UNITED STATES
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended June 30, 2002. | ||
| or | ||
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o
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TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to | ||
Commission file number 1-4682
Thomas & Betts Corporation
| Tennessee | 22-1326940 | |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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| 8155 T&B Boulevard, Memphis, Tennessee | 38125 | |
| (Address of principal executive offices) | (Zip Code) | |
(901) 252-8000
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 þ No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Outstanding | ||||
| Shares | ||||
| at August 9, | ||||
| Title of Each Class | 2002 | |||
| Common Stock, $.10 par value | 58,298,434 | |||
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
| Page | |||||||
| PART I. FINANCIAL INFORMATION | |||||||
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ITEM 1.
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Financial Statements:
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||||||
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Condensed Consolidated Statements of Operations
for the Quarters and Six Months Ended June 30, 2002 and
July 1, 2001
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2 | ||||||
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Condensed Consolidated Balance Sheets as of
June 30, 2002 and December 30, 2001
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3 | ||||||
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Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2002 and July 1, 2001
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4 | ||||||
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Notes to Condensed Consolidated Financial
Statements
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5 | ||||||
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ITEM 2.
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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
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15 | |||||
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ITEM 3.
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Quantitative and Qualitative Disclosures About
Market Risk
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24 | |||||
| PART II. OTHER INFORMATION | |||||||
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ITEM 1.
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Legal Proceedings
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24 | |||||
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ITEM 4.
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Submission of Matters to a Vote of Security
Holders
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25 | |||||
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ITEM 5.
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Other Information
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25 | |||||
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ITEM 6.
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Exhibits and Reports on Form 8-K
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25 | |||||
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
| Quarter Ended | Six Months Ended | ||||||||||||||||
| June 30, | July 1, | June 30, | July 1, | ||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
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Net sales
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$ | 341,279 | $ | 385,444 | $ | 683,330 | $ | 782,392 | |||||||||
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Cost of sales
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263,780 | 292,112 | 522,052 | 597,175 | |||||||||||||
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Gross margin
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77,499 | 93,332 | 161,278 | 185,217 | |||||||||||||
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Selling, general and administrative
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73,809 | 88,577 | 146,405 | 181,607 | |||||||||||||
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Provision — restructured operations
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361 | — | 1,626 | — | |||||||||||||
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Earnings from operations
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3,329 | 4,755 | 13,247 | 3,610 | |||||||||||||
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Income from unconsolidated companies
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398 | 245 | 1,100 | 3,679 | |||||||||||||
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Interest expense — net
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(7,581 | ) | (10,529 | ) | (18,480 | ) | (20,498 | ) | |||||||||
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Other (expense) income — net
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1,200 | (2,246 | ) | 441 | (1,763 | ) | |||||||||||
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Loss before income taxes
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(2,654 | ) | (7,775 | ) | (3,692 | ) | (14,972 | ) | |||||||||
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Income tax provision (benefit)
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(3,023 | ) | (2,410 | ) | 7,586 | (4,641 | ) | ||||||||||
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Net income (loss) before cumulative effect of an
accounting change
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369 | (5,365 | ) | (11,278 | ) | (10,331 | ) | ||||||||||
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Cumulative effect of an accounting change
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— | — | (44,815 | ) | — | ||||||||||||
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Net earnings (loss)
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$ | 369 | $ | (5,365 | ) | $ | (56,093 | ) | $ | (10,331 | ) | ||||||
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Basic earnings(loss) per share:
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Net earnings (loss) before cumulative effect of
an accounting change
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$ | 0.01 | $ | (0.09 | ) | $ | (0.19 | ) | $ | (0.18 | ) | ||||||
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Cumulative effect of an accounting change
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— | — | (0.77 | ) | — | ||||||||||||
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Net earnings (loss)
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$ | 0.01 | $ | (0.09 | ) | $ | (0.96 | ) | $ | (0.18 | ) | ||||||
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Diluted earnings (loss) per share:
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Net earnings (loss) before cumulative effect of
an accounting change
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$ | 0.01 | $ | (0.09 | ) | $ | (0.19 | ) | $ | (0.18 | ) | ||||||
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Cumulative effect of an accounting change
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— | — | (0.77 | ) | — | ||||||||||||
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Net earnings (loss)
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$ | 0.01 | $ | (0.09 | ) | $ | (0.96 | ) | $ | (0.18 | ) | ||||||
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Average shares outstanding:
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Basic
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58,292 | 58,149 | 58,253 | 58,086 | |||||||||||||
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Diluted
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58,459 | 58,149 | 58,253 | 58,086 | |||||||||||||
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
2
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
| June 30, | December 30, | |||||||||
| 2002 | 2001 | |||||||||
| ASSETS | ||||||||||
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Current Assets
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Cash and cash equivalents
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$ | 205,574 | $ | 234,843 | ||||||
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Marketable securities
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48,433 | 6,982 | ||||||||
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Receivables — net
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195,141 | 188,160 | ||||||||
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Inventories:
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Finished goods
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92,034 | 103,450 | ||||||||
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Work-in-process
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25,188 | 23,839 | ||||||||
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Raw materials
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68,960 | 64,790 | ||||||||
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Total inventories
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186,182 | 192,079 | ||||||||
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Deferred income taxes
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72,615 | 79,821 | ||||||||
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Income tax receivables
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19,127 | 5,779 | ||||||||
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Prepaid expenses
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11,751 | 13,222 | ||||||||
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Assets held for sale
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43,416 | 49,417 | ||||||||
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Total Current Assets
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782,239 | 770,303 | ||||||||
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Property, plant and equipment
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694,408 | 690,319 | ||||||||
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Less accumulated depreciation
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(394,117 | ) | (381,239 | ) | ||||||
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Net property, plant and equipment
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300,291 | 309,080 | ||||||||
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Goodwill — net
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434,035 | 473,871 | ||||||||
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Investments in unconsolidated companies
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121,301 | 121,735 | ||||||||
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Deferred income taxes
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2,119 | 50,148 | ||||||||
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Other assets
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31,044 | 36,473 | ||||||||
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Total Assets
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$ | 1,671,029 | $ | 1,761,610 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
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Current Liabilities
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Current maturities of long-term debt
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$ | 110,742 | $ | 54,002 | ||||||
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Accounts payable
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125,451 | 120,688 | ||||||||
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Accrued liabilities
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127,760 | 176,959 | ||||||||
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Income taxes payable
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5,629 | 4,060 | ||||||||
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Total Current Liabilities
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369,582 | 355,709 | ||||||||
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Long-Term Liabilities
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Long-term debt
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557,807 | 618,035 | ||||||||
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Other long-term liabilities
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104,364 | 104,581 | ||||||||
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Shareholders’ Equity
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Common stock
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5,830 | 5,816 | ||||||||
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Additional paid-in capital
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342,911 | 340,265 | ||||||||
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Retained earnings
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391,109 | 447,202 | ||||||||
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Unearned compensation-restricted stock
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(4,073 | ) | (2,831 | ) | ||||||
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Accumulated other comprehensive income
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(96,501 | ) | (107,167 | ) | ||||||
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Total Shareholders’ Equity
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639,276 | 683,285 | ||||||||
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Total Liabilities and Shareholders’ Equity
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$ | 1,671,029 | $ | 1,761,610 | ||||||
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
3
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
| Six Months Ended | ||||||||||
| June 30, | July 1, | |||||||||
| 2002 | 2001 | |||||||||
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Cash Flows from Operating Activities:
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Net loss
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$ | (56,093 | ) | $ | (10,331 | ) | ||||
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Cumulative effect of an accounting change
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44,815 | — | ||||||||
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Net loss before cumulative effective of an
accounting change
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(11,278 | ) | (10,331 | ) | ||||||
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Adjustments:
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Depreciation and amortization
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26,269 | 40,923 | ||||||||
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Provision — restructured operations
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1,626 | — | ||||||||
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Undistributed earnings from unconsolidated
companies
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(1,100 | ) | (3,679 | ) | ||||||
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Mark-to-market adjustment for derivative
instruments
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(981 | ) | 1,726 | |||||||
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(Gain) loss on sale of property, plant and
equipment
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(998 | ) | 98 | |||||||
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Deferred income taxes
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55,058 | 37,021 | ||||||||
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Changes in operating assets and
liabilities — net:
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Receivables
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(2,060 | ) | 58,457 | |||||||
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Inventories
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15,533 | 11,742 | ||||||||
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Accounts payable
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2,707 | (17,411 | ) | |||||||
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Accrued liabilities
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(31,559 | ) | (28,980 | ) | ||||||
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Accrued litigation
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(20,000 | ) | — | |||||||
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Income taxes payable (receivable)
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(11,796 | ) | (55,886 | ) | ||||||
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Other
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5,060 | (32 | ) | |||||||
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Net cash provided by operating activities
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26,481 | 33,648 | ||||||||
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Cash Flows from Investing Activities:
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Purchases of property, plant and equipment
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(11,903 | ) | (19,319 | ) | ||||||
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Proceeds from sale of property, plant and
equipment
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1,726 | — | ||||||||
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Proceeds from divestitures of businesses
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— | 6,000 | ||||||||
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Marketable securities acquired
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(43,275 | ) | — | |||||||
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Proceeds from matured marketable securities
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1,976 | 750 | ||||||||
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Net cash used in investing activities
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(51,476 | ) | (12,569 | ) | ||||||
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Cash Flows from Financing Activities:
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Decrease in borrowings with original maturities
less than 90 days
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— | (16,347 | ) | |||||||
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Repayment of long-term debt and other borrowings
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(7,976 | ) | (4,142 | ) | ||||||
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Stock options exercised
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248 | — | ||||||||
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Cash dividends paid
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— | (32,484 | ) | |||||||
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Net cash used in financing activities
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(7,728 | ) | (52,973 | ) | ||||||
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Effect of exchange-rate changes on cash
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3,454 | (2,189 | ) | |||||||
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Net decrease in cash and cash equivalents
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(29,269 | ) | (34,083 | ) | ||||||
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Cash and cash equivalents — beginning
of period
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234,843 | 207,331 | ||||||||
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Cash and cash equivalents — end of
period
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$ | 205,574 | $ | 173,248 | ||||||
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Cash payments for interest
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$ | 23,488 | $ | 24,324 | ||||||
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Cash payments (refunds) for income taxes
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$ | (39,400 | ) | $ | 14,903 | |||||
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
4
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
1. Basis of Presentation
In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for the fair presentation of the financial position as of June 30, 2002 and December 30, 2001 and the results of operations and cash flows for the periods ended June 30, 2002 and July 1, 2001.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the fiscal period ended December 30, 2001. The results of operations for the periods ended June 30, 2002 and July 1, 2001 are not necessarily indicative of the operating results for the full year.
Certain reclassifications have been made to prior periods to conform to the current year presentation (See Note 13).
2. Recently Issued Accounting Standards
In June 2001, the FASB issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. SFAS No. 142 establishes new guidelines for accounting for goodwill and other intangible assets. In accordance with SFAS No. 142, goodwill and intangible assets with indefinite lives are not amortized, but must be tested for impairment at least annually. The impact of adopting SFAS No. 141 was not material. See Note 5 related to the adoption of SFAS No. 142.
In July 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The impact of adopting SFAS No. 143 is not expected to be material.
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 broadens the presentation of discontinued operations to include more transactions and eliminates the need to accrue for future operating losses. Additionally, SFAS No. 144 prohibits the retroactive classification of assets as h