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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Form 10-Q
     
(Mark One)
    
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1933
 
    For the quarterly period ended March 31, 2005
 
or
 
o
   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
incorporation or organization)		   (I.R.S. Employer
Identification No.)
 
8155 T&B Boulevard    
Memphis, Tennessee   38125
(Address of principal executive offices)   (Zip Code)
(901) 252-8000
(Registrant’s telephone number, including area code)
      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 April 29, 2005
     
Common Stock, $.10 par value
     59,998,828  

THOMAS & BETTS CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
               
        Page
         
 PART I. FINANCIAL INFORMATION
         
          2  
          3  
          4  
          5  
      15  
      26  
      26  
 PART II. OTHER INFORMATION        
      27  
      27  
      27  
 SIGNATURE     28  
 EXHIBIT INDEX     29  
 Statement re Computation of Ratio of Earnings to Fixed Charges
 Certification of Principal Executive Officer
 Certification of Principal Financial Officer
 Section 1350 Certifications

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Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                     
    Quarter Ended
     
    March 31,   March 31,
    2005   2004
         
Net sales
   $ 392,186     $ 352,988  
Cost of sales
     281,140       253,289  
             
 
Gross profit
     111,046       99,699  
Selling, general and administrative
     69,350       73,014  
             
 
Earnings from operations
     41,696       26,685  
Income from unconsolidated companies
     309       664  
Interest expense, net
     (7,160 )     (7,614 )
Other (expense) income, net
     (467 )     (135 )
             
 
Earnings before income taxes
     34,378       19,600  
Income tax provision
     9,970       3,988  
             
   
Net earnings
   $ 24,408     $ 15,612  
             
Earnings per share:
                
 
Basic
   $ 0.41     $ 0.27  
             
 
Diluted
   $ 0.40     $ 0.27  
             
Average shares outstanding:
                
 
Basic
     59,333       58,289  
 
Diluted
     60,324       58,677  
The accompanying Notes are an integral part of these Consolidated Financial Statements.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                     
    March 31,   December 31,
    2005   2004
         
ASSETS
Current Assets
                
 
Cash and cash equivalents
   $ 335,984     $ 336,059  
 
Marketable securities
     1,544       1,658  
 
Receivables, net
     193,677       172,745  
 
Inventories:
                
   
Finished goods
     102,855       106,402  
   
Work-in-process
     32,894       28,947  
   
Raw materials
     81,168       71,809  
             
 
Total inventories
     216,917       207,158  
             
 
Deferred income taxes
     48,206       46,874  
 
Prepaid expenses
     13,617       14,401  
             
Total Current Assets
     809,945       778,895  
             
Property, plant and equipment
                
 
Land
     15,485       15,261  
 
Buildings
     176,164       171,683  
 
Machinery and equipment
     611,122       608,482  
 
Construction-in-progress
     13,046       10,219  
             
      815,817       805,645  
 
Less accumulated depreciation
     (536,297 )     (529,501 )
             
Net property, plant and equipment
     279,520       276,144  
             
Goodwill
     461,478       463,264  
Investments in unconsolidated companies
     115,338       114,922  
Deferred income taxes
     34,319       33,481  
Other assets
     88,917       89,046  
             
Total Assets
   $ 1,789,517     $ 1,755,752  
             
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
                
 
Current maturities of long-term debt
   $ 152,763     $ 2,830  
 
Accounts payable
     129,603       120,336  
 
Accrued liabilities
     96,656       100,692  
 
Income taxes payable
     9,866       14,551  
             
Total Current Liabilities
     388,888       238,409  
             
Long-Term Liabilities
                
 
Long-term debt
     389,297       543,085  
 
Other long-term liabilities
     78,753       72,539  
Contingencies (Note 11)
     —       —  
Shareholders’ Equity
                
 
Common stock
     5,998       5,935  
 
Additional paid-in capital
     382,738       366,811  
 
Retained earnings
     554,651       530,243  
 
Unearned compensation-restricted stock
     (3,511 )     (1,811 )
 
Accumulated other comprehensive income (loss)
     (7,297 )     541  
             
Total Shareholders’ Equity
     932,579       901,719  
             
Total Liabilities and Shareholders’ Equity
   $ 1,789,517     $ 1,755,752  
             
The accompanying Notes are an integral part of these Consolidated Financial Statements.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                     
    Quarter Ended
     
    March 31,   March 31,
    2005   2004
         
Cash Flows from Operating Activities:
                
Net earnings
   $ 24,408     $ 15,612  
Adjustments:
                
 
Depreciation and amortization
     13,058       13,859  
 
Undistributed earnings from unconsolidated companies
     (309 )     (664 )
 
Mark-to-market adjustment for derivative instruments
     (915 )     (1,086 )
 
Loss on sale of property, plant and equipment
     285       169  
 
Deferred income taxes
     1,006       1,644  
 
Changes in operating assets and liabilities, net:
                
   
Receivables
     (21,159 )     (31,617 )
   
Inventories
     (5,993 )     (3,350 )
   
Accounts payable
     7,318       7,646  
   
Accrued liabilities
     (7,798 )     (9,429 )
   
Other
     3,824       2,214  
             
Net cash provided by (used in) operating activities
     13,725       (5,002 )
             
Cash Flows from Investing Activities:
                
 
Purchases of businesses
     (15,203 )     —  
 
Purchases of property, plant and equipment
     (8,290 )     (5,527 )
 
Proceeds from sale of property, plant and equipment
     335       —  
 
Proceeds from matured marketable securities
     99       148  
             
Net cash provided by (used in) investing activities
     (23,059 )     (5,379 )
             
Cash Flows from Financing Activities:
                
 
Repayment of long-term debt and other borrowings
     (273 )     (126,505 )
 
Stock options exercised
     10,974       745  
             
Net cash provided by (used in) financing activities
     10,701       (125,760 )
             
Effect of exchange-rate changes on cash
     (1,442 )     (1,030 )
             
 
Net increase (decrease) in cash and cash equivalents
     (75 )     (137,171 )
 
Cash and cash equivalents, beginning of period
     336,059       387,425  
             
 
Cash and cash equivalents, end of period
   $ 335,984     $ 250,254  
             
Cash payments for interest
   $ 10,204     $ 15,693  
Cash payments for income taxes
   $ 14,629     $ 2,826  
The accompanying Notes are an integral part of these Consolidated Financial Statements.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
      In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary for the fair presentation of the Corporation’s financial position as of March 31, 2005, and December 31, 2004, and the results of operations and cash flows for the periods ended March 31, 2005 and 2004.
      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 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 year ended December 31, 2004. The results of operations for the periods ended March 31, 2005 and 2004, 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. Basic and Diluted Earnings Per Share
      The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:
                   
    Quarter Ended
     
    March 31,   March 31,
    2005   2004
(In thousands, except per share data)        
Net earnings
   $ 24,408     $ 15,612  
             
Basic shares:
                
 
Average shares outstanding
     59,333       58,289  
             
 
Basic earnings per share
   $ 0.41     $ 0.27  
             
Diluted shares:
                
 
Average shares outstanding
     59,333       58,289  
 
Additional shares from the assumed exercise of stock options and vesting of restricted stock
     991       388  
             
      60,324       58,677  
             
Diluted earnings per share
   $ 0.40     $ 0.27  
             
      Out-of-the-money options for the purchase of shares of Common Stock that were excluded because of their anti-dilutive effect totaled 1.1 million shares for the first quarter of 2005 and 2.0 million for the first quarter of 2004.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
3. Stock-Based Compensation
      The Corporation applies the intrinsic-value-based method to account for its fixed-plan stock options. The following table illustrates the effect on net earnings and earnings per share if the Corporation had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation.
                     
    Quarter Ended
     
    March 31,   March 31,
    2005   2004
(In thousands, except per share data)        
Net earnings, as reported
   $ 24,408     $ 15,612  
 
Deduct total incremental stock-based compensation expense determined under fair-value-based method for all awards, net of related tax effects(a)
     (886 )     (1,410 )
             
 
Pro forma net earnings
   $ 23,522     $ 14,202  
             
 
Earnings per share:
                
   
Basic — as reported
   $ 0.41     $ 0.27  
             
   
Basic — pro forma
   $ 0.40     $ 0.24  
             
   
Diluted — as reported
   $ 0.40     $ 0.27  
             
   
Diluted — pro forma
   $ 0.39     $ 0.24  
             
 
(a) Does not include restricted stock expense that is already reported in net earnings.
      A valuation using the fair-value-based accounting method has been made for applicable stock options granted as of March 31, 2005 and 2004. That valuation was performed using the Black-Scholes option-pricing model.
4. Income Taxes
      The Corporation’s income tax provision for the first quarter 2005 was $10.0 million, or an effective rate of 29.0% of pre-tax income, compared to a tax provision in the first quarter 2004 of $4.0 million, or an effective rate of 20.3% of pre-tax income. The tax provision for the first quarter of 2004 included a tax benefit of $1.5 million related to specific tax exposure items resulting from the favorable completion of tax audits.
      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 and tax planning strategies, based on tax laws in effect as of March 31, 2005, will be sufficient to realize the recorded deferred tax assets, net of the existing valuation allowance at March 31, 2005. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management has identified certain tax planning strategies that it could utilize to avoid the loss carryforwards expiring prior to their realization. These tax planning strategies include primarily sales of non-core assets. Projected

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
future taxable income is based on management’s forecast of the operating results of the Corporation, and there can be no assurance that such results will be achieved. 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 the net deferred tax assets, the Corporation will increase the valuation allowance by a charge to income tax expense in the period of such determination. Additionally, if events occur in subsequent periods which indicate that a previously recorded valuation allowance is no longer needed, the Corporation will decrease the valuation allowance by providing an income tax benefit in the period of such determination.
5. Comprehensive Income
      Total comprehensive income and its components are as follows:
                 
    Quarter Ended
     
    March 31,   March 31,
    2005   2004
         
(In thousands)
                
Net income
   $ 24,408     $ 15,612  
Foreign currency translation adjustments
     (7,826 )     (2,202 )
Unrealized gains (losses) on securities
     (12 )     (8 )
             
Comprehensive income
   $ 16,570     $ 13,402  
             
6. Derivative Instruments
      The Corporation is exposed to market risk from changes in raw material prices, foreign-exchange rates, and interest rates. At times, the Corporation may enter into various derivative instruments to manage certain of those risks. The Corporation does not enter into derivative instruments for speculative or trading purposes.
Commodities Futures Contracts
      The Corporation is exposed to risk from fluctuating prices for certain materials used to manufacture its products, such as: steel, aluminum, zinc, copper, resins and rubber compounds. At times, some of the risk associated with usage of copper, zinc and aluminum is mitigated through the use of futures contracts that fix the price the Corporation will pay for a commodity. Commodities futures contracts utilized by the Corporation have not previously been designated as hedging instruments and do not qualify for hedge accounting treatment under the provisions of SFAS No. 133 and SFAS No. 138. Mark-to-market gains and losses for commodities futures, if any, are recorded in cost of sales. As of March 31, 2005, the Corporation had outstanding commodities futures contracts with a notional amount of $28.6 million and a market value of $2.7 million. As of December 31, 2004, the Corporation had outstanding commodities futures contracts with a notional amount of $16.6 million and a market value of $1.8 million. Cost of sales reflects gains of $0.9 million for the quarter ended March 31, 2005 and $1.1 million for the quarter ended March 31, 2004.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
Forward Foreign Exchange Contracts
      From time to time, the Corporation utilizes forward foreign exchange contracts for the sale or purchase of foreign currencies (principally European currencies). Forward foreign exchange contracts utilized by the Corporation have not previously been designated as hedging instruments and do not qualify for hedge accounting treatment under the provisions of SFAS No. 133 and SFAS No. 138. Mark-to-market gains and losses for forward foreign exchange contracts, if any, are recorded in other (expense) income, net. As of March 31, 2005, the Corporation had outstanding forward sale contracts with a notional amount of $22.4 million related to European currencies. As of December 31, 2004, the Corporation had no outstanding forward sale contracts. Other (expense) income, net reflects a loss of $0.4 million for the quarter ended March 31, 2005 and no impact for the quarter ended March 31, 2004, from mark-to-market adjustments for forward foreign exchange contracts.
Interest Rate Swap Agreements
      As of March 31, 2005 and December 31, 2004, the Corporation had interest rate swap agreements totaling a notional amount of $165.3 million with portions maturing in 2008, 2009, and 2013. The interest rate swaps qualify for the short-cut method of accounting for a fair value hedge under SFAS No. 133. The amount to be paid or received under the interest rate swap agreements is recorded as a component of net interest expense.
      At March 31, 2005, the net out-of-the-money fair value of the interest rate swaps was $7.3 million, classified in other long-term liabilities, with an off-setting $7.3 million decrease in the book value of the debt hedged. At December 31, 2004, the net out-of-the-money fair value of the interest rate swaps was $4.0 million, classified in other long-term liabilities, with an offsetting $4.0 million decrease in the book value of the debt hedged. Interest expense, net reflects a benefit associated with these interest rate swap agreements of $0.4 million for the quarter ended March 31, 2005 and $1.7 million for the quarter ended March 31, 2004.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
7. Debt
      The Corporation’s long-term debt at March 31, 2005, and December 31, 2004, was:
                   
    March 31,   December 31,
    2005   2004
         
(In thousands)
                
Unsecured notes
                
 
6.50% Notes due 2006
   $ 150,744     $ 150,980  
 
7.25% Notes due 2013(a)
     119,709       121,303  
Unsecured medium-term notes
                
 
6.63% Medium-term notes due 2008(a)
     113,963       114,787  
 
6.39% Medium-term notes due 2009(a)
     148,991       149,919  
Industrial revenue bonds due through 2008
     4,880       4,880  
Other, including capital leases
     3,773       4,046  
             
Long-term debt (including current maturities)
     542,060