------------------------------
Long-term debt $935,731 $790,963
-------------------------------------------------------------------------------------------------
</TABLE>
Principal payments on long-term debt including capital
leases in each of the five years subsequent to January 2,
2000, are $3.8, $19.6, $56.0, $270.5 and $128.3 million,
respectively.
The Corporation has committed borrowing facilities of
approximately $625 million. Those facilities include $560
million of revolving-credit commitments with two groups of
banks that make $300 million available through June 30, 2003,
and the remaining $260 million available through June 28,
2000. Under the $260 million facility, any committed
borrowings outstanding as of June 28, 2000, would mature on
June 28, 2001. There were no borrowings outstanding under
those facilities as of January 2, 2000, or January 3, 1999.
The Corporation has the option, at the time of drawing funds
under such facilities, of selecting an interest rate based on
a number of benchmarks including LIBOR, the certificate of
deposit rate or the prime rate of the agent bank. The credit
facilities include covenants, among which are limitations on
the amount of future indebtedness that are based on certain
financial ratios. The Corporation's commercial paper program
is backed by those credit facilities.
The Corporation also has a number of uncommitted credit
facilities to provide funding for both its domestic and
international operations. In the normal course of its business
activities, the Corporation is required under certain
contracts to provide letters of credit that may be drawn in
the event the Corporation fails to perform under the
contracts. Outstanding letters of credit or similar financial
instruments amounted to $57.8 million at January 2, 2000.
The Corporation completed the sale of $150.0 million of
10-year 6.39% medium-term notes in February 1999. The net
proceeds from that sale were used to repay commercial paper
issued by the Corporation within the past year and other
short-term borrowings. The Corporation has an effective
registration statement outstanding for the sale of an
additional $450 million of the Corporation's debt securities,
common stock and preferred stock. Future proceeds from the
sale of any securities registered under this filing will be
added to the general funds of the Corporation and used for
general corporate purposes.
44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
9. 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 and directors. At January 2, 2000, a total of
4,078,766 shares were reserved for issuance under stock
options or restricted stock awards already granted or
available for future grants.
A summary of the options outstanding at January 2, 2000,
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------- ------------------------------
Weighted-Average
Range of Number Remaining Weighted-Average Number Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$23.99 - $38.59 970,201 4.30 Years $33.38 966,201 $33.38
38.72 - 45.75 930,030 7.89 Years 44.01 330,314 45.53
49.66 - 59.56 387,741 8.07 Years 50.70 135,926 50.82
------------------------------------------------------------------------------------------------------
$23.99 - $59.56 2,287,972 6.39 Years $40.64 1,432,441 $37.83
------------------------------------------------------------------------------------------------------
</TABLE>
The following is a summary of the option transactions for
the years 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Average
Per Share
Shares Option Price
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at December 29, 1996 2,166,232 $30.71
Granted 545,237 45.70
Exercised (801,132) 27.11
Terminated (61,592) 35.87
------------------------------------------------------------------------------------------------------
Balance at December 28, 1997 1,848,745 $36.53
Granted 471,661 50.16
Exercised (233,377) 31.83
Terminated (82,753) 44.14
------------------------------------------------------------------------------------------------------
Balance at January 3, 1999 2,004,276 $39.97
------------------------------------------------------------------------------------------------------
Granted 787,590 41.99
Exercised (102,986) 32.29
Terminated (400,908) 42.10
------------------------------------------------------------------------------------------------------
Balance at January 2, 2000 2,287,972 $40.64
------------------------------------------------------------------------------------------------------
Exercisable at December 28, 1997 1,074,759 $32.02
Exercisable at January 3, 1999 1,164,493 $34.74
Exercisable at January 2, 2000 1,432,441 $37.83
------------------------------------------------------------------------------------------------------
</TABLE>
The 1993 Management Stock Ownership Plan provides that,
for each calendar year, up to 1.25% of the outstanding common
stock of the Corporation will be available for issuance as
grants or awards. That 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 10 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 full vesting if the
restricted stock recipient remains in the employ of the
Corporation three years after receiving the award. The value
of the awards is recorded as compensation expense over the
vesting period. Restricted shares awarded under that plan were
75,372 in 1999, 79,724 in 1998, and 127,641 in 1997.
45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
During 1999, the Corporation made a special stock option
grant to certain members of management for 261,511 shares of
common stock at a price not less than the fair market value on
the date of grant with a term not to exceed 10 years. The
special options were to vest upon the Company reaching
specific working capital objectives. Those objectives were not
met and the options were cancelled as of January 2, 2000.
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. Those shares remain restricted during the directors'
terms. Shares issued under that plan were 1,883 in 1999; 2,000
in 1998; and 2,000 in 1997.
The Corporation has a stock option plan under which each
nonemployee director receives a nonqualified stock option
grant for 800 shares of common stock. The exercise price is
the fair market value on the date of grant. Each option is
fully vested and exercisable on the date of grant with a term
of 10 years. The Corporation also has a deferred fee plan
under which each nonemployee director can defer all or a
portion of compensation for earned services as a director. Any
amount deferred is valued in accordance with the director's
election in a hypothetical investment in Common Stock (Stock
Credits) or in one or more of seven mutual funds. In addition,
nonemployee directors receive an annual grant of Stock Credits
having a value of $7,500. Stock Credits are distributed in
shares of Common Stock and mutual fund accounts are
distributed in cash upon a director's termination of service.
The Corporation continues to account for its stock-based
employee compensation plans in accordance with Accounting
Principles 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
SFAS No. 123, "Accounting for Stock-Based Compensation," a
valuation using the fair-value-based accounting method has
been made for stock options issued in 1999, 1998 and 1997.
That valuation was performed using the Black-Scholes
option-pricing model.
The Corporation's 10-year term options were valued
assuming risk-free interest rates of 5.0%, 5.5% and 6.25% on
their respective issuance dates in 1999, 1998 and 1997, a
dividend yield of 2.5%, an average expected-option life of
five years and volatility of 20%. The valuation determined a
per-share weighted-average fair value for 10-year options
granted during 1999, 1998 and 1997 of $8.49, $10.63 and
$10.36, respectively. Had those options been accounted for
using the fair-value method, they would have resulted in
additional compensation cost of $3.1 million, $3.1 million and
$2.4 million net of taxes for 1999, 1998 and 1997,
respectively.
Had the Corporation adopted the fair-value-based
accounting method for stock options, net earnings would have
been $145.2 million ($2.52 basic earnings per share [EPS];
$2.51 diluted EPS) in 1999; $84.4 million ($1.49 basic EPS;
$1.48 diluted EPS) in 1998; and $159.7 million ($2.84 basic
EPS; $2.82 diluted EPS) in 1997.
10. POSTRETIREMENT BENEFITS
- --------------------------------------------------------------------------------
PENSION PLANS: The Corporation and its subsidiaries have
several noncontributory pension plans covering substantially
all employees. Those 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 and cash equivalents.
The Corporation maintains non-qualified supplemental
pension plans covering certain key executives, which provide
for benefit payments that exceed the limit for deductibility
imposed by income tax regulations. The benefit obligation
related to those unfunded plans was $11.4 million at January
2, 2000, and $12.3 million at January 3, 1999. Net periodic
pension cost for 1999, 1998 and 1997 for the Corporation's
defined benefit pension plans included the following
components:
46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 9,728 $ 10,542 $ 9,138
Interest cost on projected benefit obligation 17,931 17,077 15,431
Expected return on plan assets (21,314) (19,659) (17,001)
Net amortization of unrecognized:
Prior service costs/(gains) 590 607 746
Transition amount (1,557) (1,536) (1,539)
Plan net losses 395 392 57
Curtailment and settlement losses 84 816 -
---------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 5,857 $ 8,239 $ 6,832
---------------------------------------------------------------------------------------------------------
</TABLE>
Assumed weighted-average rates used in developing the net
periodic pension cost were:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
--------------------------------------------------------
1999 1998 1997 1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Discount rate 7.0% 7.3% 7.8% 5.9% 6.1% 6.3%
Rate of increase in compensation level 4.5% 4.5% 4.5% 3.9% 3.8% 4.2%
Expected long-term rate of return on plan assets 9.8% 9.5% 9.0% 7.6% 7.7% 7.7%
</TABLE>
The following is information regarding the Corporation's
1999 and 1998 pension benefit obligation:
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $267,216 $233,150
Service cost 9,728 10,542
Interest cost 17,931 17,077
Employee contributions 855 699
Plan amendments - (465)
Actuarial (gains)/losses (28,037) 17,806
Foreign-exchange impact 101 196
Acquisitions - 5,590
Curtailments (57) (123)
Settlements (601) (1,643)
Benefits paid from fund (14,740) (15,613)
Benefits paid directly (56) -
---------------------------------------------------------------------------------------------------------
Benefit obligation at end of year 252,340 267,216
---------------------------------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at beginning of year 229,678 210,875
Actual return on plan assets 29,546 19,143
Company contributions 2,224 8,908
Employee contributions 855 699
Foreign-exchange impact (86) (72)
Acquisitions - 7,381
Settlements (601) (1,643)
Benefits paid (14,740) (15,613)
---------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year 246,876 229,678
---------------------------------------------------------------------------------------------------------
Funded status:
Benefit obligation in excess of plan assets 5,467 37,538
Unrecognized:
Net transition asset 1,730 3,287
Plan net gains/(losses) 10,813 (25,940)
Prior service costs (1,834) (2,412)
---------------------------------------------------------------------------------------------------------
Accrued benefit costs $ 16,176 $ 12,473
---------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
The present value of projected benefits for U.S. plans
recorded at January 2, 2000, and January 3, 1999, was
determined using discount rates of 8% and 7%, respectively,
and an assumed rate of increase in compensation of 4.5%.
The Corporation's recognized defined benefit pension
liability for 1999 and 1998 included the following components:
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prepaid benefit costs $ (7,154) $ (7,022)
Accrued benefit liability 24,283 19,669
Accumulated other comprehensive income (651) -
Intangible asset (302) (174)
---------------------------------------------------------------------------------------------------------
Net liability recognized $ 16,176 $ 12,473
---------------------------------------------------------------------------------------------------------
</TABLE>
OTHER POSTRETIREMENT BENEFIT PLANS: The Corporation sponsors
defined contribution 401(k) savings plans for its U.S.
employees for which the Corporation's contributions are based
on a percentage of employee contributions. The cost of those
plans for continuing operations was $6.8, $6.1 and $5.0
million in 1999, 1998 and 1997, 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 those benefits over the estimated lives of the
individuals covered, and is not funding that liability. The
plan is closed to new entrants. Plan net gains and losses are
amortized over a five-year period.
The net periodic cost for postretirement health-care and
life insurance benefits in 1999, 1998 and 1997 included the
following components:
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ - $ 22 $ 37
Interest cost on projected benefit obligation 1,893 1,970 1,888
Net amortization of unrecognized:
Prior service costs 41 41 41
Plan net gains (627) (1,051) (2,161)
Transition amount 1,009 1,009 1,009
---------------------------------------------------------------------------------------------------------
Net periodic cost $2,316 $ 1,991 $ 814
---------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
The following is information regarding the Corporation's
1999 and 1998 postretirement benefit obligation:
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $28,342 $26,333
Service cost - 22
Interest cost 1,893 1,970
Actuarial (gains)/losses (2,280) 3,143
Benefits paid (2,265) (3,126)
---------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $25,690 $28,342
---------------------------------------------------------------------------------------------------------
IN THOUSANDS 1999 1998
---------------------------------------------------------------------------------------------------------
Total postretirement benefit obligation $ 25,690 $ 28,342
Unrecognized:
Net transition liability (12,900) (13,909)
Plan net losses 4,936 3,283
Prior service gains (39) (80)
---------------------------------------------------------------------------------------------------------
Accrued benefits cost $ 17,687 $ 17,636
---------------------------------------------------------------------------------------------------------
</TABLE>
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 8.0% in 1999
and 7.0% in 1998. An increase in the cost of covered
health-care benefits of 7.0% was assumed for 1999, and graded
down annually to 4.8% for 2005 and future years. A 1.0%
increase or 1.0% decrease in the health-care cost trend rate
would increase or decrease the accumulated postretirement
benefit obligation by $1.2 million at January 2, 2000, and
increase or decrease, respectively, the net periodic cost by
$0.1 million for the year then ended.
11. COMMITMENTS
- --------------------------------------------------------------------------------
The Corporation and its subsidiaries are parties to various
leases relating to plants, distribution facilities, office
facilities, automobiles and other equipment. 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 significant.
Future minimum payments under noncancelable operating
leases consisted of the following at January 2, 2000:
<TABLE>
<CAPTION>
IN THOUSANDS
---------------------------------------------------------------------------------------------------------
<S> <C>
2000 $ 26,169
2001 19,868
2002 16,362
2003 13,492
2004 9,715
Thereafter 38,915
---------------------------------------------------------------------------------------------------------
Total minimum operating lease payments $124,521
---------------------------------------------------------------------------------------------------------
</TABLE>
Rent expense for operating leases was $32.8, $32.5 and
$35.4 million in 1999, 1998 and 1997, respectively.
49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
12. OTHER FINANCIAL DATA
- --------------------------------------------------------------------------------
Other expense (income)-net consisted of the following:
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Acquisition termination fee received $(16,000) $ - $ -
Loss on sale of receivables 11,343 8,951 1,754
Foreign-currency losses (gains) (387) 707 3,759
Foreign-exchange contract gains (1,646) (2,395) (2,071)
Other 1,319 2,768 1,026
---------------------------------------------------------------------------------------------------------
Other expense (income) - net $ (5,371) $10,031 $ 4,468
---------------------------------------------------------------------------------------------------------
</TABLE>
The Corporation expenses the cost of advertising as it is
incurred. Total advertising expense was $24.8 million in 1999,
$22.4 million in 1998 and $22.0 million in 1997.
Accrued liabilities included salaries, fringe benefits and
other compensation amounting to $38.0 and $36.7 million in
1999 and 1998, respectively.
Inventories consisted of the following:
<TABLE>
<CAPTION> January 2, January 3,
IN THOUSANDS 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $266,463 $202,368
Work in process 91,765 95,436
Raw materials 179,173 171,837
---------------------------------------------------------------------------------------------------------
Total inventories $537,401 $469,641
---------------------------------------------------------------------------------------------------------
</TABLE>
The Corporation conducts portions of its business through
investments in companies accounted for using the equity
method. Those companies are primarily engaged in the design,
manufacture and selling of components used in assembling,
maintaining or repairing electrical and electronic systems.
Summarized financial information for the Corporation's equity
investees on a combined basis was:
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,331,980 $1,230,392 $1,053,715
Gross margin 385,049 361,730 297,345
Net income 64,581 60,004 42,005
Current assets 535,780 512,907 434,892
Non-current assets 203,001 161,249 123,496
Current liabilities 150,984 133,594 118,579
Non-current liabilities $ 167,696 $ 165,791 $ 164,320
---------------------------------------------------------------------------------------------------------
</TABLE>
13. SEGMENT AND OTHER RELATED DISCLOSURES
- --------------------------------------------------------------------------------
The Corporation has three reportable segments: Electrical,
Electronic Original Equipment Manufacturer (Electronic OEM)
and Communications. The Electrical segment manufactures and
sells a broad package of electrical connectors, components and
accessories consisting primarily of fasteners, connectors,
fittings, boxes and covers, metal framing, grounding materials
and lighting products for use in industrial, commercial,
residential and utility electrical installation construction
and maintenance applications. The Electronic OEM segment
manufactures and markets electronic cable assemblies,
connectors and various electronic components for use in
high-speed computer, mobile-communication and automotive
applications involving miniaturization, surface-mounts,
electromagnetic interference and multiplexing. The
Communications
50
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
segment produces and sells a package of drop-line hardware,
connectors, fasteners, grounding materials, various electronic
components for use in cable television, telecommunications and
data communications applications. Some business activities
cannot be classified in one of the aforementioned segments and
are shown under Other. Those businesses consist mainly of the
manufacture and sale of steel structures for electrical
transmission and distribution, power-generation and
telecommunications applications and mechanical products,
primarily heating units, for heating and ventilation
applications. The Corporation's reportable segments are based
on channels to market, and represent the primary mode used to
assess allocation of resources and performance. Management
evaluates each segment's profit or loss performance based on
earnings before interest, taxes, loss on sale of accounts
receivable, restructure, special charges and certain other
expenses and, beginning in 2000, on economic value added. The
significant accounting policies applied to the segments to
determine earnings are essentially those described in the
summary of significant accounting policies. The Corporation
has no material inter-segment sales. General corporate assets
not allocated to segments are principally cash, marketable
securities, deferred income taxes and other corporate assets.
<TABLE>
<CAPTION>
SEGMENT INFORMATION
IN THOUSANDS 1999 1998(a) 1997(a)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales
Electrical $1,358,626 $1,117,917 $1,020,102
Electronic OEM 686,716 635,946 752,482(b)
Communications 260,302 260,601 262,121
All other 216,364 215,887 224,803
---------------------------------------------------------------------------------------------------------
Total $2,522,008 $2,230,351 $2,259,508
---------------------------------------------------------------------------------------------------------
Segment Earnings
Electrical $ 171,900 $ 188,927 $ 172,062
Electronic OEM 26,771 60,845 69,573
Communications (4,463) 16,369 23,440
Related to all other sales 24,174 22,619 17,316
---------------------------------------------------------------------------------------------------------
Total $ 218,382 $ 288,760 $ 282,391
---------------------------------------------------------------------------------------------------------
Total Assets
Electrical $1,435,718 $1,307,834 $1,064,971
Electronic OEM 607,192 543,179 530,452
Communications 262,293 257,834 223,448
Related to all other sales 195,461 217,736 197,722
---------------------------------------------------------------------------------------------------------
Total $2,500,664 $2,326,583 $2,016,593
---------------------------------------------------------------------------------------------------------
Capital Expenditures
Electrical $ 71,566 $ 55,163 $ 50,752
Electronic OEM 46,976 39,486 36,288
Communications 8,350 21,069 19,431
Related to all other sales 6,191 11,015 10,042
---------------------------------------------------------------------------------------------------------
Total $ 133,083 $ 126,733 $ 116,513
---------------------------------------------------------------------------------------------------------
Depreciation and Amortization
Electrical $ 47,321 $ 47,765 $ 46,240
Electronic OEM 27,070 26,061 25,574
Communications 15,396 13,183 15,988
Related to all other sales 8,066 8,283 8,065
---------------------------------------------------------------------------------------------------------
Total $ 97,853 $ 95,292 $ 95,867
---------------------------------------------------------------------------------------------------------
</TABLE>
(a) Certain prior-year amounts have been reclassified to
conform to the current-year presentation.
(b) Includes sales of businesses contributed to the
Exemplar/Thomas & Betts joint venture at the end of 1997,
amounting to $85.9 million. In 1999 and 1998, results of
operations from that investment were accounted for using
the equity method.
51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
The following are reconciliations of the total of reportable
segments to the consolidated company:
<TABLE>
<CAPTION>
RECONCILIATION TO TOTAL COMPANY
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales
Total reportable segment net sales $2,305,644 $2,014,464 $2,034,705(a)
Other sales 216,364 215,887 224,803
---------------------------------------------------------------------------------------------------------
Total $2,522,008 $2,230,351 $2,259,508
---------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes
Total reportable segment earnings $ 194,208 $ 266,141 $ 265,075
Earnings on other sales 24,174 22,619 17,316
Restructure and special charges 11,632 (108,487) -
Interest expense (67,956) (51,135) (52,041)
Loss on sale of receivables (11,343) (8,951) (1,754)
Interest income 6,961 5,379 7,246
Other 2,060 (658) (2,335)
---------------------------------------------------------------------------------------------------------
Total $ 159,736 $ 124,908 $ 233,507
---------------------------------------------------------------------------------------------------------
Total Assets
Total from reportable segments $2,299,373 $2,108,847 $1,818,871
Related to all other sales 201,291 217,736 197,722
General corporate 152,022 173,004 77,695
---------------------------------------------------------------------------------------------------------
Total $2,652,686 $2,499,587 $2,094,288
---------------------------------------------------------------------------------------------------------
Capital Expenditures
Total from reportable segments $ 126,892 $ 115,718 $ 106,471
Related to all other sales 6,191 11,015 10,042
General corporate - - 2,413
---------------------------------------------------------------------------------------------------------
Total $ 133,083 $ 126,733 $ 118,926
---------------------------------------------------------------------------------------------------------
Depreciation and Amortization
Total from reportable segments $ 89,787 $ 87,009 $ 87,802
Related to all other sales 8,066 8,283 8,065
General corporate 194 41 671
---------------------------------------------------------------------------------------------------------
Total $ 98,047 $ 95,333 $ 96,538
---------------------------------------------------------------------------------------------------------
</TABLE>
(a)Includes sales of businesses contributed to the
Exemplar/Thomas & Betts joint venture at the end of 1997.
52
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
14. FINANCIAL INFORMATION RELATING TO OPERATIONS
IN DIFFERENT GEOGRAPHIC AREAS
- -------------------------------------------------------------------------------
The Corporation conducts business in five principal areas:
U.S., Europe, Canada, Asia Pacific and Latin America.
<TABLE>
<CAPTION>
IN THOUSANDS 1999 1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales (by external customer locations)
U.S. $1,701,534 $1,606,131 $1,728,135(a)
Europe 377,742 284,713 259,927
Canada 279,427 215,065 165,873
Asia Pacific 108,580 94,108 97,502
Latin America 44,820 21,573 8,071
Other countries 9,905 8,761 -
---------------------------------------------------------------------------------------------------------
Total $2,522,008 $2,230,351 $2,259,508
---------------------------------------------------------------------------------------------------------
Long-lived Assets
U.S. $1,029,847 $1,028,384 $1,041,436
Europe 209,680 200,476 58,918
Canada 129,244 110,832 81,599
Asia Pacific 80,589 71,903 35,110
Latin America 20,711 17,505 30,753
Other foreign countries 18,680 12,085 -
---------------------------------------------------------------------------------------------------------
Total $1,488,751 $1,441,185 $1,247,816
---------------------------------------------------------------------------------------------------------
</TABLE>
(a)Includes sales of businesses contributed to the
Exemplar/Thomas & Betts joint venture at the end of 1997.
15. SUBSEQUENT EVENT
- --------------------------------------------------------------------------------
On February 16, 2000, a shareholder filed a purported
class-action suit in the United States District Court for the
Western District of Tennessee against the Corporation, Clyde
R. Moore, as president and chief executive officer, and Fred
R. Jones, as vice president-chief financial officer. The
complaint alleges fraud and violations of Section 10(b) and
20(a) of the Securities Exchange Act of 1934, as amended, and
Rule 10b-5 thereunder. The plaintiffs allege that purchasers
of the Corporation's common stock between April 28, 1999, and
December 14, 1999, were damaged when the market value of the
stock dropped by nearly 29% on December 15, 1999. The
plaintiffs allege generally that the defendants artificially
inflated the market value of the Corporation's common stock by
a series of misleading statements or by failing to disclose
certain adverse information. An unspecified amount of damages
is sought. At this time, the Corporation is investigating the
allegations, and is unable to predict the outcome of this
litigation and its ultimate effect, if any, on the financial
condition of the Corporation. However, the Corporation
believes that meritorious defenses to the claims exist and
intends to vigorously defend against those claims. Mr. Moore
and Mr. Jones may be entitled to indemnification from the
Corporation.
53
<PAGE>
COMPANY REPORT ON FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
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.
Those 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 below, 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, internal auditors and members of management to
review matters relating to the quality of financial reporting and internal
accounting control and to the nature, extent and results of audit efforts.
INDEPENDENT AUDITORS' REPORT
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
To the Shareholders and Board of Directors of
Thomas & Betts Corporation:
We have audited the accompanying consolidated balance sheets of Thomas & Betts
Corporation and subsidiaries as of January 2, 2000, and January 3, 1999, and the
related consolidated statements of earnings, cash flows, and shareholders'
equity for each of the years in the three-year period ended January 2, 2000.
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 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
present fairly, in all material respects, the financial position of Thomas &
Betts Corporation and subsidiaries at January 2, 2000, and January 3, 1999, and
the results of their operations and their cash flows for each of the years in
the three-year period ended January 2, 2000, in conformity with generally
accepted accounting principles.
KPMG LLP
Memphis, Tennessee
March 17, 2000
54
<PAGE>
QUARTERLY REVIEW
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
IN THOUSANDS (EXCEPT PER SHARE DATA) 1999(a) 1998(b) 1997(c)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter
Net sales $ 612,011 $ 544,656 $ 549,287
Gross profit 176,461 163,342 161,932
Net earnings 34,493 37,303 31,696
Earnings per common share
Basic .60 .66 .57
Diluted .60 .65 .57
Cash dividends declared per share .28 .28 .28
Market price range $37 5/16 - 48 7/8 $ 44 5/8 - 64 $ 42 1/2 - 47 1/2
- -----------------------------------------------------------------------------------------------------------------------------
Second Quarter
Net sales $ 652,660 $ 553,318 $ 581,153
Gross profit 189,895 170,636 177,020
Net earnings 43,706 41,543 40,199
Earnings per common share
Basic .76 .73 .72
Diluted .75 .73 .71
Cash dividends declared per share .28 .28 .28
Market price range $ 37 5/8 - 48 1/8 $ 45 7/8 - 61 3/4 $ 41 - 55 3/8
- -----------------------------------------------------------------------------------------------------------------------------
Third Quarter
Net sales $ 635,641 $ 539,945 $ 553,956
Gross profit 137,527 132,343 169,113
Net earnings (loss) 46,930 (37,468) 42,232
Earnings (loss) per common share
Basic .81 (.66) .75
Diluted .81 (.66) .74
Cash dividends declared per share .28 .28 .28
Market price range $41 7/8 - 53 7/16 $33 11/16 - 49 15/16 $ 51 9/16 - 58 11/16
- ---------------------------------------------------------------------------------------------------------------------------
Fourth Quarter
Net sales $ 621,696 $ 592,432 $ 575,112
Gross profit 170,863 182,815 184,158
Net earnings 23,178 46,124 48,151
Earnings per common share
Basic .40 .81 .85
Diluted .40 .81 .85
Cash dividends declared per share .28 .28 .28
Market price range $ 28 - 51 9/16 $ 36 7/8 - 45 9/16 $43 15/16 - 55 13/16
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Basic per share amounts are based on average shares outstanding in each quarter.
Diluted per share amounts also reflect potential dilution from stock options.
(a) 1999 includes restatements for one-time items and other charges and
credits. (See Note 5.)
(b) Includes special charges of $108.5 million pretax ($1.36 basic and $1.35
diluted per share) in the third quarter.
(c) Includes sales of businesses contributed to the Exemplar/Thomas & Betts
joint venture at the end of 1997, amounting to $85.9 million. In 1999 and
1998, such investment was accounted for using the equity method.
55
<PAGE>
OFFICERS AND DIRECTORS
THOMAS & BETTS CORPORATION
OFFICERS
CLYDE R. MOORE
President and
Chief Executive Officer
T. ROY BURTON
President -
Electronics/OEM Group
GREGORY M. LANGSTON
Group President-International
W. NEIL PARKER
President -
Electrical Components Group
GARY R. STEVENSON
President -
Operations/Administration Group
JOHN P. MURPHY
Senior Vice President -
Chief Financial Officer
JOHN R. JANULIS
Vice President - Controller
JERRY KRONENBERG
Vice President -
General Counsel and Secretary
CONNIE MUSCARELLA
Vice President - Human Resources
THOMAS C. OVIATT
Treasurer
PENELOPE Y. TURNBOW
Assistant Secretary
DIRECTORS
T. KEVIN DUNNIGAN
Chairman of the Board
of the Corporation
DIRECTOR SINCE 1975(2)(3)
ERNEST H. DREW
Former Chief Executive Officer,
Industries and Technology Group
Westinghouse Electric Corporation
(power generation and process control systems)
DIRECTOR SINCE 1989(2)(3)
JEANANNE K. HAUSWALD
Managing Partner,
Solo Management Group, L.L.C.
(corporate finance and investment management consulting)
DIRECTOR SINCE 1993(1)
DEAN JERNIGAN
Chairman, President and Chief Executive Officer
Storage USA, Inc.
(self-storage real estate
investment trust)
DIRECTOR SINCE 1999
RONALD B. KALICH, SR.
President and
Chief Executive Officer,
National-Standard Company
(wire-related products for the
automotive industry)
DIRECTOR SINCE 1998(1)
ROBERT A. KENKEL
Former Chairman of the Board,
Chief Executive Officer and
Chief Operating Officer,
The Pullman Co.
(automotive, aerospace and industrial companies)
DIRECTOR SINCE 1994(3)(4)
KENNETH R. MASTERSON
Executive Vice President,
General Counsel and Secretary,
FedEx Corporation
(transportation services)
DIRECTOR SINCE 1995(2)
THOMAS C. MCDERMOTT
Chairman and Manager,
Forbes Products, L.L.C.
(custom vinyl business products)
DIRECTOR SINCE 1996(1)
CLYDE R. MOORE
President and Chief Executive Officer of the Corporation
DIRECTOR SINCE 1993(2)(3)
JEAN-PAUL RICHARD
Chairman and
Chief Executive Officer,
PRO MACH, Inc.
(industrial food processing and packaging equipment)
DIRECTOR SINCE 1996(1)
JERRE L. STEAD
Chairman,
Ingram Micro, Inc.
(distributor of technology products and services)
DIRECTOR SINCE 1998(4)
WILLIAM H. WALTRIP
Former Chairman of the Board,
Bausch & Lomb Incorporated
(optical products), and
Chairman of the Board,
Technology Solutions Company
(computer technology services)
DIRECTOR SINCE 1983(3)(4)
- -------------------------------------------------------------------------------
(1) Audit Committee
(2) Corporate Governance Committee
(3) Executive Committee
(4) Human Resources Committee
56
<PAGE>
CORPORATE INFORMATION
THOMAS & BETTS CORPORATION
ANNUAL MEETING
The annual meeting of shareholders will be held on
Wednesday, May 3, 2000, at 10:00 a.m. at the
Winegardner Auditorium, The Dixon Gallery and
Gardens 4339 park Avenue, Memphis, Tennessee.
ANNUAL REPORT ON FORM 10-K
A copy of the Corporation's Annual Report on Form
10-K (excluding exhibits), filed with the Securities
and Exchange Commission, is available free of charge
by writing to the vice president-investor relations at
corporate headquarters.
The Form 10-K and other documents filed
electronically with the SEC may be accessed via the
Internet at www.sec.gov
TRANSFER AGENT, REGISTRAR AND
DIVIDEND DISBURSING AGENT
First Chicago Trust Company, a division of Equiserve
P.O. Box 2500
Jersey City, New Jersey 07303-2500
Fax (201) 222-4679
Telephone Response Center (800) 446-2617
(8 a.m. to 7 p.m. Eastern time weekdays)
Fax (201) 222-4892, TDD Service (201) 222-4955
Correspondence concerning change of address
dividends, lost stock certificates and stock transfer
requirements should be directed to the address above.
Inquiries regarding the Dividend Reinvestment Plan
should be directed to the corporate secretary at
corporate headquarters.
DIVIDEND REINVESTMENT PLAN
First Chicago Trust Company, a division of Equiserve
Dividend Reinvestment Plan
P.O. Box 2598
Jersey City, New Jersey 07303-2598
Internet address: www.equiserve.com
LISTED NEW YORK STOCK EXCHANGE
Trading symbol: TNB
CORPORATE HEADQUARTERS
Thomas & Betts Corporation
8155 T&B Boulevard
Memphis, Tennessee 38125
(901) 252-8000
INVESTOR INQUIRIES
Inquiries should be directed to the investor relations
department at (901) 252-8300 or e-mailed to
investor-relations @tnb.com.
Visit us on the World Wide Web at www.tnb.com
for investor information, technical producer back-
ground or a general overview of Thomas & Betts.
SAFE HARBOR NOTICE
Forward-looking statements made throughout this
annual report are subject to many uncertainties in
the Corporation's operations and business environ-
ment. Such uncertainties, which are discussed in the
Corporation's Annual Report on Form 10-K filed
with the Securities and Exchange Commission, may
cause acrual results of the Corporation to be materi-
ally different from any future results expressed or
implied by such forward-looking statements.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
State or Country of
Subsidiaries of Registrant Incorporation or Organization
-------------------------- -----------------------------
<S> <C>
Amerace Corporation Delaware
Augat Inc. Massachusetts
Leviton Manufacturing Co., Inc. Delaware
Thomas & Betts Caribe, Inc. Delaware
Thomas & Betts International, Inc. Delaware
Thomas & Betts Limited Canada
Thomas & Betts Netherlands B.V. The Netherlands
</TABLE>
The Registrant has omitted 16 subsidiaries operating in the U.S. and 71
subsidiaries operating in foreign countries. The Registrant's subsidiaries are
in the same businesses.
EX-21
<PAGE>
EXHIBIT 23
ACCOUNTANTS' CONSENT
The Shareholders and Board of Directors
Thomas & Betts Corporation:
We consent to incorporation by reference in the Registration Statements (No.
33-56789, No. 33-68370, No. 333-80435, No. 333-93101, No. 333-31290 and No.
333-31302) on Form S-8, Registration Statements (No. 333-61465, No. 333-60459,
No. 333-87025, No. 333-93161 and No. 333-80483) on Form S-3 and Registration
Statement (No. 333-893) on Form S-4 of Thomas & Betts Corporation of our report
dated March 17, 2000, relating to the consolidated balance sheets of Thomas &
Betts Corporation and subsidiaries as of January 2, 2000 and January 3, 1999,
and the related consolidated statements of earnings, cash flows and
shareholders' equity for each of the years in the three-year period ended
January 2, 2000, which report appears or is incorporated by reference in the
January 2, 2000 Annual Report on Form 10-K of Thomas & Betts Corporation.
KPMG LLP
Memphis, Tennessee
March 24, 2000
EX-23
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Clyde R. Moore, Jerry Kronenberg
and Fred R. Jones, and each of them, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, to sign the Annual Report on Form 10-K of Thomas & Betts
Corporation for its fiscal year 1999, and any and all amendments and 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 necessary to be done as fully to all intents and purposes as he or she
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Clyde R. Moore President and Chief March 20, 2000
- ---------------------------- Executive Officer and
Clyde R. Moore Director
/s/ Ernest H. Drew Director March 21, 2000
- ----------------------------
Ernest H. Drew
/s/ T. Kevin Dunnigan Chairman of the Board March 21, 2000
- ---------------------------- and Director
T. Kevin Dunnigan
/s/ Jeananne K. Hauswald Director March 21, 2000
- ----------------------------
Jeananne K. Hauswald
/s/ Dean Jernigan Director March 21, 2000
- ----------------------------
Dean Jernigan
/s/ Fred R. Jones Vice President-Chief March 20, 2000
- ---------------------------- Financial Officer
Fred R. Jones
<PAGE>
/s/ Ronald B. Kalich, Sr Director March 20, 2000
- ----------------------------
Ronald B. Kalich, Sr.
/s/ Robert A. Kenkel Director March 21, 2000
- ----------------------------
Robert A. Kenkel
/s/ Kenneth R. Masterson Director March 20, 2000
- ----------------------------
Kenneth R. Masterson
/s/ Thomas C. Mcdermott Director March 18, 2000
- ----------------------------
Thomas C. McDermott
/s/ Jean-Paul Richard Director March 21, 2000
- ----------------------------
Jean-Paul Richard
/s/ Jerre L. Stead Director March 21, 2000
- ----------------------------
Jerre L. Stead
/s/ William H. Waltrip Director March 21, 2000
- ----------------------------
William H. Waltrip
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10K
FOR THE PERIODS ENDED JANUARY 2, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-START> JAN-04-1999
<PERIOD-END> JAN-02-2000
<CASH> 70,553<F1>
<SECURITIES> 14,217<F1>
<RECEIVABLES> 530,729<F1>
<ALLOWANCES> (60,197)<F1>
<INVENTORY> 537,401<F1>
<CURRENT-ASSETS> 1,163,935<F1>
<PP&E> 1,257,069<F1>
<DEPRECIATION> (590,541)<F1>
<TOTAL-ASSETS> 2,652,686<F1>
<CURRENT-LIABILITIES> 513,445<F1>
<BONDS> 935,731<F1>
0<F1>
0<F1>
<COMMON> 5,782<F1>
<OTHER-SE> 1,088,350<F1>
<TOTAL-LIABILITY-AND-EQUITY> 2,652,686<F1>
<SALES> 2,522,008<F1>
<TOTAL-REVENUES> 2,522,008<F1>
<CGS> 1,847,262<F1>
<TOTAL-COSTS> 2,330,424<F1>
<OTHER-EXPENSES> (36,108)<F1>
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 67,956<F1>
<INCOME-PRETAX> 159,736<F1>
<INCOME-TAX> 11,429<F1>
<INCOME-CONTINUING> 148,307<F1>
<DISCONTINUED> 0<F1>
<EXTRAORDINARY> 0<F1>
<CHANGES> 0<F1>
<NET-INCOME> 148,307<F1>
<EPS-BASIC> 2.57<F1>
<EPS-DILUTED> 2.56<F1>
<FN>
<F1>AMOUNTS IN 1999 HAVE BEEN RESTATED AS OF THE BEGINNING OF 1999 TO INCLUDE THE
AUGUST 31, 1999 ACQUISITION OF L.E. MASON CO., ACCOUNTED FOR AS AN IMMATERIAL
POOLING OF INTERESTS.
</FN>
</TABLE>
