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 September 28, 2003. | ||
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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) 252-5000
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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 | ||||
| Title of Each Class | at November 3, 2003 | |||
| Common Stock, $.10 par value | 58,466,122 | |||
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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Condensed Consolidated Statements of Operations
for the Quarters and Nine Months Ended September 28, 2003
and September 29, 2002
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2 | ||||||
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Condensed Consolidated Balance Sheets as of
September 28, 2003 and December 29, 2002
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3 | ||||||
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Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 28, 2003 and
September 29, 2002
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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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16 | |||||
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ITEM 3.
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Quantitative and Qualitative Disclosures About
Market Risk
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26 | |||||
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ITEM 4.
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Controls and Procedures
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27 | |||||
| PART II. OTHER INFORMATION | |||||||
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ITEM 1.
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Legal Proceedings
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27 | |||||
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ITEM 5.
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Other Information
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28 | |||||
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ITEM 6.
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Exhibits and Reports on Form 8-K
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28 | |||||
| Signature | 29 | ||||||
| Exhibit Index | 30 | ||||||
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
| Quarter Ended | Nine Months Ended | ||||||||||||||||
| September 28, | September 29, | September 28, | September 29, | ||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
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Net sales
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$ | 338,691 | $ | 327,469 | $ | 972,834 | $ | 1,010,799 | |||||||||
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Cost of sales
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254,172 | 245,704 | 719,760 | 767,756 | |||||||||||||
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Gross margin
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84,519 | 81,765 | 253,074 | 243,043 | |||||||||||||
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Selling, general and administrative
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66,950 | 68,342 | 208,500 | 214,747 | |||||||||||||
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Provision (recovery) — restructured
operations
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— | 59 | — | 1,685 | |||||||||||||
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Earnings from operations
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17,569 | 13,364 | 44,574 | 26,611 | |||||||||||||
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Income from unconsolidated companies
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441 | 936 | 1,853 | 2,036 | |||||||||||||
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Interest expense — net
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(9,682 | ) | (10,216 | ) | (27,101 | ) | (28,696 | ) | |||||||||
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Other (expense) income — net
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7,771 | (19,472 | ) | 7,400 | (19,031 | ) | |||||||||||
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Earnings (loss) before income taxes
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16,099 | (15,388 | ) | 26,726 | (19,080 | ) | |||||||||||
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Income tax provision (benefit)
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4,347 | (4,771 | ) | 3,216 | 2,815 | ||||||||||||
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Net earnings (loss) before cumulative effect of
an accounting change
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11,752 | (10,617 | ) | 23,510 | (21,895 | ) | |||||||||||
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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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$ | 11,752 | $ | (10,617 | ) | $ | 23,510 | $ | (66,710 | ) | |||||||
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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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$ | 0.20 | $ | (0.18 | ) | $ | 0.40 | $ | (0.37 | ) | |||||||
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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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$ | 0.20 | $ | (0.18 | ) | $ | 0.40 | $ | (1.14 | ) | |||||||
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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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$ | 0.20 | $ | (0.18 | ) | $ | 0.40 | $ | (0.37 | ) | |||||||
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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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$ | 0.20 | $ | (0.18 | ) | $ | 0.40 | $ | (1.14 | ) | |||||||
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Average shares outstanding:
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Basic
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58,466 | 58,298 | 58,428 | 58,266 | |||||||||||||
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Diluted
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58,473 | 58,298 | 58,433 | 58,266 | |||||||||||||
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
2
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
| September 28, | December 29, | |||||||||
| 2003 | 2002 | |||||||||
| ASSETS | ||||||||||
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Current Assets
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Cash and cash equivalents
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$ | 305,805 | $ | 177,994 | ||||||
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Marketable securities
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21,979 | 65,863 | ||||||||
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Receivables — net
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197,530 | 161,091 | ||||||||
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Inventories:
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Finished goods
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96,284 | 90,325 | ||||||||
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Work-in-process
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30,776 | 22,059 | ||||||||
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Raw materials
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64,409 | 69,898 | ||||||||
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Total inventories
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191,469 | 182,282 | ||||||||
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Deferred income taxes
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62,138 | 64,423 | ||||||||
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Prepaid expenses
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8,500 | 12,895 | ||||||||
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Assets held for sale
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— | 40,383 | ||||||||
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Total Current Assets
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787,421 | 704,931 | ||||||||
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Property, plant and equipment
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Land
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15,655 | 14,447 | ||||||||
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Buildings
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170,636 | 150,815 | ||||||||
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Machinery & equipment
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589,321 | 509,839 | ||||||||
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Construction-in-progress
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13,687 | 9,601 | ||||||||
| 789,299 | 684,702 | |||||||||
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Less accumulated depreciation
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(483,980 | ) | (397,287 | ) | ||||||
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Net property, plant and equipment
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305,319 | 287,415 | ||||||||
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Goodwill — net
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447,804 | 437,175 | ||||||||
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Investments in unconsolidated companies
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121,588 | 121,575 | ||||||||
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Deferred income taxes
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47,794 | 36,414 | ||||||||
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Other assets
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36,234 | 32,246 | ||||||||
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Total Assets
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$ | 1,746,160 | $ | 1,619,756 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
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Current Liabilities
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Current maturities of long-term debt
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$ | 127,640 | $ | 65,126 | ||||||
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Accounts payable
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111,044 | 109,479 | ||||||||
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Accrued liabilities
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113,116 | 113,406 | ||||||||
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Income taxes payable
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6,916 | 9,148 | ||||||||
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Total Current Liabilities
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358,716 | 297,159 | ||||||||
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Long-Term Liabilities
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Long-term debt
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557,063 | 559,982 | ||||||||
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Other long-term liabilities
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148,204 | 138,479 | ||||||||
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Shareholders’ Equity
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Common stock
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5,847 | 5,830 | ||||||||
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Additional paid-in capital
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345,764 | 342,911 | ||||||||
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Retained earnings
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417,685 | 394,175 | ||||||||
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Unearned compensation-restricted stock
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(3,699 | ) | (2,914 | ) | ||||||
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Accumulated other comprehensive income
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(83,420 | ) | (115,866 | ) | ||||||
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Total Shareholders’ Equity
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682,177 | 624,136 | ||||||||
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Total Liabilities and Shareholders’ Equity
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$ | 1,746,160 | $ | 1,619,756 | ||||||
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
3
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
| Nine Months Ended | ||||||||||
| September 28, | September 29, | |||||||||
| 2003 | 2002 | |||||||||
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Cash Flows from Operating Activities:
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Net earnings (loss)
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$ | 23,510 | $ | (66,710 | ) | |||||
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Cumulative effect of an accounting change
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— | 44,815 | ||||||||
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Net earnings (loss) before cumulative effective
of an accounting change
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23,510 | (21,895 | ) | |||||||
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Adjustments:
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Depreciation and amortization
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39,530 | 38,049 | ||||||||
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Provision (recovery) — restructured
operations
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— | 1,685 | ||||||||
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Undistributed earnings from unconsolidated
companies
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(1,853 | ) | (2,036 | ) | ||||||
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Mark-to-market adjustment for derivative
instruments
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(30 | ) | (593 | ) | ||||||
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(Gain) loss on sale of property, plant and
equipment
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834 | (995 | ) | |||||||
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Deferred income taxes
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(9,590 | ) | 43,213 | |||||||
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Changes in operating assets and
liabilities — net:
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Receivables
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(28,288 | ) | 3,616 | |||||||
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Inventories
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10,232 | 803 | ||||||||
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Accounts payable
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(2,605 | ) | 1,635 | |||||||
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Accrued liabilities
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(3,554 | ) | (35,557 | ) | ||||||
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Income taxes payable
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(2,961 | ) | 9,980 | |||||||
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Other
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7,495 | 16,279 | ||||||||
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Net cash provided by (used in) operating
activities
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32,720 | 54,184 | ||||||||
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Cash Flows from Investing Activities:
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Purchases of and investment in businesses
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— | (5,079 | ) | |||||||
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Purchases of property, plant and equipment
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(19,392 | ) | (16,998 | ) | ||||||
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Proceeds from sale of property, plant and
equipment
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266 | 3,603 | ||||||||
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Marketable securities acquired
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(30,941 | ) | (71,699 | ) | ||||||
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Proceeds from matured marketable securities
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79,277 | 24,326 | ||||||||
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Net cash provided by (used in) investing
activities
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29,210 | (65,847 | ) | |||||||
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Cash Flows from Financing Activities:
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Proceeds from long-term debt and other borrowings
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125,191 | — | ||||||||
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Repayment of long-term debt and other borrowings
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(65,341 | ) | (9,522 | ) | ||||||
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Stock options exercised
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— | 248 | ||||||||
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Net cash provided by (used in) financing
activities
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59,850 | (9,274 | ) | |||||||
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Effect of exchange-rate changes on cash
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6,031 | 3,239 | ||||||||
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Net increase (decrease) in cash and cash
equivalents
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127,811 | (17,698 | ) | |||||||
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Cash and cash equivalents — beginning
of period
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177,994 | 234,843 | ||||||||
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Cash and cash equivalents — end of
period
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$ | 305,805 | $ | 217,145 | ||||||
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Cash payments for interest
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$ | 38,586 | $ | 41,570 | ||||||
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Cash payments (refunds) for income taxes
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$ | 13,231 | $ | (51,513 | ) | |||||
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 September 28, 2003 and December 29, 2002 and the results of operations and cash flows for the periods ended September 28, 2003 and September 29, 2002.
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 29, 2002. The results of operations for the periods ended September 28, 2003 and September 29, 2002 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.
| 2. |