THOMAS & BETTS CORP - 10-K Annual Report

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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 DECEMBER 30, 2001.

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 Identification No.)
incorporation or organization)

8155 T&B BOULEVARD, MEMPHIS, TENNESSEE 38125
(Address of principal executive offices) (Zip Code)

(901) 252-8000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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 11, 2002, 58,283,951 shares of the Registrant's Common Stock
were outstanding and the aggregate market value of the voting common equity held
by non-affiliates of the Registrant (based on the average bid and asked prices
of such equity on the New York Stock Exchange composite tape) was
$1,180,832,847.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held May 1, 2002, are incorporated by reference into Part III hereof.
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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

Page 2 of 87

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Report includes various forward-looking statements regarding the
Corporation which are subject to risks and uncertainties. Forward-looking
statements include information concerning future results of operations and
financial condition. Statements that contain words such as "believes,"
"expects," "anticipates," "intends," "estimates," "continue," "should," "could,"
"may," "plan," "project," "predict," "will" or similar expressions are
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties, and many factors could affect the future financial
results of the Corporation. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations--Business Risks." Accordingly,
actual results may differ materially from those expressed or implied by the
forward-looking statements contained in this Report. For those statements, the
Corporation claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

There are many factors that could cause actual results to differ materially
from those in forward-looking statements, some of which are beyond the control
of the Corporation. These factors include, but are not limited to:

- Economic weakness and recession in the U.S. or the Corporation's other
main markets, including Canada and Western Europe;

- Effects of significant changes in monetary or fiscal policies in the U.S.
and abroad which could result in major currency fluctuations, including
fluctuations in the Canadian dollar, Euro and British pound;

- Significant changes in governmental policies domestically and abroad
which could create trade restrictions, patent enforcement issues, adverse
tax-rate changes and changes to tax treatment of items such as tax
credits, withholding taxes, transfer pricing and other income and expense
recognition for tax purposes, including changes in taxation of income
generated in Puerto Rico;

- Changes in environmental regulations and projected remediation technology
advances that could impact expectations of remediation expenses;

- Undiscovered liabilities arising from past acquisitions and dispositions
of businesses;

- Unexpected liabilities resulting from pending or future legal matters and
risks associated with the coverage and cost of insurance;

- Changes in customer demand for various products of Thomas & Betts that
could affect its overall product mix, margins, plant utilization levels
and asset valuations or simultaneous disruptions with a group of large
customers;

- Realization of deferred tax assets, which is dependent upon generating
sufficient taxable income prior to their expiration and the Corporation's
tax planning strategies;

- The recoverability of long-lived assets, which could be impacted if the
estimated future operating cash flows are not achieved; and

- Failure to achieve estimated savings net of estimated costs in connection
with, and unforeseen difficulties or time delays implementing, the
Corporation's comprehensive program to streamline production, improve
productivity and reduce costs in its U.S., European and Mexican
electrical products manufacturing facilities.

Page 3 of 87

The Corporation undertakes no obligation to revise the forward-looking
statements included in this Report to reflect any future events or
circumstances. The Corporation's actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these
forward-looking statements.

Page 4 of 87

PART I

ITEM 1. BUSINESS

Thomas & Betts Corporation is a leading manufacturer of connectors and
components primarily for worldwide electrical markets. It operates over 150
manufacturing, distribution and office facilities around the world in
approximately 20 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 sells its products through electrical, telephone, cable and
heating, ventilation and air-conditioning distributors, directly to original
equipment manufacturers and end users, and through mass merchandisers, catalog
merchandisers and home improvement centers. Thomas & Betts pursues growth
through market penetration, new product development, and, at times,
acquisitions. See Management's Discussion and Analysis of Financial Condition
and Results of Operations--Recent History for details regarding the general
development of the business. See Note 4 in the Notes to Consolidated Financial
Statements for information on acquisitions and divestitures during 2001, 2000
and 1999.

GENERAL SEGMENT INFORMATION

The Corporation classifies its products into business segments that are
organized around the market channels through which it sells those products:
Electrical, Steel Structures, Communications, and HVAC. The majority of the
Corporation's products, especially 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. Sales during 2001 to any
customer by one or more of such segments did not exceed 10% of the Corporation's
consolidated net sales for 2001. For financial information regarding net sales,
earnings (loss) from continuing operations and total assets by segment for the
three years ended December 30, 2001 refer to Note 15 in the Notes to
Consolidated Financial Statements and in Management's Discussion and Analysis of
Financial Condition and Results of Operations--Segment Results set forth herein.

Electrical Segment

The Electrical segment's markets include industrial, commercial, utility
and residential construction, renovation, maintenance and repair; project
construction; and industrial OEM, primarily in North America and Europe.
Consolidated sales of the segment were $1.15 billion, $1.35 billion and $1.39
billion, or 76.8%, 76.8% and 74.1% of the Corporation's consolidated sales for
2001, 2000 and 1999, 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 tray and electrical enclosures;
hazardous location lighting; safety switches; and other products,

Page 5 of 87

including insulation products, wire markers, and application tooling products.
Products are sold under a variety of well-known brand names.

Electrical products are sold through electrical and utility distributors,
as well as retail outlets such as home improvement centers and mass
merchandisers. The Corporation has relationships with over 6,000 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 lines; its
market-leading service programs; its strong history of product innovation; and
the high degree of brand-name recognition for its products among end users.

Steel Structures Segment

The Corporation designs, manufactures and markets tubular steel
transmission and distribution poles and lattice steel transmission towers for
North American power and telecommunications companies and for export. These
products are primarily sold to five types of end users: investor-owned
utilities; cooperatives, which purchase power from utilities and manage its
distribution to end users; municipal utilities; cable television operating
companies; and telephone companies. They are marketed under the Lehigh(TM),
Meyer(TM) and Thomas & Betts(R) brand names. Steel Structures segment sales were
$140.6 million, $121.9 million and $116.0 million, or 9.4%, 6.9% and 6.2% of the
Corporation's consolidated sales for 2001, 2000 and 1999, respectively.

Communications Segment

Thomas & Betts' Communications segment designs, manufactures and markets
electromechanical components, subsystems and accessories used to construct,
maintain and repair cable television (CATV) and telecommunications 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 $108.1 million, $178.4 million
and $264.8 million, or 7.2%, 10.2% and 14.1% of the Corporation's consolidated
sales for 2001, 2000 and 1999, respectively.

The Corporation's communications product offering includes: CATV drop
hardware; radio frequency RF connectors; 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 are sold under a variety of
the Corporation's brand names, most notably LRC(R), Diamond-Sachs(R) and
Kold-N-Klose(R).

HVAC Segment

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. These products are sold primarily under the Reznor(R) brand name
through HVAC, mechanical and refrigeration distributors in approximately 2,000
locations throughout North America and Europe. Total HVAC segment sales were
$98.5 million, $106.9 million and $104.1 million, or 6.6%, 6.1% and 5.6% of the
Corporation's consolidated sales for 2001, 2000 and 1999, respectively.

Page 6 of 87

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.

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 have historically enjoyed a reputation for quality
in the markets in which they are sold. To ensure quality, all of Thomas & Betts'
facilities embrace quality programs, and as of December 30, 2001, approximately
80% meet ISO 9000, 9001, 9002 or QS 9000 standards. 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.

RAW MATERIALS

Thomas & Betts purchases a wide variety of raw materials for the
manufacture of its products including steel, aluminum, zinc, copper, resins and
rubber compounds. The Corporation's sources of raw materials and component parts
are well established and are sufficiently numerous to avoid serious interruption
of production in the event that certain suppliers are unable to provide raw
materials and component parts.

RESEARCH AND DEVELOPMENT

Thomas & Betts has research, development and engineering capabilities in
each business unit 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 develop products that meet the needs of the
marketplace.

Research, development and engineering expenditures invested into new and
improved products and processes were $20.7 million, $23.0 million and $26.4
million, or 1.4%, 1.3% and 1.4% of sales for 2001, 2000 and 1999, respectively.
For 2002, the Corporation expects research and development expense to remain
relatively constant as a percentage of sales.

PATENTS AND TRADEMARKS

Thomas & Betts owns approximately 1,300 active patent registrations and
applications worldwide. The Corporation has over 1,300 active trademarks and
domain names worldwide, including: Thomas & Betts, T&B, Amerace, Anchor,
Blackburn, Bowers, Canstrut, Catamount, Center Lok, Color-Keyed, Commander,
Deltec, Diamond, DuraGard, E.K. Campbell, Eklips, Elastimold, Electroline,
Emergi-Lite, Epitome, Ever-Lok, E-Z-Code, Furse, Hazlux, Kindorf, Klik-It,
Kold-N-Klose, Locktite, LRC, Marr, Marrette, Max-Gard, Meyer, Ocal, Red Dot,
Reznor, RussellStoll, Sachs, Shamrock, Shield-Kon, Shrink-Kon, Signature
Service, Site Light, Snap-N-Seal, Sta-Kon, Star Teck, Steel City, Superstrut,
Taylor, Termaster, Ty-Fast, Ty-Rap, Union and Zinsco.

Page 7 of 87

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 held to be material to
its business.

PRACTICES RELATING TO WORKING CAPITAL

The Corporation's practices relating to working capital are discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Working Capital Improvements.

COMPETITION

Thomas & Betts' continuing ability to meet customer needs by enhancing
existing products and developing and manufacturing new products is critical to
its prominence in the electrical industry. Thomas & Betts encounters competition
in all areas of its business, and the methods and levels of competition vary
among its markets. While no single company competes with the Corporation in all
of its product lines, various companies compete with it in one or more product
lines. Some of these competitors have substantially greater sales and assets
than the Corporation. As Thomas & Betts works to enhance its product offerings,
these companies will most likely continue to improve their products and will
likely develop new offerings with competitive price and performance
characteristics. Although Thomas & Betts believes that it has specific
technological and other advantages over its competitors, because of the
intensity of the competition in the product areas and geographic markets that it
serves, Thomas & Betts could experience increased downward pressure on the
selling prices for its products. The activities of the Corporation's competitors
designed to enhance their own product offerings, coupled with any unforeseeable
changes in customer demand for various products of Thomas & Betts, could affect
the Corporation's overall product mix, margins, plant utilization levels and
asset valuations. Management believes that continued consolidation of the
industry could further increase competitive pressures in the industry.

EMPLOYEES

As of December 30, 2001, the Corporation and its subsidiaries had
approximately 11,000 full-time employees worldwide. Employees of the
Corporation's foreign subsidiaries in the aggregate comprise approximately 30%
of all employees. Of the total number of employees, approximately 30% are
represented by trade unions. The Corporation believes its relationships with its
employees and trade unions are good.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

The Corporation is subject to federal, state, local and foreign
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. See "Item 3--Legal Proceedings" and Note 17 in the Notes
to Consolidated Financial Statements.

Page 8 of 87

FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. OPERATIONS

For information concerning financial results for foreign and U.S.
operations for the three years ended December 30, 2001, refer to Note 16 of
Notes to Consolidated Financial Statements contained herein. Export sales
originating in the U.S. were approximately $46 million, $57 million and $55
million for 2001, 2000 and 1999, respectively.

ITEM 2. PROPERTIES

As of December 30, 2001, the Corporation has over 150 plant, office,
distribution, storage and warehouse facilities, occupying approximately
8,389,000 sq. ft. in 26 states, the Commonwealth of Puerto Rico and
approximately 20 countries. This space is composed of approximately 5,470,000
sq. ft. of manufacturing space, 2,344,000 sq. ft. of office, distribution,
storage and warehouse space and 575,000 sq. ft. of idle space.

The Corporation's manufacturing locations by segment as of December 30,
2001 are as follows:

Page 9 of 87

In addition to the above mentioned manufacturing facilities, the
Corporation owns three central distribution centers which are located 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 709,000 sq. ft. of space, 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 headquarters.

The Corporation has approximately 575,000 sq. ft. of idle manufacturing and
office space in Georgia, Kansas, Pennsylvania, New Jersey, Missouri,
Massachusetts, South Carolina and the U.K., not included in the above table.

As of December 30, 2001, the following plants, included in the above
manufacturing locations, were operating at capacities significantly below
historical levels and are not expected to have significant improvements stemming
from the Electrical segment's manufacturing efficiency and consolidation
initiatives discussed more fully in Management's Discussion and Analysis of
Financial Condition and Results of Operations. Management expects these
facilities to operate at less than optimal capacity, thus adversely impacting
the Corporation's results of operations, until the domestic economy fully
recovers from the recession and demand for the Corporation's products returns to
historical levels.

As of December 30, 2001, the following manufacturing plants are scheduled
to be closed during 2002.

Page 10 of 87

ITEM 3. LEGAL PROCEEDINGS

Shareholder Litigation

During 2000 certain shareholders of the Corporation filed five separate
class-action suits in the United States District Court for the Western District
of Tennessee against the Corporation, Clyde R. Moore and Fred R. Jones. The
complaints allege 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 August 21, 2000, were damaged when the market value of the
stock dropped by nearly 29% on December 15, 1999, dropped by nearly 26% on June
20, 2000 and fell another 8% on August 22, 2000. An unspecified amount of
damages is sought.

On December 12, 2000, the Court issued an order consolidating all five of
the actions into a single action. The consolidated complaint essentially repeats
the allegations in the earlier complaints.

The Corporation intends to contest the litigation vigorously and has filed
a motion to dismiss. At this stage, the Corporation is unable to predict the
outcome of this litigation and its ultimate effect, if any, on the financial
condition of the Corporation. However, management believes that there are
meritorious defenses to the claims. Mr. Moore and Mr. Jones may be entitled to
indemnification by the Corporation in connection with this litigation.

A parallel federal securities law class action was filed by the same
plaintiffs against KPMG LLP, the Corporation's independent auditors, mirroring
the Rule 10b-5 allegations in the action discussed above against the
Corporation. This suit was consolidated with the action against the Corporation
on August 14, 2001.

Tyco Dispute

On November 1, 2000, pursuant to the Purchase Agreement between Tyco Group
S.A.R.L. (Tyco) and the Corporation, dated May 7, 2000, as amended, Tyco
delivered to the Corporation its proposed calculation of the Statement of
Closing Working Capital and Statement of Closing Long-term Tangible Assets for
the Electronics OEM business (collectively, the "Tyco Statement Calculation").
Under the terms of the Purchase Agreement, the purchase price to the Corporation
on the closing date could be adjusted if the Closing Working Capital or the
Closing Long-term Tangible Assets, which are amounts to be agreed to by Tyco and
the Corporation, or determined by an agreed upon third party, are less than the
Base Working Capital or the Base Long-term Tangible Assets, as defined in the
Purchase Agreement (Base Working Capital and Base Long-term Tangible Assets
collectively referred to herein as "Agreed Amounts"). The Tyco Statement
Calculation delivered to the Corporation was substantially below the Agreed
Amounts. Management reviewed the Tyco Statement Calculation and disputed
substantially all of the differences between the Tyco Statement Calculation and
the Corporation's records. As of December 31, 2000, Tyco held back $35 million
of proceeds.

Subsequent to 2001, the Corporation settled this dispute with Tyco. Under
terms of the settlement agreement, Tyco will retain $35 million held for
post-closing adjustments on working capital and long-term tangible assets.
Thomas & Betts recorded an $8 million net-of-tax charge to gain on sale of
discontinued operations in the fourth quarter of 2001 to reflect this
settlement.

Page 11 of 87

SEC Investigation

Soon after issuing the August 21, 2000 press release announcing substantial
charges in the second fiscal quarter of 2000, the Corporation received an
informal request for information regarding the basis of the charges from the
staff of the Securities and Exchange Commission (the "Commission") Enforcement
Division. In response, the Corporation collected and produced the bulk of the
documents requested and various former and current employees were interviewed
telephonically by the Commission's staff.

On January 4, 2001, the Commission issued a Formal Order of Investigation
and subsequently has required the production of additional documents, conducted
interviews and taken the testimony of current and former employees. Management
is unable to express any opinion regarding the future course of this
investigation; however, the Corporation intends to fully cooperate with the
Commission during this process.

Other Legal Matters

The Corporation is also involved in legal proceedings and litigation
arising in the ordinary course of business. In those cases where the Corporation
is the defendant, plaintiffs may seek to recover large and sometimes unspecified
amounts or other types of relief and some matters may remain unresolved for
several years. Such matters may be subject to many uncertainties and outcomes
are not predictable with assurance. The Corporation has provided for losses to
the extent probable and estimable; however, additional losses, even though not
anticipated, could be material with respect to financial position, results of
operations or liquidity in any given period.

Environmental Matters

Owners and operators of sites containing hazardous substances, as well as
generators of hazardous substances, are subject to broad and retroactive
liability for investigatory and cleanup costs and damages arising out of past
disposal activities. Such liability in many cases may be imposed regardless of
fault or the legality of the original disposal activity. 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, in many instances 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,
as amended (the "Superfund Act"), similar federal and state environmental
statutes, or common law theories.

The Corporation is the owner or operator, or former owner, of various
manufacturing locations currently being evaluated by the Corporation for the
presence of contamination that may require remediation. These sites include
closed facilities in Connecticut (Monroe); Georgia (Decatur County); Indiana
(Medora); Massachusetts (Attleboro, Canton); New Hampshire (New Milford); New
Jersey (Butler, Elizabeth); New York (Horseheads); and Pennsylvania (Perkasie,
Pittsburgh). The sites further include active manufacturing locations in New
Jersey (Hackettstown); New Mexico (Albuquerque); South Carolina (Lancaster);
Alabama (Mobile); Massachusetts (Boston); and Wisconsin (Hager City).

Five of these current and former manufacturing locations relate to
activities of American Electric for the period prior to the acquisition of
American Electric by the Corporation. These five sites include Decatur County,
Georgia; Hager City, Wisconsin; Lancaster, South Carolina; Medora, Indiana; and
Pittsburgh, Pennsylvania. Each of these sites except one (Pittsburgh) is subject
to an Asset Purchase Agreement dated June 28, 1985 between American Electric and

Page 12 of 87

ITT Corporation ("ITT"). ITT and the Corporation have shared responsibilities
and costs at the four outstanding sites subject to this agreement. For certain
of the sites covered by this agreement, ITT agreed to indemnify American
Electric for environmental liabilities, if any, that occurred prior to the
purchase of the facilities by American Electric. The Corporation believes that
the indemnity of ITT is reliable; however, there can be no assurances that any
such indemnities will be honored.

In addition to current or former manufacturing locations, the Corporation
has received notifications from the EPA, similar state environmental regulatory
agencies or private parties that the Corporation, along with others, may
currently be potentially responsible for its share of the costs relating to
investigation and remediation of nineteen sites pursuant to the Superfund Act or
similar state environmental enactments.

In December 1996, the Corporation acquired Augat Inc. Pursuant to the
various environmental laws and regulations described above, Augat has evaluated
or remediated, and may have liability associated with contamination at a number
of sites. Pursuant to a Purchase Agreement between the Corporation and Tyco, the
Corporation agreed to retain certain environmental liabilities, if any, for
former Augat manufacturing locations in Alabama (Montgomery Plants 1 & 3);
Massachusetts (Mashpee); South Carolina (Inman); and Texas (Lewisville); and for
two offsite alleged disposal locations, in Massachusetts (The Ledge and
Re-Solve); and one location in Texas (Chemical Recycling).

In July 1997, the Corporation acquired Diamond Communications, Inc.
Pursuant to the various environmental laws and regulations described above,
Diamond has evaluated and remediated contamination associated with its Garwood,
New Jersey, facility. The Corporation received a "No Further Action" letter from
the responsible state agency and is required to monitor this site.

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 in Dorval, Quebec.

The Corporation has provided for liabilities to the extent probable and
estimable, but the Corporation is not able to predict the extent of its ultimate
liability with respect to all of its pending or future environmental matters.
However, the Corporation does not believe that any additional liability with
respect to the aforementioned environmental matters will be material to its
financial position or results of operations.

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 December 30, 2001.

Page 13 of 87

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):

Mr. Dunnigan was President (1974 to 1976) of The Thomas & Betts Co.
Division of Thomas & Betts Corporation, Vice President--T&B/Thomas & Betts (1976
to 1978), Executive Vice President--Electrical (1978 to 1980), Chief Operating
Officer (1980 to 1985), President (1980 to 1994), Chief Executive Officer (1985
to 1997), Chairman of the Board (1992 to May 2000) and Chairman and Chief
Executive Officer (August to October 2000).

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).

Mr. Pileggi held various positions with the Corporation (1979 to 1983)
before being elected Vice President--General Manager of the Electronics division
(1983 to 1986), Vice President, Electronics Marketing Division (1986 to 1988),
President--Electronics division (1988 to 1994) and President--Electrical
Components Division (1994 to 1995) of the Corporation. Mr. Pileggi was President
and Chief Executive Officer (1995 to 1996) of Casco Molded Plastics, Inc.,
President and Chief Executive Officer (1996 to 1998) of Jordan
Telecommunications Products, Executive Vice President (1998 to 2000) and
President--EMS Division (2000) of Viasystems Group, Inc.

Mr. Fluke held various finance and managerial positions with The Goodyear
Tire and Rubber Company beginning in 1982, including General Manager,
Finance--South Pacific Tyres and Controller North American Tires Division.

Ms. Muscarella was Vice President--Human Resources of SKW Bio-Systems, Inc.
(1990 to 1998) and Vice President--Human Resources of the Corporation (1998 to
2000).

Mr. Raines was a partner of the law firm of Glankler Brown PLLC for more
than the past five years.

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 1, 2002.
There is no arrangement or understanding between any officer and any person,
other than a director or executive officer of

Page 14 of 87

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.

Page 15 of 87

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Corporation's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol TNB. The following table sets forth by quarter for the
last two years the high and low sales prices of the Corporation's Common Stock
on the NYSE Composite tape as reported by the Dow Jones News Retrieval Service,
and the dividends declared by the Board of Directors of the Corporation on its
Common Stock.

At March 11, 2002, the Corporation had 3,646 shareholders of record.

On July 24, 2001, the Corporation's Board of Directors approved a change in
the Corporation's dividend payment practices and elected to retain its future
earnings to fund the development and growth of its business. The Corporation
does not presently anticipate declaring any cash dividends on the Corporation's
common stock in the foreseeable future. Future decisions concerning the payment
of cash dividends on the Corporation's common stock will depend upon its results
of operations, financial condition, capital expenditure plans and other factors
that the Board of Directors may consider relevant.

The Corporation's revolving credit agreements contain provisions that could
restrict, as a practical matter, the Corporation's ability to pay dividends
during the term of those agreements. See Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources--Financing Activities for a discussion of the material provisions of
the Corporation's credit agreements.

Page 16 of 87

ITEM 6. SELECTED FINANCIAL DATA

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

- ------------------------------

(a) Net earnings (loss) from continuing operations for 2000 and prior periods
have been restated for the change in inventory costing method from LIFO to
FIFO during 2001 for all inventories not previously accounted for on the
FIFO method. This change reduced the net loss from continuing operations in
2000 by $14.7 million; reduced net earnings from continuing operations in
1999 by $6.5 million; increased net earnings from continuing operations in
1998 by $1.0 million; and reduced net earnings from continuing operations in
1997 by $1.0 million. See Note 3 of the Notes to Consolidated Financial
Statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RECENT HISTORY

The following narrative reviews the many strategic, procedural, operational
and resource issues addressed by Thomas & Betts since mid-2000 as part of its
effort to restore the Corporation to a position of financial and competitive
leadership in the electrical products industry.

SUMMARY OF PAST STRATEGIES

During the mid- to late-1990s, Thomas & Betts pursued certain strategies
and undertook a number of initiatives designed to drive profitable growth. These
strategies included:

- Enhancing the Corporation's participation in higher-growth electronics
markets by acquiring Augat, Inc.;

- Reducing manufacturing costs by moving many production lines to regions
with historically low labor costs and redirecting engineering resources
away from new product development;

- Expanding the Corporation's core electrical products portfolio and market
presence through acquisitions;

- Structuring the organization as a matrix with overlapping managerial
responsibilities for product and geographic management;

Page 17 of 87

- Implementing new global financial and enterprise resource planning
systems; and

- Re-positioning the Corporation to capitalize on business-to-business
(B2B) e-commerce opportunities.

These strategies and related activities initially delivered positive
results. Over time, however, the diverse and broad nature of the various
strategies put unanticipated strain on the Corporation's resources and adversely
affected its focus on its core competencies and underlying processes and
controls.

These underlying process, control and organizational issues were
exacerbated by problems associated with the implementation of a new global order
processing system in November 1999. The launch of the new system severely
disrupted the Corporation's global operations, causing significant delays in
product shipments, serious problems with pricing and invoicing, and a
deterioration in relations with its core distributor network.

NEW MANAGEMENT TEAM

As the Corporation worked to recover from the disruption caused by the
order processing system implementation, initial changes were made to the senior
management team. In March 2000, Thomas & Betts hired John P. Murphy as chief
financial officer.

Recognizing that the Corporation's use of working capital significantly
exceeded that of peer companies in the electrical industry and that improving
its cash position was fundamental to laying a foundation for improved
performance, the new financial management began a detailed study of accounts
receivable and inventory policies, controls and procedures beginning early in
the second quarter 2000.

This review of accounts receivable and inventory management led to the
discovery of issues with many of the Corporation's processes, controls and
systems and the conclusion that significant charges were required in a number of
areas.

The Corporation reported its second quarter 2000 results in August 2000.
These results included $224 million in special charges to continuing operations.
Subsequently, Thomas & Betts restated its financial statements for the years
1996, 1997, 1998, 1999, and 2000 to reflect the effect of certain of these
charges in the appropriate reporting period.

In August 2000, the Corporation's Board of Directors appointed a new chief
executive officer, T. Kevin Dunnigan. Dunnigan was previously the Corporation's
chairman and chief executive officer and spent 35 years with Thomas & Betts
before retiring from active management in 1997.

The scope of the underlying issues that required attention before Thomas &
Betts could achieve a sustainable improvement in earnings was extensive.
Strengthening the Corporation's leadership team was considered critical to
effectively manage the anticipated changes.

In October 2000, Thomas & Betts hired Dominic J. Pileggi as president of
the electrical products business. Pileggi formerly led the Corporation's
electrical business before leaving the Corporation in 1995.

In addition to changes made at the senior management level, Thomas & Betts
has enhanced the quality of its management team in all areas and at all levels
of its operations over the past 18 months. Early in the turnaround effort, as
the Corporation intensified its effort to reinforce controls and improve
processes, the corporate and divisional accounting leadership was

Page 18 of 87

strengthened. In June 2000, the Corporation hired a new corporate controller
and, in December 2000, hired a new controller for its largest division,
electrical products. In January 2001, Thomas & Betts restructured management of
the internal audit services and significantly strengthened the leadership and
staff of this function.

The new management team has pursued a focused and disciplined program to
comprehensively change the way Thomas & Betts manages and operates its
businesses.

WORKING CAPITAL IMPROVEMENTS

During the mid- to late-1990s, management of working capital was impeded
primarily because of the magnitude of Thomas & Betts' strategic initiatives, and
the lack of clear lines of responsibility inherent in the matrix management
structure. The Corporation also was disadvantaged by an overly complex pricing
structure in its largest business (electrical products sold in the U.S.) and
technical systems issues that adversely affected pricing and invoicing during
the fourth quarter 1999 and the beginning of 2000. These factors led to an
extensive backlog of outstanding customer payment deductions and credits that
required resolution before the Corporation could show significant improvement in
accounts receivable. Lacking sufficient internal resources to resolve this
backlog in a timely manner, in September 2000, Thomas & Betts retained a leading
consulting firm experienced in managing claims and collections to supplement its
accounts receivable staff.

In order to eliminate the cause of the accounts receivable backlog, Thomas
& Betts also initiated a multi-faceted project to analyze and revise processes
associated with its revenue cycle (pricing, quotations, order entry, ship from
stock and debit, returned goods and claims processing) in the first quarter
2001. By the time the project was completed in the fourth quarter 2001,
significant changes had been made to all of the business processes.

As a result of all of the initiatives related to accounts receivable,
Thomas & Betts has achieved a strong improvement in collections, a significant
decline in the number and rate of payment deductions taken by its customers, and
a significant reduction of its investment in accounts receivable. Since the end
of the second quarter 2000, the Corporation has reduced overall Days Sales
Outstanding by 43%.

Using a combination of internal resources and third-party consultants,
Thomas & Betts also undertook a thorough review of, and has comprehensively
revised, all facets of its global inventory management and control processes.
This initiative was completed in the second quarter 2001 and the Corporation
believes that inventory control has been substantially strengthened.

At year-end 2001, Thomas & Betts had reduced its investment in inventory by
approximately 42% compared to levels at the end of second quarter 2000, due
primarily to the Corporation's efforts to tightly manage its inventory in weak
market conditions and from divestitures and impairments.

The Corporation will continue to refine inventory management and believes
that it may achieve additional efficiencies as a result of the manufacturing
restructuring initiative currently underway. See "Manufacturing Strategy
Redirected."

MANAGEMENT STRUCTURE REVISED

Beginning in 1997, Thomas & Betts employed a complex matrix management
structure with business operations managed along three axes (market, product and
geographic) and functional responsibilities, such as legal, operations, finance
and human resources were centralized. The

Page 19 of 87

structure raised issues concerning lines of responsibility for profitability and
weakened the Corporation's ability to execute effectively. To support this
matrix structure, the Corporation utilized a complex allocation methodology for
financial budgeting, forecasting and reporting.

In August 2000, Thomas & Betts eliminated the matrix organizational
structure and replaced it with a fully integrated, market-driven, divisional
structure. Under this model, each business leader is responsible, and
accountable, for all manufacturing, engineering, marketing, business
development, and associated support activities for their business. They are also
responsible for managing working capital, with the support and guidance of
corporate resources.

To support the effectiveness of these changes, the Corporation's Management
Incentive Program was significantly revised to better align individual goals
with corporate strategies. Managing working capital is now a key performance
metric for the incentive compensation program.

Management believes that simplifying the management structure, and
eliminating the complex financial allocation system required to support it, has
also enhanced the Corporation's focus on financial and business performance.
Thomas & Betts continues to refine its financial budgeting, forecasting and
reporting processes to further improve such performance.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES REDUCED

The Corporation's focus on operating as a tightly managed, decentralized
organization with minimal corporate overhead has led to significant reductions
in operating expenses. Since initiating the turnaround program, Thomas & Betts
has reduced selling, general and administrative expenses (SG&A) as a percent of
sales from the mid-twenties to 21.7% for 2001. The Corporation's targeted goal
is to achieve SG&A expense as a percentage of annual sales at approximately 20%
or lower.

B2B E-COMMERCE STRATEGY REDIRECTED

In the mid- to late-1990s, Thomas & Betts also committed significant
resources to position itself as a leader in the then-emerging
business-to-business (B2B) e-commerce market. Given the dynamics of the
electrical industry, where distribution is the primary channel to market, this
strategy adversely affected the relationship of the Corporation with its
electrical distributor network. It also diverted valuable resources from the
day-to-day operations of the Corporation.

In August 2000, senior management positions associated with the B2B
strategy were eliminated and associated resources were redirected to complement
and more directly support the e-business needs of the Corporation's
distributors. An example of this support is T&B Access(R), a web-based service
that allows distributors to track order status and place emergency orders
outside normal business hours. T&B Access helps reduce transaction costs for
both the Corporation and its distributor customer base.

During 2001, Thomas & Betts continued to refine and enhance its information
systems to support changes in its business policies and procedures. The
Corporation believes that it has effective information management systems that
fully support its turnaround initiatives and overall management of its
businesses.

ACQUISITION ACTIVITY

During the mid- and late-1990s, the Corporation broadened its product
portfolio through acquisitions. Over five years, Thomas & Betts completed
approximately 30 acquisitions or

Page 20 of 87

mergers. The Corporation now believes that many product lines and facilities
acquired during this time period were not optimally integrated and others proved
to be non-strategic. Together with the transfer of many manufacturing operations
to low-cost areas, these activities led Thomas & Betts to record multiple
restructuring charges during the mid- and late-1990s.

The largest of these acquisitions, Augat Inc. in 1996, greatly expanded
Thomas & Betts' presence in the higher-growth electronics market. Over time, it
became evident that the significantly different competitive dynamics in the
electronics industry (where products are made to order for original equipment
manufacturers) did not leverage the Corporation's core manufacturing
competencies. In addition, consolidation in the electronics industry favored
larger and more established competitors than Thomas & Betts.

In July 2000, the Corporation sold its Electronics OEM business, which
included virtually all of the products acquired from Augat. This divestiture
effectively removed Thomas & Betts from the electronics industry and reduced
corporate revenues by approximately 30%.

Over the past 18 months or so, Thomas & Betts has divested or exited
several other smaller product lines that were not performing at an acceptable
level or did not complement the Corporation's core product portfolio. The
largest divestiture in 2001 was the sale of commercial lighting product lines
marketed under the American Electric(R) and Dark-to-Light(R) brand names. In
2001, the Corporation also divested its ground rod business and began to exit
the low-voltage circuit protection market.

For the foreseeable future, management expects to continue to focus on
achieving organic growth through enhanced marketing and research and development
in its electrical products business.

MANUFACTURING STRATEGY REDIRECTED

Thomas & Betts pursued a manufacturing strategy aimed at reducing costs by
moving production to areas with historically low labor costs. During the mid- to
late-1990s, the Corporation moved approximately 30 product lines or facilities
to new locations. In some cases, these manufacturing transfers affected the
Corporation's ability to service its distributors in a timely and cost-effective
manner. In 2000, despite these transfers, Thomas & Betts' manufacturing base
remained widely dispersed and structural costs remained high. A weakening global
economy contributed to high inventory levels during this period and into 2001.

Thomas & Betts addressed the issue of excess inventory by substantially
reducing production at virtually all of its electrical products facilities and
closing several smaller plants in the second half of 2000 and first half of
2001. Reducing production led to higher-than-normal unabsorbed fixed costs and
unfavorable manufacturing variances, which has adversely affected the
Corporation's performance since the second quarter of 2000.

In December 2001, Thomas & Betts announced a more comprehensive program to
streamline and consolidate electrical products manufacturing in the United
States, Europe and Mexico. The Corporation believes that restructuring these
manufacturing operations is critical to completing its return to profitability
within a reasonable time frame.

The manufacturing initiatives have three components: revising manufacturing
processes to improve equipment and labor productivity; consolidating
manufacturing capacity; and investing in tooling, equipment and training to
achieve superior levels of productivity. Thomas & Betts has retained an
internationally prominent manufacturing-consulting firm to assist with this
project.

Page 21 of 87

In 2001, Thomas & Betts began the process of closing 12 facilities and
implementing efficiency improvements in the remaining facilities affected by the
manufacturing project. Teams comprised of Thomas & Betts personnel and
consultants are comprehensively reviewing all manufacturing processes on a
plant-by-plant basis for opportunities to improve productivity and efficiency.
Examples of areas being addressed include operating standards, production
planning and reporting, operator and supervisor training, preventive maintenance
processes, and inventory forecasting and planning.

Thomas & Betts expects on-going pre-tax savings of approximately $45 to $50
million annually from the manufacturing restructuring program, which should be
substantially completed by the end of the third quarter 2002.

Pre-tax charges associated with the project will total approximately $80 to
$90 million. $49 million in charges were recorded in the fourth quarter 2001 and
the remaining $30 to $40 million in pre-tax charges are expected to be recorded
in 2002, primarily in the first half of the year.

Total cost of the project is expected to be $100 to $110 million, including
approximately $20 million for capitalized equipment and tooling. Approximately
1,600 jobs, or 15% of the Corporation's global workforce, are expected to be
eliminated.

Charges associated with the program include approximately $60 million in
cash costs with the remainder in non-cash costs. Cash costs are primarily for
severance, consulting fees, equipment moves and other exit costs. Non-cash costs
are largely for asset write-offs associated with the closing of facilities.

Thomas & Betts expects the net effect of the project to negatively impact
2002 pre-tax earnings by approximately $10 to $20 million, and to negatively
impact 2002 cash flow by $40 to $45 million. See "Business Risks" for the risks
related to the manufacturing project described above.

ELECTRICAL PRODUCTS BUSINESS REORGANIZED

Thomas & Betts has also taken action to address the performance of its
largest business, electrical products sold through distributors.

Specifically, the product management, sales and manufacturing operations of
the electrical business' commercial and industrial product groups have been
fully combined, eliminating managerial redundancies and reducing the number of
sales offices by over 50%. As a result, the sales and sales support staff has
been significantly reduced.

In the mid- to late-1990s, product management in the electrical business
focused on reducing product costs rather than on traditional product/brand
management activities such as pricing, competitive positioning, sales support,
and new product development. As a result, the Corporation did not fully leverage
the substantial brand equity of many of its leading products to help gain market
share and improve profits.

Late in the first quarter 2001, Thomas & Betts hired an experienced
executive to lead product management for the electrical business. The department
is now focused on the full complement of brand management activities.

In 2002, the electrical business strategically realigned many of its
marketing activities and shifted from promotions based on price to promotions
focused on strengthening the Corporation's

Page 22 of 87

relationships with the end users of its products: electricians, contractors and
MRO (maintenance, repair and operations) engineers.

PRODUCT ENGINEERING AND DEVELOPMENT ENHANCED

Throughout its 100+ year history, product engineering has consistently been
a strength of Thomas & Betts. However, during the late 1990s, the Corporation
largely redirected its engineering expertise toward other strategies, as
discussed above, rather than developing new products.

In 2001, Thomas & Betts began to rebuild its engineering capabilities with
a goal of increasing the percent of sales generated by new products over the
next few years. In the first quarter 2002, the electrical business hired a
former Thomas & Betts executive to lead its engineering and new product
development efforts.

During 2001, Thomas & Betts introduced innovative new product designs in
more than 30 product categories, expanding its presence in its core market
sectors and strengthening its market leadership position. A key goal of the
Corporation's R&D program is to develop new products that lower the cost of
installation for its end-user customers, particularly through the use of
automation.

ELECTRICAL PRODUCTS PRICING RE-ALIGNED

Thomas & Betts' electrical business operates in highly competitive markets.
The Corporation stocks thousands of products and has relationships with more
than 6,000 electrical and utility distributors, retail outlets and mass
merchandisers. Thomas & Betts uses a variety of promotional programs, including
volume-incentive discount programs and ship from stock and debit, to compete
effectively.

Over the past several years, however, Thomas & Betts moved away from highly
structured incentive or discount programs and increasingly allowed electrical
field sales personnel in the U.S. to offer price concessions on a per-product,
per-customer basis. This trend led to significant pricing complexity, which
inevitably gave rise to many of the customer invoice disputes discussed earlier
under "Working Capital Improvements."

In the third quarter of 2000, the authority to set prices was
re-established as a fundamental responsibility of the product management
function. In late 2000 and 2001, the Corporation simplified the volume-incentive
discount provision of its Signature Service(SM) preferred customer program to
enhance compliance and eliminate the practice of customer-specific pricing.

During 2001, Thomas & Betts took additional steps to manage pricing for its
electrical business in the United States more strategically. A task team was
created to analyze pricing and comprehensively revise and simplify the
Corporation's policies and procedures related to pricing. A new pricing schedule
was introduced to U.S.-based electrical distributors in the fourth quarter 2001
and the new prices took effect January 2, 2002. In addition, distributor
incentives continue to be revised to support a more profitable product mix.
Controls have been further enhanced to ensure compliance with the revised
incentive and pricing programs.

FREIGHT COSTS UNDER REVISION

Unusually high freight and distribution costs have also adversely affected
Thomas & Betts' performance over the past several years. The Corporation has
taken significant initial steps to reduce freight costs, including consolidating
customer shipments and revising freight policies

Page 23 of 87

incorporated in its Signature Service preferred customer program. Thomas & Betts
experienced a modest improvement in freight performance beginning in the second
half of 2001. The Corporation continues to examine ways to cost-effectively meet
distributors' expectations of more frequent and smaller quantity shipments.

SUMMARY OF RECENT HISTORY

Thomas & Betts believes that it has identified, and made substantial
progress in addressing, the majority of the issues that have adversely impacted
its performance over the past several years. The Corporation's shift to a
divisional management structure and its focus on strengthening the quality of
the management team have contributed significantly to the development of a
comprehensive plan to restore Thomas & Betts to a profitable and strategically
focused leadership position in its markets. The Corporation will continue to
execute against this plan throughout 2002.

2002 OUTLOOK

Since the new management team initiated the turnaround program
approximately 18 months ago, the Corporation has made extensive changes to the
way it manages and operates its businesses including significantly reducing
selling, general and administrative expenses, divesting or exiting product lines
not achieving acceptable returns, closing excess warehousing facilities,
consolidating certain manufacturing operations, revising U.S. electrical
products pricing structure, reorganizing its selling structure and promotional
strategies to improve product mix, and comprehensively overhauling working
capital.

These actions have significantly strengthened the Corporation's balance
sheet and have begun to positively affect its segment and net results.
Management expects to continue to realize the benefit of these changes on
earnings throughout 2002 and in subsequent years.

Assuming a reasonable recovery in general economic conditions in the second
half of the year, the Corporation's targeted goal is to achieve low double-digit
segment earnings in the fourth quarter of 2002. The Corporation expects first
quarter 2002 sales to be down 10% to 15% compared to the year-ago period,
excluding sales from previously divested product lines. First quarter 2002 net
results are expected to be approximately flat with the first quarter 2001,
excluding the costs associated with implementing the manufacturing initiatives.

Page 24 of 87

YEAR 2001 COMPARED WITH 2000

CONSOLIDATED RESULTS

- ---------------

(a) Results for 2000 have been restated for the change in inventory costing
method from LIFO to FIFO during 2001 for domestic and certain foreign
inventories.

NET SALES

The Corporation's net sales decreased approximately 15% to $1.5 billion in
2001 from $1.8 billion in 2000. The decrease is primarily due to lower sales
volume in its Electrical and Communications segments resulting from weak market
conditions. In addition, net sales for 2001 were also negatively impacted by
previous divestitures of product lines in both the Electrical and Communications
segments. Excluding revenues from previously divested product lines,
consolidated sales were down approximately 12% as compared to the prior year.

GROSS MARGIN

The gross margin percent for the year 2001 was 22.6% of net sales compared
with 16.5% in 2000. Gross margins in both periods have been negatively impacted
by unabsorbed manufacturing fixed costs associated with relatively low capacity
utilization. Gross margin for 2001 was also adversely impacted by $4 million in
fees for project consultants associated with the manufacturing efficiency and
consolidation initiatives. The 2001 to 2000 gross margin comparison is impacted
by the following:

- Year 2000 reflected increased provisions for accounts receivable.

- Year 2000 included elevated freight costs due to more expensive freight
expediting practices in place during part of 2000.

- Year 2000 included higher charges than 2001 for write-downs for
slow-moving, excess and obsolete inventory. The Corporation also recorded
an additional write-down in 2000 for specifically identifiable
slow-moving, excess and obsolete inventory primarily attributable to
divested product lines.

Page 25 of 87

- Year 2000 included further inventory write-downs totaling approximately
$24 million related to product lines considered to be non-strategic at
year end 2000 versus $3 million in 2001.

EXPENSES

Selling, general and administrative (SG&A) expenses were 21.7% of sales in
2001, versus 25.3% in 2000. The significant decreases were primarily in legal,
auditing and accounting fees and expenses; consulting and temporary service
costs; corporate severance expense; information technology expenses;
distribution expenses; and employee compensation from the employee headcount
reductions.

Research and development expense represented 1.4% and 1.3% of sales for
years 2001 and 2000, respectively. For 2002, the Corporation expects research
and development expense to remain relatively constant as a percentage of sales.

The Corporation recorded fourth quarter pre-tax charges of $49.1 million to
continuing operations for the manufacturing initiatives previously discussed. Of
the $49.1 million recorded, impairment charges totaled $30.0 million and
restructure charges totaled $11.7 million. The remaining charges were included
in cost of sales. The Corporation has begun the process of closing certain
facilities, primarily in the U.S., and implementing improvements in the
remaining facilities affected by the program. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Recent History."

The 2001 results also include $39.8 million in pre-tax charges on the sale
of the Corporation's American Electric and Dark-to-Light lighting product lines,
which closed in October 2001. These charges include $36.6 million for impairment
on long-lived assets, primarily goodwill, associated with these product lines.
Net proceeds of $24.5 million were received during 2001 from this sale.

During December 2001, management determined that certain product lines in
the Communication segment were non-strategic for the Corporation. Accordingly,
the inventories and long-lived assets for these product lines were reflected as
assets held for sale at their approximate net realizable value of $49.4 million
as of December 30, 2001. The 2001 results include pre-tax charges of $16.7
million in association with the impairment of long-lived assets of these product
lines.

During 2000, the Corporation recorded impairment charges of approximately
$33 million. Impairment charges totaled approximately $20 million for the
Electrical segment (primarily die cast fittings, circuit protection, electrical
enclosures product lines) and totaled approximately $13 million for the
Communications segment (primarily premise wiring product line).

INCOME FROM UNCONSOLIDATED COMPANIES

Income from unconsolidated companies includes equity income from the
Corporation's joint ventures and other equity investments. The reduction in 2001
reflects primarily lower domestic operating results related to these entities
due to weak market conditions. See also Note 14 in the Notes to the Consolidated
Financial Statements.

Page 26 of 87

INTEREST EXPENSE--NET

Interest expense-net includes interest income of $7.1 million in 2001 and
$8.2 million in 2000. The decrease in interest expense is due primarily to lower
debt levels during the current year as compared to the prior year.

OTHER EXPENSES (INCOME)--NET

Other expense (income)--net for 2001 includes expense of $27 million for
the settlement of a patent infringement lawsuit. Year 2000 includes $15 million
received from the favorable settlement of a trade secret and trade dress
infringement lawsuit, which was partially offset by losses of $3.3 million on
sale of receivables pursuant to an asset securitization program that was
terminated during 2000.

INCOME TAXES

The Corporation's 2001 and 2000 effective tax rates for continuing
operations are a benefit of (25.8)% and (28.4)%, respectively.

DISCONTINUED OPERATIONS

On July 2, 2000, the Corporation completed the sale of substantially all of
its Electronics OEM business for $750 million, subject to certain adjustments.
The Electronics OEM sale has been accounted for as a discontinued operation in
accordance with Accounting Principles Board Opinion No. 30. Accordingly, results
from continuing operations for the current and prior periods exclude the impact
of the Electronics OEM business. The net results for the current and prior
periods of the Electronics OEM business are reflected in earnings from, or gain
on sale of, discontinued operations. Subsequent to 2001, the Corporation reached
a settlement agreement which stipulates that Tyco Group S.A.R.L., the purchaser,
will retain $35 million held for post-closing adjustments on working capital and
long-term tangible assets. In the fourth quarter 2001, the Corporation recorded
an $8 million net-of-tax charge to gain on sale of discontinued operations to
reflect this settlement. See Note 4 in Notes to Consolidated Financial
Statements.

SEGMENT RESULTS

The Corporation evaluates its business segments on the basis of segment
earnings (loss), with segment earnings (loss) defined as earnings (loss) from
continuing operations before interest, taxes, asset impairments, restructuring
charges and certain other adjustments. Beginning in the first quarter 2001, the
Corporation began reporting its Steel Structures and HVAC businesses as separate
segments. These businesses were previously included in Other results.
Information for the prior period has been restated to conform to the new basis
of presentation.

Continuing operations losses for the Electrical and Communications segments
decreased by $110 million and $15 million, respectively, from the prior year.
Earnings for the Steel Structures segment increased $8 million while earnings
for the HVAC segment remained relatively flat.

ELECTRICAL

Sales for the Electrical segment decreased to $1.15 billion in 2001 from
$1.35 billion in 2000 due primarily to lower sales volumes resulting from weak
market conditions. Results for 2001 were adversely impacted by the continued
slow down in industrial and construction markets. In addition, the aggregate
adverse net sales impact on 2001 from divested product lines

Page 27 of 87

when compared to 2000 was approximately $47 million. Year 2001 segment loss was
$27.3 million as compared to segment loss of $137.4 million for 2000. The 2000
segment results were significantly impacted by charges taken in 2000 while 2001
segment results were positively impacted as the result of actions taken by
management to reduce manufacturing and SG&A expenses. Results in 2001 and 2000
were negatively impacted by unabsorbed manufacturing fixed costs associated with
relatively low capacity utilization previously mentioned plus deterioration in
its unconsolidated subsidiaries' performance.

STEEL STRUCTURES

Sales for the Steel Structures segment increased to $140.6 million in 2001
from $121.9 million in 2000. Earnings for the Steel Structures segment increased
from $10.2 million in 2000 to $18.2 million in 2001. Higher sales volumes for
2001 are due to added capacity and strong demand for infrastructure to support
power grids. The 2000 earnings were significantly impacted by charges taken in
that year while favorable product mix in 2001 boosted segment earnings.

COMMUNICATIONS

Sales for the Communications segment decreased to $108.1 million in 2001
from $178.4 million in 2000 largely as a result of the depressed domestic market
conditions in the cable TV (CATV) and telecom markets. Segment loss for 2001 was
$10.2 million as compared to $25.6 million for 2000. The 2000 results were
significantly impacted by charges taken in that year while 2001 segment results
were positively affected by efforts made to reduce manufacturing and SG&A
expenses to better match current demand levels.

HVAC

Sales for HVAC decreased to $98.5 million in 2001 from $106.9 million in
2000. Sales were adversely affected by reduced demand for made-to order products
due to soft construction markets. Segment earnings remained relatively flat at
$1.2 million and $1.5 million for 2001 and 2000, respectively.

YEAR 2000 COMPARED WITH 1999

Page 28 of 87

- ---------------

(a) Results for 2000 and 1999 have been restated for the change in inventory
costing method from LIFO to FIFO made during 2001 for domestic and certain
foreign inventories.

NET SALES

The Corporation's 2000 net sales decreased $117.6 million from 1999,
reflecting reduced sales volumes in its Electrical segment. The reduced
Electrical sales volumes were due to a number of factors including:

- Disruptions caused by the Corporation's implementation of a new pricing
and order processing system in late 1999, including a decline in demand
associated with customer discontent with the Corporation's impaired
ability to accurately process orders and, at times, from disruptions in
the Corporation's ability to fulfill orders on a timely basis.

- A decrease in traditional Electrical quarter-end promotional sales
incentives that in 1999 resulted in significantly larger sales volumes at
discounted sales prices.

- Certain excess inventories in the Electrical distribution channel as a
result of prior promotional practices no longer utilized by the
Corporation.

Sales for 2000 were also negatively impacted by the divestitures of product
lines in the Communications segment. The Corporation sold the Photon and
Broadband product lines in June 1999 and September 1999, respectively, which had
combined sales in 1999 of approximately $65 million prior to their divestiture.
In 2000, the Corporation sold the Telzon/ HDDX and Aster product lines in March
and November, respectively. The combined adverse net sales impact from the
divested product lines when compared to 1999 is approximately $75 million.

In 2000, net sales were negatively impacted by increased accounts
receivable provisions which were necessitated largely by the confusion and
disruption caused by the Corporation's implementation of a new order processing
system. After completion of the implementation of the new order processing
computer system in late 1999, the Corporation experienced significant
disruptions, which led to the Corporation's inability to execute an effective
collections process because of considerable uncertainty with customer billing.
The latter led to many customer payment deductions and an increase in aged
receivables.

GROSS MARGIN

The gross margin percent for the year 2000 was 16.5% of sales compared with
26.2% in 1999. The significantly lower gross margin in year 2000 reflects the
following:

- Lower sales volume, primarily in the Electrical segment, partially due to
the decrease in use of traditional promotional sales incentive programs,
and the distribution channel for the Corporation's products containing
high levels of Thomas & Betts product. See "Net Sales" discussion above.

- Increases in accounts receivable provisions.

- Lower net pricing primarily in the Electrical segment due to excessive
use of discounting, price and volume rebates and customer concessions.

- Higher manufacturing costs due to low capacity utilization. The
Corporation significantly cut back production in the second half of 2000,
when it became apparent the distribution

Page 29 of 87

channel for its products was full and it already had sufficient inventory
in its own facilities.

- Increased freight costs (approximately $18 million) due partially to more
expensive freight expediting practices.

- Increased write-downs for slow-moving, excess and obsolete inventory. The
Corporation recorded a write-down of approximately $22 million for excess
and obsolete inventory based on management's evaluation of current
inventory aging and usage and its new strategy to reduce levels of
slow-moving inventory. The Corporation also recorded an additional
write-down of approximately $12 million for specifically identifiable
slow-moving, excess and obsolete inventory primarily attributable to
divested product lines.

- Further inventory write-downs totaling approximately $24 million related
to product lines considered to be non-strategic at year end 2000.

EXPENSES

Selling, general and administrative (SG&A) expenses were 25.3% of sales in
2000, versus 19.1% in 1999. The significant increases were primarily in:

- Legal, auditing and accounting fees and expenses (approximately $24
million).

The increase reflects expenses related to ongoing litigation and
investigation of the Corporation's accounting practices by the Securities
and Exchange Commission, efforts to improve current business and
accounting processes and controls, enhanced collections process for
outstanding accounts receivable, and audit fees relating to the
restatement of the consolidated financial statements for 1996 through
1999.

- Information technology expenses (approximately $14 million).

The increase reflects efforts to stabilize and enhance existing global
order processing, finance, and human resources systems, as well as
support the decision to abandon certain B2B e-commerce initiatives
including writing off certain software.

- Distribution expenses (approximately $14 million).

The increase reflects inefficiencies in our warehousing operations as
well as expenses for third party warehousing capacity.

- Corporate severance expense (approximately $13 million).

SG&A expense was also high due in part to overhead levels which remained
following the sale of the Corporation's Electronics OEM business in the second
quarter of 2000.

Research and development expense remained relatively unchanged at 1.3% and
1.4% of sales for years 2000 and 1999, respectively.

Subsequent to its decision to sell the Electronics OEM business, the
Corporation's management re-evaluated the strategic importance of a number of
product lines and concluded that it would dispose of certain product lines by
sale or otherwise. The Corporation considered net cash flows, including the
expected proceeds from the sale of assets of those product lines, and as a
result, recorded an impairment charge of approximately $33 million during 2000.
Impairment charges totaled approximately $20 million for the Electrical segment
(primarily die cast fittings, circuit protection, electrical enclosures product
lines) and totaled approximately $13 million for the Communications segment
(primarily premise wiring product line).

Page 30 of 87

INCOME FROM UNCONSOLIDATED COMPANIES

Income from unconsolidated companies includes equity income from the
Corporation's joint ventures and other equity investments. Year 2000 reflects
lower domestic operating results related to those entities.

INTEREST EXPENSE--NET

Interest expense-net includes interest income of $8.2 million in 2000 and
$7.0 million in 1999. The increase in interest income is due primarily to
increased earnings on a portion of the proceeds from the sale of the Electronics
OEM business. Gross interest expense attributable to continuing operations in
2000 increased 4.4% from the prior year in part due to higher interest rates on
floating-rate debt experienced in 2000. Resulting net interest expense in 2000
remained relatively flat compared with 1999.

OTHER EXPENSE (INCOME)--NET

Other expense (income)--net for 2000 includes $15 million received from the
settlement of a trade secret and trade dress infringement lawsuit, which was
partially offset by losses on sale of receivables pursuant to an asset
securitization program that was terminated during 2000, and losses on sales of
certain fixed assets. In 1999, the Corporation received $16 million as a result
of a termination fee related to a proposed acquisition that more than offset
related transaction costs and losses on sale of receivables under the
Corporation's asset securitization program.

INCOME TAXES

The Corporation's 2000 effective tax rate for continuing operations is a
benefit of (28.4)%. The 1999 effective tax rate for continuing operations is a
benefit of (35.5)% and reflected a $30.7 million reduction in the tax provision
from approval of tax refund claims and completion of prior year tax audits,
which was not repeated in 2000.

DISCONTINUED OPERATIONS

On July 2, 2000, the Corporation completed the sale of substantially all of
its previous Electronics OEM business for $750 million, subject to certain
adjustments. The Electronics OEM sale was accounted for as a discontinued
operation in accordance with Accounting Principles Board Opinion No. 30.
Accordingly, results from continuing operations for 2000 and 1999 exclude the
impact of the Electronics OEM business. The net results for 2000 and 1999 of the
Electronics OEM business are reflected in earnings from, or gain on the sale of,
discontinued operations. See Note 4 in the Notes to Consolidated Financial
Statements.

SEGMENT RESULTS

The Electrical segment loss from continuing operations was $137.4 million
for 2000 as compared to segment earnings of $107.0 million for 1999. Segment
earnings for Steel Structures for 2000 were $10.2 million as compared to $15.0
million for 1999. Communications segment loss from continuing operations for
2000 was $25.6 million as compared to $9.3 million for 1999. The HVAC segment
earnings for 2000 were $1.5 million as compared to $7.0 million for 1999.

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ELECTRICAL

Sales for the Electrical segment decreased in 2000, to $1.35 billion. Sales
during 2000 reflect the negative impact of an increase in the historical level
of receivable provisions combined with the negative impact during the last half
of the year of a decrease in traditional Electrical quarter-end promotional
sales incentives that in the prior year resulted in significantly larger volumes
at discounted sales prices. Additionally, these prior promotional sales
incentives resulted in excessive inventory in the distributor channel during
2000. Sales for the Electrical segment were positively impacted by the
acquisitions of Shamrock Conduit Products, Inc. and L. E. Mason Co. in late
1999.

STEEL STRUCTURES

Sales for the Steel Structures segment increased to $121.9 million in 2000
from $116.0 million in 1999 due in part to the Corporation becoming an exclusive
supplier to certain Steel Structure customers in 2000.

COMMUNICATIONS

Sales for the Communications segment decreased in 2000, to $178.4 million.
Sales were negatively impacted when the Corporation sold the Photon and
Broadband product lines in June 1999 and September 1999, respectively, which had
combined sales in 1999 of approximately $65 million prior to their divestiture.
In the year 2000, the Corporation sold the Telzon/HDDX and Aster product lines
in March and November, respectively. The combined adverse net sales impact from
the divested product lines when compared to 1999 is approximately $75 million.

HVAC

Sales for the HVAC segment remained relatively unchanged at $106.9 million
for 2000 as compared to $104.1 million for 1999.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements contained in this Report requires
the use of estimates and assumptions to determine certain amounts reported as
net sales, costs, expenses, assets or liabilities and certain amounts disclosed
as contingent assets or liabilities. There can be no assurance that actual
results will not differ from those estimates or assumptions. The Corporation's
significant accounting policies are described in Note 1 of the Notes to
Consolidated Financial Statements. Management believes the Corporation's most
critical accounting policies include: Revenue Recognition; Inventory Valuation;
Impairment of Long-Lived Assets; Income Taxes; and Environmental Costs.

- Revenue Recognition: The Corporation recognizes revenue in accordance
with the Securities and Exchange Commission's Staff Accounting Bulletin
No. 101. The Corporation recognizes revenue when finished products are
shipped to unaffiliated customers and both title and risks of ownership
are transferred. Sales discounts, quantity and price rebates, allowances
and warranty costs are estimated based on contractual commitments and
experience and recorded in the period in which the sale is recognized.
Certain customers have the right to return goods under certain
circumstances and those returns, which are reasonably estimable, are
accrued at the time of shipment. Management analyzes historical returns
and allowances, current economic trends and

Page 32 of 87

specific customer circumstances when evaluating the adequacy of accounts
receivable related reserves and accruals.

- Inventory Valuation: The Corporation periodically evaluates the carrying
value of its inventories to ensure they are carried at the lower of cost
or market. Such evaluation is based on management's judgement and use of
estimates. Such estimates incorporate inventory quantities on-hand, sales
forecasts for particular product groupings, planned dispositions of
product lines and overall industry trends.

- Impairment of Long-Lived Assets: The Corporation follows the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." SFAS No. 121 establishes accounting standards
for the impairment of long-lived assets such as property, plant and
equipment, certain identifiable intangibles and goodwill. For purposes of
recognizing and measuring impairment of long-lived assets, the
Corporation evaluates assets for associated product groups. The
Corporation reviews long-lived assets to be held and used for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable. If the sum of the
undiscounted expected future cash flows is less than the carrying amount
of the assets, the assets are considered to be impaired. Impairment
losses are measured as the amount by which the carrying amount of the
assets exceeds the fair value of the assets. When fair values are not
available, the Corporation estimates fair value using the expected future
cash flows discounted at a rate commensurate with the risks associated
with the recovery of the assets. Assets to be disposed of are reported at
the lower of carrying amount or fair value less costs to sell. See
"Recently Issued Accounting Statements" for a description of SFAS No.
142, "Goodwill and Other Intangible Assets" and SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets." The Corporation
will be required to implement these new accounting standards during 2002.
The Corporation has not determined the impact from the adoption of these
standards.

- 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 book and tax bases of
assets and liabilities and provides a valuation allowance based on a
more-likely-than-not criteria. The Corporation has valuation allowances
for deferred tax assets primarily associated with operating loss
carryforwards, tax credit carryforwards and deferred state income tax
assets. Realization of the deferred tax assets is dependent upon the
Corporation's ability to generate sufficient future taxable income and,
if necessary, execution of its tax planning strategies. Management
believes that it is more-likely-than-not that future taxable income,
based on enacted tax law in effect as of December 30, 2001, will be
sufficient to realize the recorded deferred tax assets net of existing
valuation allowances. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax
planning strategies, which involve estimates and uncertainties, in making
this assessment. Tax planning strategies include primarily sales of
non-core assets. Projected future taxable income is based on management's
forecast of the operating results of the Corporation. Management
periodically reviews such forecasts in comparison with actual results and
expected trends. In the event management determines that sufficient
future taxable income, in light of tax planning strategies, may not be
generated to fully realize net deferred tax assets, the Corporation will
increase valuation allowances by a charge to income tax expense in the
period of such determination.

Page 33 of 87

During March 2002, the U.S. Congress enacted and the President signed The
Job Creation and Worker Assistance Act of 2002 ("2002 Act"). The 2002 Act
increased the two year carryback period to five years for net operating
losses arising in tax years ending in 2001 and 2002. Management is
currently assessing the impact the 2002 Act will have on the realization
of deferred tax assets, the income tax provision and potential refund
claims.

- 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 current available facts
related to each site.

LIQUIDITY AND CAPITAL RESOURCES

The Corporation's cash and cash equivalents increased to $234.8 million at
December 30, 2001, from $207.3 million at December 31, 2000. The increase
resulted primarily from $105.9 million provided by operating activities which
was reduced by $4.2 million used in investing activities, $71.2 million used in
financing activities and $3 million related to the effect of exchange rate
changes on cash.

OPERATING ACTIVITIES

Operating activities provided cash of $105.9 million in 2001. This compares
to cash used by operating activities of $248.3 million in 2000 and cash provided
by operating activities of $64.8 million in 1999.

Working capital as of December 30, 2001 was $414.6 million compared with
$547.2 million as of December 31, 2000. Net receivables were lower at December
30, 2001 than the previous year by $137.5 million due primarily to improved cash
collections and lower sales volume. The Corporation's inventory levels as of
year-end 2001 were $104.7 million lower than at year-end 2000, due primarily to
the Corporation's efforts to tightly manage its inventory in weak market
conditions and from divestitures and impairments.

INVESTING ACTIVITIES

Capital expenditures for 2001 totaled $39.0 million, down significantly
from $69.4 million for 2000, due to planned lower expenditures for 2001. During
2001, the Corporation reviewed and revised its capital appropriations processes
and enhanced controls associated with authorization and procurement. The
Corporation intends to continue to tightly manage capital expenditures. For the
year 2002, capital expenditures, including expenditures associated with the
Electrical segment's manufacturing efficiency and consolidation initiatives, are
projected to be approximately $55 million. The Corporation expects the net
effect of the manufacturing and consolidation initiatives to negatively impact
2002 cash flows by $40 to $45 million, including approximately $20 million in
capitalized equipment and tooling.

The Corporation received net proceeds of $30.5 million during 2001 from
divestitures of product lines. During the third quarter of 2001, the Corporation
sold its American Electric and Dark-to-Light lighting product lines. The
Corporation received $24.5 million in net proceeds and retained accounts
receivable related to these product lines. The remaining proceeds from product

Page 34 of 87

line divestitures relate to the February 2001 sale of the Corporation's copper
and zinc ground rods product line.

During 2000, the Corporation completed the sale of substantially all of its
previous Electronics OEM business for $750 million in cash, subject to
adjustment, with $50 million of the proceeds deferred. The cash purchase price
was reduced by approximately $14 million for debt assumed by Tyco. During the
third quarter of 2000, $15 million of withheld proceeds were released to the
Corporation. Subsequent to 2001, the Corporation reached a settlement agreement
which stipulates that Tyco will retain the remaining $35 million of proceeds
held for post closing adjustments on working capital and long-term assets. In
the fourth quarter 2001, the Corporation recorded an $8 million net-of-tax
charge to gain on sale of discontinued operations to reflect the settlement.

Also, during 2000, the Corporation purchased one product line for $1.8
million and received $22.1 million from the sale of other product lines.

In 1999, the Corporation received $16.4 million from the sale of product
lines and 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.

FINANCING ACTIVITIES

Net debt (total debt net of all cash, cash equivalents and marketable
securities) decreased approximately $44 million in 2001.

Year-end debt decreased $263.6 million in 2000, primarily reflecting the
use of a portion of the Electronics OEM sale proceeds to reduce debt. During
2000, the Corporation used its debt facilities to purchase a total of $177.1
million of receivables sold under the Corporation's previous asset
securitization program.

Credit Facilities

In the normal course of its business activities, the Corporation is
required under certain contracts to provide letters of credit that may be drawn
upon in the event the Corporation fails to perform under the contracts. The
availability under the credit agreements is reduced by the amount of outstanding
letters of credit. Outstanding letters of credit amounted to $38.7 million at
December 30, 2001 and $40.1 million at December 31, 2000.

The Corporation has a $100 million committed revolving credit facility with
a bank group which is secured by, among other things, inventory and equipment
located in the United States. Availability under the facility as of December 30,
2001 was $61 million before considering outstanding letters of credit. This
credit facility is subject to, among other things, limitations on equipment
disposals, additional debt, liens and movement of equipment, and minimum
liquidity requirements. There were no borrowings outstanding under this facility
as of December 30, 2001. Any committed borrowings outstanding as of November
2003, would mature on that date.

The Corporation has a committed revolving credit facility with a Canadian
bank which had availability as of December 30, 2001 of approximately C$30
million (approximately US$19 million as of December 30, 2001). This facility is
secured by inventory and accounts receivable located in Canada. This facility
matures in March 2004. There were no borrowings outstanding as of December 30,
2001.

Page 35 of 87

The Corporation has the option, at the time of drawing funds under either
of the facilities discussed above, of selecting an interest rate based on a
number of benchmarks including LIBOR, the federal funds rate, or the prime rate
of the agent bank.

The credit facilities contain standard covenants restricting the payment of
dividends, investments, liens, debt and dispositions of collateral. Also
included are financial covenants regarding minimum liquidity and capital
expenditures. The credit facilities contain standard events of default such as
covenant default and cross-default. The Corporation is in compliance with all
covenants or other requirements set forth in its credit agreements. Further, the
Corporation does not have any rating downgrade triggers that would accelerate
the maturity dates of its debt. However, a downgrade in the Corporation's credit
rating could adversely affect the Corporation's ability to renew existing, or
obtain access to new, credit facilities in the future and could increase the
cost of such facilities.

Off-Balance Sheet Program

In September 2001, the Corporation established an asset-securitization
program. The program permits the Corporation to continually sell accounts
receivable through September 21, 2002, to a maximum of $120 million as needed as
a source of liquidity. As of December 30, 2001, availability under this facility
was approximately $56 million. The amount of accounts receivable sold from time
to time depends on the level of eligible accounts receivable and restrictions on
concentrations of receivables. At December 30, 2001, no receivables have been
sold under this program.

During 2000, the Corporation had an asset securitization program which
permitted the Corporation to continually sell accounts receivable to a maximum
of $200 million. As of January 2, 2000, sold accounts receivable totaling $177.1
million were reflected as reductions of the receivables balance in the
accompanying consolidated balance sheet. All such sold receivables were
subsequently purchased by the Corporation during 2000 and this program was
terminated.

Except for the asset securitization programs described in the preceding
paragraphs, at December 30, 2001 and December 31, 2000, the Corporation did not
have any other relationships with unconsolidated entities or financial
partnerships (often referred to as structured finance or special purpose
entities) which were established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes. As such,
the Corporation is not materially exposed to any financing, liquidity, market or
credit risk that could arise if the Corporation had engaged in such
relationships.

Debt Securities

The Corporation had the following senior debt securities outstanding as of
December 30, 2001:

Page 36 of 87

The Corporation has a medium-term note program for issuance of debt
securities due nine months or more from date of issue. The Corporation had the
following debt securities outstanding under its medium-term note program as of
December 30, 2001:

The indentures underlying the debt securities contain standard covenants
such as restrictions on mergers, liens on certain property, sale-leaseback of
certain property and funded debt for certain subsidiaries. The indentures also
include standard events of default such as covenant default and
cross-acceleration. The Corporation is in compliance with all covenants and
other requirements set forth in the indentures.

The net proceeds from the sale of these senior unsecured debt securities
were used for general corporate purposes including capital expenditures and
repayment of outstanding indebtedness (including commercial paper issued for
working capital purposes).

The Corporation maintains a commercial paper program. The commercial paper
market is not currently available to the Corporation on acceptable terms or
rates. There was no commercial paper outstanding as of December 30, 2001.

Contractual Obligations

The following table reflects the Corporation's total contractual cash
obligations as of December 30, 2001.

Other

Total dividends paid to shareholders were $48.8 million, $64.9 million and
$64.9 million in 2001, 2000 and 1999, respectively. On July 24, 2001, the
Corporation's Board of Directors approved a change in the Corporation's current
dividend payment practices and elected to retain its future earnings to fund the
development and growth of its business. The Corporation does not presently
anticipate declaring any cash dividends on the Corporation's common stock in the
foreseeable future. Future decisions concerning the payment of cash dividends on
the Corporation's common stock will depend upon its results of operations,
financial condition, capital expenditure plans and other factors that the Board
of Directors may consider relevant. The Corporation's revolving credit
agreements contain provisions that co