UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For
the fiscal year ended December 31,
2009
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or
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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
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Commission file number
1-4682
Thomas & Betts
Corporation
(Exact name of registrant as
specified in its charter)
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Tennessee
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22-1326940
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer Identification
No.)
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8155 T&B Boulevard
Memphis, Tennessee
(Address of principal executive
offices)
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38125
(Zip Code)
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(901) 252-8000
(Registrants telephone
number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange
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Title of Each Class
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on which Registered
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Common Stock, $.10 par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act.
Yes o No þ
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 has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was
required to submit and post such files).
Yes o No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants 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.
þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
(Do not check if a smaller
reporting company)
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Smaller reporting
company o
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange Act).
Yes o No þ
As of June 30, 2009, the aggregate market value of the
voting and non-voting common equity held by non-affiliates of
the registrant was $1,513,038,170 based on the closing price as
reported on the New York Stock Exchange.
As of February 12, 2010, 52,618,389 shares of the
registrants common stock were outstanding.
Documents
Incorporated by Reference
Portions of the definitive Proxy Statement for the Annual
Meeting of Shareholders will be filed within 120 days after
the end of the fiscal year covered by this report and are
incorporated by reference into Part III.
Thomas &
Betts Corporation and Subsidiaries
TABLE OF
CONTENTS
Page 2 of 94
CAUTION
REGARDING FORWARD-LOOKING STATEMENTS
This Report includes forward-looking comments and
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
not historical facts regarding Thomas & Betts
Corporation and are subject to risks and uncertainties in our
operations, business, economic and political environment.
See Item 1A. Risk Factors. Forward-looking
statements contain words such as:
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achieve
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should
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could
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may
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anticipates
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expects
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might
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believes
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intends
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predict
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will
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other similar expressions
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These forward-looking statements are not guarantees of future
performance. Many factors could affect our future financial
condition or results of operations. Accordingly, actual results,
performance or achievements may differ materially from those
expressed or implied by the forward-looking statements contained
in this Report. We undertake no obligation to revise any
forward-looking statement included in this Report to reflect any
future events or circumstances.
A reference in this Report to we, our,
us, Thomas & Betts or the
Corporation refers to Thomas & Betts
Corporation and its consolidated subsidiaries.
Page 3 of 94
PART I
Thomas & Betts Corporation is a leading designer and
manufacturer of electrical components used in industrial,
construction, utility and communications markets. We are also a
leading producer of commercial heating and ventilation units and
highly engineered steel structures used for utility
transmission. We have operations in approximately 20 countries.
Manufacturing, marketing and sales activities are concentrated
primarily in North America and Europe. We pursue growth through
market penetration, new product development and acquisitions.
We sell our products through the following channels:
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electrical, utility, telephone, cable, and heating, ventilation
and air-conditioning distributors;
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mass merchandisers, catalog merchandisers and home improvement
centers; and
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directly to original equipment manufacturers, utilities and
certain end-users.
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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. We were reincorporated in Tennessee in 1996. Our corporate
offices are maintained at 8155 T&B Boulevard, Memphis,
Tennessee 38125, and the telephone number at that address is
901-252-8000.
Available
Information
Our internet address is www.tnb.com where interested parties can
find our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and amendments to those reports. These materials are free of
charge and are made available as soon as reasonably practicable
after they are electronically filed with, or furnished to, the
Securities and Exchange Commission (SEC). We will
provide electronic or paper copies of our filings free of charge
upon request.
General
Segment Information
We classify our products into the following business segments
based primarily on product lines. Our segments are:
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Electrical,
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Steel Structures, and
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Heating, Ventilation and Air-Conditioning (HVAC).
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The majority of our products, especially those sold in the
Electrical segment, have
region-specific
standards and are sold mostly in North America or in other
regions sharing North American electrical codes. No customer
accounted for 10% or more of our consolidated net sales for
2009, 2008 or 2007.
Electrical
Segment
Our Electrical segments markets include industrial MRO
(maintenance, repair and operations) and OEM (original equipment
manufacturers), construction, utility and communications
markets. This segments sales are concentrated primarily in
North America and Europe. The Electrical segment typically
experiences modest seasonal increases in sales during the second
and third
Page 4 of 94
quarters reflecting the construction season. Net sales for the
Electrical segment for the past three years were:
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2009
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2008
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2007
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Segment Sales (in thousands)
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$
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1,554,326
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$
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2,103,121
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$
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1,766,598
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Percent of Consolidated Net Sales
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81.9
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%
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85.0
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%
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82.7
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%
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The Electrical segment designs, manufactures and markets
thousands of different connectors, components and other products
for industrial, construction, utility and communications
applications. We have a market-leading position for many of our
products. Products in the Electrical segment include:
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fittings and accessories;
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fastening products, such as plastic and metallic ties for
bundling wire, and flexible tubing;
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connectors, such as compression and mechanical connectors for
high-current power and grounding applications;
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indoor and outdoor switch and outlet boxes, covers and
accessories;
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floor boxes;
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metal framing used as structural supports for conduits, cable
tray and electrical enclosures;
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emergency and hazardous lighting;
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utility distribution connectors and switchgear;
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power quality equipment and services;
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CATV drop hardware;
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radio frequency RF connectors;
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aerial, pole, pedestal and buried splice enclosures;
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encapsulation and sheath repair systems; and
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other products, including insulation products, wire markers, and
application tooling products.
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These products are sold under a variety of well-known brand
names, such as
Carlon®,
Color-Keyed®,
Cyberex®,
Diamond®,
Elastimold®,
Emergi-Lite®,
Furse®,
Homac®,
Iberville®,
Joslyn Hi-Voltagetm,
Kindorf®,
Kold-N-Klose®,
Ocal®,
LRC®,
Red
Dot®,
Snap-N-Seal®,
Sta-Kon®,
Steel City®,
Superstrut®
and
Ty-Rap®.
Demand for electrical products follows general economic
conditions and is sensitive to activity in construction markets,
industrial production levels and spending by utilities for
replacement, expansion and efficiency improvement. The
segments product lines are predominantly sold through
major distributor chains, independent distributors and to retail
home centers and hardware outlets. They are also sold directly
to original equipment manufacturers, utilities, cable operators,
and telecommunications and satellite TV companies. We have
strong relationships with our distributors as a result of the
breadth and quality of our product lines, our market-leading
service programs, our strong history of product innovation, and
the high degree of brand-name recognition for our products among
end-users.
Page 5 of 94
Steel
Structures Segment
Our Steel Structures segment designs, manufactures and markets
highly engineered steel transmission structures. These products
are primarily sold to the following types of end-users:
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investor-owned utilities;
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cooperatives, which purchase power from utilities and manage its
distribution to end-users; and
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municipal utilities.
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These products are marketed primarily under the
Meyer®
and Thomas &
Betts®
brand names. Net sales for the Steel Structures segment for the
past three years were:
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2009
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2008
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2007
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Segment Sales (in thousands)
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$
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234,462
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$
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231,554
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$
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227,356
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Percent of Consolidated Net Sales
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12.3
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%
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9.4
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%
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10.6
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%
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HVAC
Segment
Our HVAC segment designs, manufactures and markets heating,
ventilation and air conditioning products for commercial and
industrial buildings. Products in this segment include:
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gas, oil and electric unit heaters;
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gas-fired duct furnaces;
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indirect and direct gas-fired
make-up air;
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infrared heaters; and
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evaporative cooling and heat recovery products.
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These products are sold primarily under the
Reznor®
brand name through HVAC, mechanical and refrigeration
distributors throughout North America and Europe. Demand for
HVAC products tends to be higher when these regions are
experiencing cold weather and, as a result, HVAC typically has
higher sales in the first and fourth quarters. To reduce the
impact of seasonality on operations, the segment offers an
off-season sales promotional program with its distributors. Net
sales for the HVAC segment for the past three years were:
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2009
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2008
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2007
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Segment Sales (in thousands)
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$
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109,912
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$
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139,149
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$
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142,934
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Percent of Consolidated Net Sales
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5.8
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%
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5.6
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%
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6.7
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Manufacturing
and Distribution
We employ advanced processes for manufacturing quality products.
Our manufacturing processes include high-speed stamping,
precision molding, machining, plating, pressing, welding and
automated assembly. Our internal processes utilize lean
manufacturing techniques designed to reduce waste and improve
operating efficiencies in our facilities. We also make extensive
use of
computer-aided
design and computer-aided manufacturing (CAD/CAM) software and
equipment to link product engineering with our manufacturing
facilities. Additionally, we utilize 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.
Page 6 of 94
Our products have historically enjoyed a reputation for quality
in the markets in which they are sold. To ensure we maintain
these high quality standards, all facilities embrace quality
programs, and approximately 80% meet either ISO 9001 2000 or ISO
9001 2008 standards as of December 31, 2009, with future
certifications to be performed under ISO 9001 2008 standards as
applicable. Additionally, we have implemented quality control
processes in our design, manufacturing, delivery and other
operations in order to further improve product quality and
customer service levels.
Raw
Materials
We purchase a wide variety of raw materials for the manufacture
of our products including steel, aluminum, zinc, copper, resins
and rubber compounds. Sources for raw materials and component
parts are well established and, with the exception of steel and
certain resins, are sufficiently numerous to avoid serious
future interruptions of production in the event that current
suppliers are unable to sufficiently meet our needs. However, we
could encounter manufacturing disruptions in each of our
segments from interruptions by steel and resins suppliers. In
addition, we could encounter price increases that we may not be
able to pass on to our customers.
Research
and Development
We have a long-standing reputation for innovation and value
based upon our ability to develop products that meet the needs
of the marketplace. Each of our business segments maintain
research, development and engineering capabilities intended to
directly respond to specific market needs.
Research, development and engineering expenditures invested into
new and improved products and processes are shown below. These
expenditures are included in cost of sales in the Consolidated
Statements of Operations.
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2009
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2008
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2007
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R&D Expenditures (in thousands)
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$
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34,942
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$
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35,145
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$
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29,869
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Percent of Net Sales
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1.8
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%
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1.4
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%
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1.4
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%
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Working
Capital Practices
We maintain sufficient inventory to enable us to provide a high
level of service to our customers. Our inventory levels, payment
terms and return policies are in accordance with general
practices associated with the industries in which we operate.
Patents
and Trademarks
We own approximately 2,200 active patent registrations and
applications worldwide. We have over 1,500 active trademarks and
domain names worldwide, including: Thomas & Betts,
T&B, T&B Access, Blackburn, Bowers, Canstrut, Carlon,
Catamount, Color-Keyed, Commander, Cyberex, Deltec, Diamond,
DuraGard, Elastimold, Emergi-Lite,
E-Z-Code,
Flex-Cuf, Furse, Hazlux, Homac, Iberville, Joslyn Hi-Voltage,
Kindorf, Klik-It, Kold-N-Klose, Lehigh, LRC, Marr, Marrette,
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,
Ty-Duct, Ty-Rap and Union.
While we consider our patents, trademarks, and trade dress to be
valuable assets, we do not believe that our competitive position
is dependent solely on patent or trademark protection, or that
any business segment or our operations as a whole is dependent
on any individual patent or trademark. However, the Carlon,
Color-Keyed, Elastimold, Iberville, Kindorf, Ocal, Sta-Kon,
Steel City, Superstrut, and Ty-Rap trademarks are
important to the Electrical segment; the Meyer
Page 7 of 94
trademark is important to the Steel Structures segment; and the
Reznor trademark is important to the HVAC segment. In
addition, we do not consider any of our individual licenses,
franchises or concessions to be material to our business as a
whole or to any business segment.
Competition
Our ability to continue to meet customer needs by enhancing
existing products and developing and manufacturing new products
is critical to our prominence in our primary market, the
electrical products industry. We have robust competition in all
areas of our business, and the methods and levels of
competition, such as price, service, warranty and product
performance, vary among our markets. While no single company
competes with us in all of our product lines, various companies
compete with us in one or more product lines. Some of these
competitors have substantially greater sales and assets and
greater access to capital than we do. We believe
Thomas & Betts is among the industry leaders in
service to its customers.
Although we believe that we have specific technological and
other advantages over some of our competitors, our
competitors ability to develop new product offerings with
competitive price and performance characteristics could lead to
increased downward pressure on the selling prices for our
products.
The abilities of our competitors to enhance their own products,
coupled with any unforeseeable changes in customer demand for
various products of Thomas & Betts, could affect our
overall product mix, pricing, margins, plant utilization levels
and asset valuations. We believe that industry consolidation
could further increase competitive pressures.
Employees
As of December 31, 2009, we had approximately
8,500 full-time employees worldwide. Employees of our
foreign subsidiaries comprise approximately 45% of all
employees. Approximately 25% of our U.S. and approximately
30% of our worldwide employees are represented by trade unions.
We believe our relationships with our employees and trade unions
are good.
Compliance
with Environmental Regulations
We are subject to federal, state, local and foreign
environmental laws and regulations that govern the discharge of
pollutants into the air, soil and water, as well as the handling
and disposal of solid and hazardous wastes. We believe that we
are in compliance, in all material respects, with applicable
environmental laws and regulations and that the costs of
maintaining such compliance will not be material to our
financial position.
Financial
Information About Foreign and U.S. Operations
Export sales originating in the U.S. were approximately
$58 million in 2009, $64 million in 2008, and
$62 million in 2007. For additional financial information
about international and U.S. operations, please refer to
Note 18 in the Notes to Consolidated Financial Statements.
Page 8 of 94
There are many factors that could pose a material risk to our
business, its operating results, its financial condition and its
ability to execute its business plan, some of which are beyond
our control. These factors include, but are not limited to:
Negative
economic conditions could have a material adverse effect on our
operating results and financial condition.
The success of Thomas & Betts business is
directly linked to positive economic conditions in the countries
where we sell our products. We do business in geographically
diverse markets. In 2009, approximately one-third of our net
sales were generated outside of the United States. Continued
turmoil in the financial markets during 2009 has had an adverse
effect on economic activity in the United States and other
regions of the world in which we do business. The current
economic environment has had an adverse effect on demand in our
primary markets and a continued decline in economic activity
could adversely affect demand for products in each of our
business segments, thereby having a material adverse impact on
our operating results and financial condition. Additionally,
these conditions could also impair the ability of those with
whom we do business to satisfy their obligations to us. Finally,
a continued decline in economic activity could result in adverse
changes to our current stock market-related fundamentals and
current projected future operating results that are used to
assess asset valuations (including goodwill and other intangible
assets). Such revisions could lead to potentially significant
financial impairment charges for these assets in future periods.
Material adverse changes in economic (including the potential
negative impact of higher interest rates and availability of
credit on capital spending in the markets we serve) or industry
conditions generally or in the specific markets served by
Thomas & Betts could have a material adverse effect on
our operating results and financial condition.
A
significant reduction in the supply of commodity raw materials
could materially disrupt our business and rising and volatile
costs for commodity raw materials and energy could have a
material adverse effect on our profitability.
In recent years, we have experienced rising and, at times,
volatile costs for commodity raw materials (steel, aluminum,
copper, zinc, resins and rubber compounds) and energy.
Additionally, increased worldwide demand for steel has, at
times, caused the availability of steel to be a concern and
resin supply has been disrupted by natural disasters. Any
significant accidents, labor disputes, fires, severe weather,
floods or other difficulties encountered by our principal
suppliers could result in production delays or the inability to
fulfill orders on a timely basis. We may also not be able to
fully offset in the future the effects of rising and at times
volatile costs for commodity raw materials and energy through
price increases for its products, productivity improvements or
other cost reductions.
Significant
changes in customer demand due to increased competition could
have a material adverse effect on our operating results and
financial condition.
As Thomas & Betts works to enhance its product
offerings, its competitors will most likely continue to improve
their products and will likely develop new offerings with
competitive price and performance characteristics. Because of
the intensity of the competition in the product areas and
geographic markets that we serve, we could experience increased
downward pressure on the selling prices for certain of our
products.
Additionally, enhanced product offerings by competitors, coupled
with any unforeseeable significant changes in customer demand
for products of Thomas & Betts, could impact overall
Page 9 of 94
product mix, pricing, margins, plant utilization levels and
asset valuations, thereby having a material adverse impact on
our operating results and financial condition.
Deterioration
in the credit quality of several major customers could have a
material adverse effect on our operating results and financial
condition.
A significant asset included in our working capital is accounts
receivable from customers. If customers responsible for a
significant amount of accounts receivable become insolvent or
otherwise unable to pay for products and services, or become
unwilling or unable to make payments in a timely manner, our
operating results and financial condition could be adversely
affected. A significant deterioration in the economy could have
an adverse effect on the servicing of these accounts receivable,
which could result in longer payment cycles, increased
collection costs and defaults in excess of managements
expectations. Although we are not dependent on any one customer
for more than 10% of our sales, deterioration in the credit
quality of several major customers at the same time could have a
material adverse effect on operating results and financial
condition.
Unforeseen
adverse regulatory, environmental, monetary and other
governmental policies could have a material adverse effect on
our profitability.
Thomas & Betts is subject to governmental regulations
and policies throughout the world. Unforeseen changes in these
governmental regulations and policies could reduce our
profitability. Namely, significant changes in monetary or fiscal
policies in the U.S. and abroad could result in currency
fluctuations, including fluctuations in the Canadian dollar,
Euro and British pound, which, in turn, could have a negative
impact on our net sales, costs and expenses. Furthermore,
significant changes in any number of governmental policies could
create trade restrictions, patent enforcement issues, adverse
tax rate changes and changes to tax treatment of items such as
tax credits, withholding taxes and transfer pricing. These
changes might limit our ability to sell products in certain
markets, and could have a material adverse effect on our
business, operating results and financial condition.
In addition, our operations are subject to or could become
subject to, international, federal, state and local laws and
regulations governing environmental matters, including emissions
and discharges of pollutants (including green house gases) into
the air, soil and water and the generation and handling of
waste. Thomas & Betts is also subject to laws relating
to occupational health and safety. The operation of
manufacturing plants involves a high level of susceptibility in
these areas, and there is no assurance that we will not incur
material environmental or occupational health and safety
liabilities in the future. Moreover, expectations of remediation
expenses could be affected by, and potentially significant
expenditures could be required to comply with, environmental
regulations and health and safety laws that may be adopted or
imposed in the future. Future remediation technology advances
could adversely impact expectations of remediation expenses.
Unfavorable
litigation outcomes could have a material adverse effect on our
profitability.
We are and may in the future be party to legal proceedings and
claims, including those involving product liability,
intellectual property and contractual disputes. Given the
inherent uncertainty of litigation, we cannot offer any
assurance that existing litigation or future adverse
developments may not have a material adverse effect on our
business, operating results and financial condition.
Page 10 of 94
Inability
to access capital markets may adversely impact our
business.
Our ability to invest in our businesses and make strategic
acquisitions may require access to capital markets. If we are
unable to access the capital markets as needed, we could
experience a material adverse impact on our business.
Our
facilities or facilities of our customers could be susceptible
to natural disasters.
Thomas & Betts has operations in approximately 20
countries and sells to customers throughout the world. Should a
natural disaster such as a hurricane, tornado, earthquake or
flood severely damage a major manufacturing, distribution or
headquarters facility of Thomas & Betts, or damage a
major facility of one or more of our significant customers or
important suppliers, our business could be materially disrupted.
Possible
inadequate insurance coverage.
In accordance with its risk management practices,
Thomas & Betts continually reevaluates risks, their
potential cost and the cost of minimizing them. To reduce the
Corporations exposure to material risks, in certain
circumstances, we purchase insurance. Certain risks are inherent
in the manufacturing of our products and our insurance may not
be adequate to cover potential claims against us involving our
products. Thomas & Betts is also exposed to risks
inherent in the packaging and distribution of products. Although
we maintain liability insurance, we cannot assure that the
coverage limits under these insurance programs will be adequate
to protect Thomas & Betts against future claims, or
that we will be able to obtain this insurance on acceptable
terms in the future.
Terrorist
Acts and Acts of War could adversely impact our business and
operating results.
Terrorist acts and acts of war (wherever located around the
world) may cause damage or disruption to our employees,
facilities, suppliers, distributors or customers, which could
significantly impact our net sales, costs and expenses and
financial condition. The potential for future terrorist attacks,
the national and international responses to terrorist attacks,
and other acts of war or hostility have created many economic
and political uncertainties, which could adversely impact our
business and results of operations in ways that cannot presently
be predicted. In addition, as a global company with headquarters
and significant operations located in the United States, we may
be impacted by actions against the United States. We are
uninsured for losses and interruptions caused by acts of war and
have policy limits for losses caused by terrorist acts.
|
|
Item 1B.
|
UNRESOLVED
STAFF COMMENTS
|
None.
Page 11 of 94
We have operations in approximately 20 countries and, as of
December 31, 2009, occupy approximately 5.3 million
square feet of manufacturing space. Our manufacturing locations
by segment as of December 31, 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
|
|
|
|
Area in
|
|
|
|
|
Square Feet
|
|
|
|
|
(000s)
|
Segment
|
|
Location
|
|
Leased
|
|
Owned
|
|
Electrical
|
|
Arkansas
|
|
|
|
|
|
|
286
|
|
|
|
California
|
|
|
113
|
|
|
|
|
|
|
|
Florida
|
|
|
|
|
|
|
189
|
|
|
|
Iowa
|
|
|
|
|
|
|
159
|
|
|
|
Mississippi
|
|
|
|
|
|
|
237
|
|
|
|
New Jersey
|
|
|
|
|
|
|
134
|
|
|
|
New Mexico
|
|
|
|
|
|
|
100
|
|
|
|
New York
|
|
|
|
|
|
|
268
|
|
|
|
North Carolina
|
|
|
|
|
|
|
22
|
|
|
|
Ohio
|
|
|
|
|
|
|
67
|
|
|
|
Puerto Rico
|
|
|
68
|
|
|
|
28
|
|
|
|
Tennessee
|
|
|
|
|
|
|
477
|
|
|
|
Virginia
|
|
|
100
|
|
|
|
|
|
|
|
Australia
|
|
|
28
|
|
|
|
29
|
|
|
|
Canada
|
|
|
83
|
|
|
|
751
|
|
|
|
France
|
|
|
|
|
|
|
52
|
|
|
|
Germany
|
|
|
30
|
|
|
|
|
|
|
|
Hungary
|
|
|
88
|
|
|
|
|
|
|
|
Japan
|
|
|
12
|
|
|
|
|
|
|
|
Mexico
|
|
|
502
|
|
|
|
|
|
|
|
Netherlands
|
|
|
8
|
|
|
|
39
|
|
|
|
Saudi Arabia
|
|
|
|
|
|
|
29
|
|
|
|
United Kingdom
|
|
|
40
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Structures
|
|
Alabama
|
|
|
|
|
|
|
240
|
|
|
|
South Carolina
|
|
|
|
|
|
|
105
|
|
|
|
Texas
|
|
|
|
|
|
|
136
|
|
|
|
Wisconsin
|
|
|
|
|
|
|
191
|
|
|
|
|
|
|
|
|
|
|
|
|
HVAC
|
|
Pennsylvania
|
|
|
|
|
|
|
227
|
|
|
|
Belgium
|
|
|
140
|
|
|
|
|
|
|
|
France
|
|
|
25
|
|
|
|
|
|
|
|
Mexico
|
|
|
214
|
|
|
|
|
|
As of December 31, 2009, the Corporation has
2.4 million square feet of office, distribution, storage
and other space. Included in this total are three owned primary
distribution centers located in
Page 12 of 94
Belgium (0.1 million square feet), Canada (0.3 million
square feet) and Byhalia, Mississippi (0.9 million square
feet). We also have principal sales offices, warehouses, storage
and other facilities in approximately 0.9 million square
feet of space, most of which is leased, and approximately
0.2 million square feet of leased space in Memphis,
Tennessee, which includes our corporate headquarters.
|
|
Item 3.
|
LEGAL
PROCEEDINGS
|
We are involved in legal proceedings and litigation arising in
the ordinary course of business. In those cases where we are 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 which are not
predictable with certainty. We have provided for losses to the
extent probable and estimable. The legal matters that have been
recorded in our consolidated financial statements are based on
gross assessments of expected settlement or expected outcome and
do not reflect possible recovery from insurance companies or
other parties. Additional losses, even though not anticipated,
could have a material adverse effect on our 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. We have been
notified by the United States Environmental Protection Agency or
similar state environmental regulatory agencies or private
parties that we, 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, similar
federal and state environmental statutes, or common law
theories. We, along with others, may be held jointly and
severally liable for all costs relating to investigation and
remediation of eight sites pursuant to these environmental laws.
We are the owner or operator, or former owner or operator, of
various manufacturing locations that we are currently evaluating
for the presence of contamination that may require remediation
or are in process of remediation. These sites include former or
inactive facilities or properties in Alabama; Connecticut;
Indiana; Massachusetts; New Hampshire; New Jersey; Pennsylvania;
Ohio and Oklahoma. The sites further include active
manufacturing locations in Florida; New Jersey; New Mexico; and
South Carolina.
In conjunction with the acquisitions of Lamson &
Sessions Co., Joslyn Hi-Voltage, Power Solutions, Drilling
Technical Supply SA, The Homac Manufacturing Company and Boreal
Braidings Inc., we assumed responsibility for legacy
environmental matters.
We have provided for environmental liabilities to the extent
probable and estimable, but we are not able to predict the
extent of our ultimate liability with respect to all of these
pending or future environmental matters.
|
|
Item 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
No matters were submitted to a vote of security holders during
the fourth quarter of the fiscal year ended December 31,
2009.
Page 13 of 94
Executive
Officers of the Registrant
The following persons are executive officers of
Thomas & Betts, and are elected by and serve at the
discretion of the Board of Directors.
Dominic
J. Pileggi, 58
Chairman and Chief Executive Officer
Mr. Pileggi was elected Chief Executive Officer in January
2004, and Chairman of the Board effective January 2006.
Mr. Pileggi has held several executive positions with the
Corporation, including President and Chief Operating Officer
from 2003 to 2004, and Senior Vice President and Group
President Electrical from 2000 to 2003. He also held
various executive positions with Thomas & Betts from
1979 to 1995. Mr. Pileggi was employed by Viasystems Group,
Inc., as Executive Vice President from 1998 to 2000 and
President EMS Division of Viasystems in 2000. From
1995 to 1998, he also held various executive positions with
Casco Plastic, Inc. and Jordan Telecommunications.
William
E. Weaver, Jr., 46
Senior Vice President and Chief Financial Officer
Mr. Weaver was elected Chief Financial Officer in October
2009. Previously, he held the position of Vice
President Controller from November 2008 to 2009.
Mr. Weaver was employed by First Horizon Home Loans/MetLife
Home Loans from 2006 to 2008. Prior to that time, he was a
partner with KPMG LLP from 2002 to 2006 and held various
positions including partner with Arthur Andersen LLP from 1984
to 2002.
Charles
L. Treadway, 44
Senior Vice President and Group President
Electrical
Mr. Treadway was elected Group President
Electrical in March 2009. Mr. Treadway was employed by
Schneider Electric from 2006 to 2009 where he led the
companys Custom Sensors and Technology business. Prior to
that time, he was President and Chief Executive Officer of
Prettl International, a subsidiary of German-based Prettl GMBH
from 2001 to 2005 and he was President of Groupo Teso Mexico, a
division of Yale Security (Americas), Inc. from 1999 to 2001.
Imad
Hajj, 49
Senior Vice President Global Operations
Mr. Hajj was elected Senior Vice President
Global Operations in November 2008. Previously, he held several
executive positions within the Corporation, including Vice
President and Chief Development Officer 2006 to 2008. He also
held the position of President HVAC Division dating
back to 2004. Between 1983 and 2004, Mr. Hajj held
executive and managerial positions in manufacturing, supply
chain, information technology and global electrical
manufacturing operations. In addition, he has served as general
manager of the Companys European business.
J.N.
Raines, 66
Vice President General Counsel and
Secretary
Mr. Raines was elected Vice President General
Counsel & Secretary in December 2001. Prior to that
time, he was a partner of the law firm of Glankler Brown PLLC
from 1976 to 2001. He has also served as an assistant United
States attorney for the Western District of Tennessee and as a
trial lawyer for the anti-trust division of the
U.S. Department of Justice.
Page 14 of 94
Stanley
P. Locke, 50
Vice President Business Development and Strategic
Planning
Mr. Locke was elected Vice President Business
Development and Strategic Planning in November 2008. Previously,
he held the positions of Vice President Controller
and Vice President Corporate Controller from 2004 to
2008. Prior to that time, he held various positions in finance
and corporate development with Sara Lee Corporation, beginning
in 1985, as well as with a consulting advisory firm from 2003 to
2004.
NYSE
Certifications
Our CEO certified to the New York Stock Exchange in 2009 that we
were in compliance with the NYSE listing standards. Our CEO and
CFO have executed the certification required by section 302
of the Sarbanes-Oxley Act of 2002, which is contained herein as
an exhibit to this
Form 10-K
for the fiscal year ended December 31, 2009.
Page 15 of 94
PART II
|
|
Item 5.
|
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Market
Information
Our common stock is traded on the New York Stock Exchange under
the symbol TNB. The following table sets forth by quarter for
the last two years the high and low sales prices of our common
stock as reported by the NYSE.
At February 12, 2010, the closing price of our common stock on
the NYSE was $34.58.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
First Quarter
|
|
|
|
|
|
|
|
|
Market price high
|
|
$
|
28.04
|
|
|
$
|
49.12
|
|
Market price low
|
|
$
|
19.76
|
|
|
$
|
33.26
|
|
Second Quarter
|
|
|
|
|
|
|
|
|
Market price high
|
|
$
|
33.06
|
|
|
$
|
43.69
|
|
Market price low
|
|
$
|
23.17
|
|
|
$
|
34.70
|
|
Third Quarter
|
|
|
|
|
|
|
|
|
Market price high
|
|
$
|
30.76
|
|
|
$
|
48.19
|
|
Market price low
|
|
$
|
23.82
|
|
|
$
|
32.16
|
|
Fourth Quarter
|
|
|
|
|
|
|
|
|
Market price high
|
|
$
|
38.55
|
|
|
$
|
38.92
|
|
Market price low
|
|
$
|
28.36
|
|
|
$
|
15.79
|
|
Holders
At February 12, 2010, we had 2,634 shareholders of record, not
including shares held in security position listings, or
street name.
Dividends
We do not currently pay cash dividends. Future decisions
concerning the payment of cash dividends will depend upon our
results of operations, financial condition, strategic investment
opportunities, capital expenditure plans, terms of credit
agreements, and other factors that the Board of Directors may
consider relevant.
Page 16 of 94
PERFORMANCE
GRAPH
This graph shows, from the end of 2004 to the end of 2009,
changes in the value of $100 invested in each of Thomas and
Betts common stock, Standard & Poors
(S&P) Midcap 400 Composite Index, S&P 500
Composite Index and a peer group consisting of five companies
whose businesses are representative of our business segments.
The companies in the peer group are: Amphenol Corporation,
Cooper Industries, Ltd., Eaton Corporation, Hubbell Incorporated
and Rockwell Automation Corporation.
In 2009, we are replacing our broad market index of the S&P
500 Composite Index with the S&P Midcap 400 Composite
Index. This change provides a better comparison of Thomas &
Betts with other companies of similar market capitalization
levels. In 2009, we are presenting the information using both
the old and new broad market indexes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec-04
|
|
|
|
Dec-05
|
|
|
|
Dec-06
|
|
|
|
Dec-07
|
|
|
|
Dec-08
|
|
|
|
Dec-09
|
|
Thomas & Betts Corp.
|
|
|
$
|
100
|
|
|
|
$
|
136
|
|
|
|
$
|
154
|
|
|
|
$
|
159
|
|
|
|
$
|
78
|
|
|
|
$
|
116
|
|
S&P Midcap
400®
|
|
|
$
|
100
|
|
|
|
$
|
113
|
|
|
|
$
|
124
|
|
|
|
$
|
134
|
|
|
|
$
|
86
|
|
|
|
$
|
117
|
|
S&P
500®
|
|
|
$
|
100
|
|
|
|
$
|
105
|
|
|
|
$
|
121
|
|
|
|
$
|
128
|
|
|
|
$
|
81
|
|
|
|
$
|
102
|
|
Custom Peer Group (5 Stocks)
|
|
|
$
|
100
|
|
|
|
$
|
107
|
|
|
|
$
|
124
|
|
|
|
$
|
157
|
|
|
|
$
|
83
|
|
|
|
$
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Custom Peer Group has been weighted in accordance with each
companys market capitalization as of the beginning of each
of the five years covered by the performance graph. The weighted
return was calculated by summing the products obtained by
multiplying (i) the percentage that each companys
market capitalization represents of the total market
capitalization for all companies in the index by (ii) the
total shareholder return for that company.
Page 17 of 94
Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
In 2008, our Board of Directors approved a share repurchase plan
that authorized us to buy 5,000,000 of our common shares. In
2008, we repurchased, with available cash resources, 2,425,000
common shares through open-market transactions. During 2009, we
repurchased, with available cash resources, 1,000,000 common
shares through open-market transactions. The timing of future
repurchases, if any, will depend upon a variety of factors,
including market conditions. This authorization expires in
October 2010.
Issuer
Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Shares
|
|
|
|
Total
|
|
|
|
|
|
Purchased
|
|
|
that May
|
|
|
|
Number of
|
|
|
Average
|
|
|
as Part of
|
|
|
Yet Be
|
|
|
|
Common
|
|
|
Price Paid
|
|
|
Publicly
|
|
|
Purchased
|
|
|
|
Shares
|
|
|
per Common
|
|
|
Announced
|
|
|
Under
|
|
|
|
Purchased
|
|
|
Share
|
|
|
Plans
|
|
|
the Plans
|
|
|
October 2008 Plan (5,000,000 common shares authorized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2009
|
|
|
100,000
|
|
|
$
|
23.05
|
|
|
|
100,000
|
|
|
|
2,475,000
|
|
March 2009
|
|
|
400,000
|
|
|
$
|
22.07
|
|
|
|
400,000
|
|
|
|
2,075,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
$
|
22.26
|
|
|
|
500,000
|
|
|
|
2,075,000
|
|
2nd Quarter 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,075,000
|
|
3rd Quarter 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2009
|
|
|
500,000
|
|
|
$
|
27.52
|
|
|
|
500,000
|
|
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
$
|
27.52
|
|
|
|
500,000
|
|
|
|
1,575,000
|
|
4th Quarter 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan total for year ended December 31, 2009
|
|
|
1,000,000
|
|
|
$
|
24.89
|
|
|
|
1,000,000
|
|
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 18 of 94
|
|
Item 6.
|
SELECTED
FINANCIAL DATA
|
Thomas &
Betts Corporation and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share
data)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Net sales
|
|
$
|
1,898,700
|
|
|
$
|
2,473,824
|
|
|
$
|
2,136,888
|
|
|
$
|
1,868,689
|
|
|
$
|
1,695,383
|
|
Net earnings from continuing operations
|
|
$
|
107,910
|
|
|
$
|
273,686
|
|
|
$
|
183,676
|
|
|
$
|
175,130
|
|
|
$
|
113,408
|
|
Total assets
|
|
$
|
2,453,407
|
|
|
$
|
2,410,602
|
|
|
$
|
2,567,786
|
|
|
$
|
1,830,223
|
|
|
$
|
1,920,396
|
|
Long-term debt including current maturities
|
|
$
|
638,536
|
|
|
$
|
660,944
|
|
|
$
|
811,205
|
|
|
$
|
387,631
|
|
|
$
|
537,959
|
|
Per share earnings from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.07
|
|
|
$
|
4.84
|
|
|
$
|
3.17
|
|
|
$
|
2.90
|
|
|
$
|
1.89
|
|
Diluted
|
|
$
|
2.04
|
|
|
$
|
4.79
|
|
|
$
|
3.13
|
|
|
$
|
2.85
|
|
|
$
|
1.86
|
|
Note: Selected financial data in 2008 and 2007 reflect
acquisitions by the Corporation for consideration of
approximately $90 million and $750 million,
respectively. The Corporation funded certain of the 2008 and
2007 acquisitions using its revolving credit facility. Net
earnings from continuing operations in 2008 reflects a pre-tax
gain of approximately $170 million from the
Corporations sale of its minority interest in Leviton
Manufacturing Company.
Page 19 of 94
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Item 7.
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MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Executive
Overview
Introduction
Thomas & Betts Corporation is a leading designer and
manufacturer of electrical components used in industrial,
construction, utility and communications markets. We are also a
leading producer of commercial heating and ventilation units and
highly engineered steel structures used for utility
transmission. We have operations in approximately 20 countries.
Manufacturing, marketing and sales activities are concentrated
primarily in North America and Europe.
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. Actual results may differ from those
estimates or assumptions. Our significant accounting policies
are described in Note 2 of the Notes to Consolidated
Financial Statements. We believe our critical accounting
policies include the following:
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|
|
|
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Revenue Recognition: We recognize revenue when
products are shipped and the customer takes ownership and
assumes risk of loss, collection of the relevant receivable is
probable, persuasive evidence of an arrangement exists and the
sales price is fixed or determinable. We recognize revenue for
service agreements over the applicable service periods. Sales
discounts, quantity and price rebates, and allowances are
estimated based on contractual commitments and experience and
recorded as a reduction of revenue in the period in which the
sale is recognized. Quantity rebates are in the form of volume
incentive discount plans, which include specific sales volume
targets or
year-over-year
sales volume growth targets for specific customers. Certain
distributors can take advantage of price rebates by subsequently
reselling our products into targeted construction projects or
markets. Following a distributors sale of an eligible
product, the distributor submits a claim for a price rebate. A
number of distributors, primarily in our Electrical segment,
have the right to return goods under certain circumstances and
those returns, which are reasonably estimable, are accrued as a
reduction of revenue at the time of shipment. We analyze
historical returns and allowances, current economic trends and
specific customer circumstances when evaluating the adequacy of
accounts receivable related reserves and accruals. We provide
allowances for doubtful accounts when credit losses are both
probable and estimable.
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Inventory Valuation: Inventories are stated at
the lower of cost or market. Cost is determined using the
first-in,
first-out (FIFO) method. To ensure inventories are carried at
the lower of cost or market, we periodically evaluate the
carrying value of our inventories. We also periodically perform
an evaluation of inventory for excess and obsolete items. Such
evaluations are based on managements judgment and use of
estimates. Such estimates incorporate inventory quantities
on-hand, aging of the inventory, sales history and forecasts for
particular product groupings, planned dispositions of product
lines and overall industry trends.
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Goodwill and Other Intangible Assets: We apply
the acquisition (purchase) method of accounting for all business
combinations. Under this method, all assets and liabilities
acquired in a business combination, including goodwill,
indefinite-lived intangibles and other intangibles, are recorded
at fair value. The initial recording of goodwill and other
intangibles
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Page 20 of 94
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requires subjective judgments concerning estimates of the fair
value of the acquired assets and liabilities. Goodwill consists
principally of the excess of cost over the fair value of net
assets acquired in business combinations and is not amortized.
For each amortizable intangible asset, we use a method of
amortization that reflects the pattern in which the economic
benefits of the intangible asset are consumed. If that pattern
cannot be reliably determined, the straight-line amortization
method is used.
|
We perform an annual impairment test of goodwill and
indefinite-lived intangible assets. We perform our annual
impairment assessment as of the beginning of the fourth quarter
of each year, unless circumstances dictate more frequent interim
assessments. In evaluating when an interim assessment of
goodwill is necessary, we consider, among other things, the
trading level of our common stock, changes in expected future
cash flows and mergers and acquisitions involving companies in
our industry. In evaluating when an interim assessment of
indefinite-lived intangible assets is necessary, we review for
significant events or significant changes in circumstances.
In conjunction with each test of goodwill we determine the fair
value of each reporting unit and compare the fair value to the
reporting units carrying amount. A reporting unit is
defined as an operating segment or one level below an operating
segment. We determine the fair value of our reporting units
using a combination of three valuation methods: market multiple
approach; discounted cash flow approach; and comparable
transactions approach. The market multiple approach provides
indications of value based on market multiples for public
companies involved in similar lines of business. The discounted
cash flow approach calculates the present value of projected
future cash flows using assumptions consistent with those of
market participants. The comparable transactions approach
provides indications of value based on an examination of recent
transactions in which companies in similar lines of business
were acquired. The fair values derived from these three
valuation methods are then weighted to arrive at a single value
for each reporting unit. Relative weights assigned to the three
methods are based upon the availability, relevance and
reliability of the underlying data. We then reconcile the total
values for all reporting units to our market capitalization and
evaluate the reasonableness of the implied control premium.
To the extent a reporting units carrying amount exceeds
its fair value, an indication exists that the reporting
units goodwill may be impaired, and we must perform a
second more detailed impairment assessment. The second
impairment assessment involves allocating the reporting
units fair value to all of its recognized and unrecognized
assets and liabilities in order to determine the implied fair
value of the reporting units goodwill as of the assessment
date. The implied fair value of the reporting units
goodwill is then compared to the carrying amount of goodwill to
quantify an impairment charge as of the assessment date.
Methods used to determine fair values for indefinite-lived
intangible assets involve customary valuation techniques that
are applicable to the particular class of intangible asset and
apply inputs and assumptions that we believe a market
participant would use.
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Long-Lived Assets: We review 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. Indications of impairment require significant
judgment by management. For purposes of recognizing and
measuring impairment of long-lived assets, we evaluate assets at
the lowest level of identifiable cash flows for associated
product groups. If the sum of the undiscounted expected future
cash flows over the remaining useful life of the primary asset
in the associated product groups is less than the carrying
amount of the assets,
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Page 21 of 94
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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, we estimate fair values using the expected
future discounted cash flows using assumptions consistent with
those of market participants. Assets to be disposed of are
reported at the lower of carrying amount or fair value less
costs to dispose.
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|
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|
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Pension and Other Postretirement Benefit Plan Actuarial
Assumptions: We recognize the overfunded or
underfunded status of benefit plans in our consolidated balance
sheets. For purposes of calculating pension and postretirement
medical benefit obligations and related costs, we use certain
actuarial assumptions. Two critical assumptions, the discount
rate and the expected return on plan assets, are important
elements of expense
and/or
liability measurement. We evaluate these assumptions annually.
Other assumptions include employee demographic factors
(retirement patterns, mortality and turnover), rate of
compensation increase and the healthcare cost trend rate. See
additional information contained in Managements Discussion
and Analysis of Financial Condition and Results of
Operations Qualified Pension Plans.
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Income Taxes: We use the asset and liability
method of accounting for income taxes. This method recognizes
the expected future tax consequences of temporary differences
between book and tax bases of assets and liabilities and
requires an evaluation of asset realizability based on a
more-likely-than-not criteria. We have valuation allowances for
deferred tax assets primarily associated with foreign net
operating loss carryforwards and foreign income tax credit
carryforwards. Realization of the deferred tax assets is
dependent upon our ability to generate sufficient future taxable
income. We believe that it is more-likely-than-not that future
taxable income, based on enacted tax laws in effect as of
December 31, 2009, will be sufficient to realize the
recorded deferred tax assets net of existing valuation
allowances.
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Environmental Costs: Environmental
expenditures that relate to current operations are expensed or
capitalized, as appropriate. Remediation costs that relate to an
existing condition caused by past operations are accrued when it
is probable that those costs will be incurred and can be
reasonably estimated based on evaluations of currently available
facts related to each site. The operation of manufacturing
plants involves a high level of susceptibility in these areas,
and there is no assurance that we will not incur material
environmental or occupational health and safety liabilities in
the future. Moreover, expectations of remediation expenses could
be affected by, and potentially significant expenditures could
be required to comply with, environmental regulations and health
and safety laws that may be adopted or imposed in the future.
Future remediation technology advances could adversely impact
expectations of remediation expenses.
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Page 22 of 94
Summary
of Consolidated Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
In
|
|
|
% of Net
|
|
|
In
|
|
|
% of Net
|
|
|
In
|
|
|
% of Net
|
|
|
|
Thousands
|
|
|
Sales
|
|
|
Thousands
|
|
|
Sales
|
|
|
Thousands
|
|
|
Sales
|
|
|
Net sales
|
|
$
|
1,898,700
|
|
|
|
100.0
|
|
|
$
|
2,473,824
|
|
|
|
100.0
|
|
|
$
|
2,136,888
|
|
|
|
100.0
|
|
Cost of sales
|
|
|
1,328,817
|
|
|
|
70.0
|
|
|
|
1,697,844
|
|
|
|
68.6
|
|
|
|
1,475,347
|
|
|
|
69.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
569,883
|
|
|
|
30.0
|
|
|
|
775,980
|
|
|
|
31.4
|
|
|
|
661,541
|
|
|
|
31.0
|
|
Selling, general and administrative
|
|
|
372,927
|
|
|
|
19.6
|
|
|
|
430,717
|
|
|
|
17.4
|
|
|
|
371,853
|
|
|
|
17.4
|
|
Intangible asset impairment
|
|
|
5,794
|
|
|
|
0.3
|
|
|
|
32,700
|
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations
|
|
|
191,162
|
|
|
|
10.1
|
|
|
|
312,563
|
|
|
|
12.7
|
|
|
|
289,688
|
|
|
|
13.6
|
|
Interest expense, net
|
|
|
(35,483
|
)
|
|
|
(1.9
|
)
|
|
|
(43,426
|
)
|
|
|
(1.8
|
)
|
|
|
(23,521
|
)
|
|
|
(1.2
|
)
|
Loss on extinguishment of debt
|
|
|
(6,391
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income, net
|
|
|
1,846
|
|
|
|
0.1
|
|
|
|
(7,737
|
)
|
|
|
(0.3
|
)
|
|
|
(2,276
|
)
|
|
|
(0.1
|
)
|
Gain on sale of equity interest
|
|
|
|
|
|
|
|
|
|
|
169,684
|
|
|
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes
|
|
|
151,134
|
|
|
|
8.0
|
|
|
|
431,084
|
|
|
|
17.5
|
|
|
|
263,891
|
|
|
|
12.3
|
|
Income tax provision
|
|
|
43,224
|
|
|
|
2.3
|
|
|
|
157,398
|
|
|
|
6.4
|
|
|
|
80,215
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings from continuing operations
|
|
|
107,910
|
|
|
|
5.7
|
|
|
|
273,686
|
|
|
|
11.1
|
|
|
|
183,676
|
|
|
|
8.6
|
|
Loss from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
(8,355
|
)
|
|
|
(0.3
|
)
|
|
|
(460
|
)
|
|
|
(0.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
107,910
|
|
|
|
5.7
|
|
|
$
|
265,331
|
|
|
|
10.8
|
|
|
$
|
183,216
|
|
|
|
8.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.07
|
|
|
|
|
|
|
$
|
4.84
|
|
|
|
|
|
|
$
|
3.17
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2.07
|
|
|
|
|
|
|
$
|
4.69
|
|
|
|
|
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.04
|
|
|
|
|
|
|
$
|
4.79
|
|
|
|
|
|
|
$
|
3.13
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2.04
|
|
|
|
|
|
|
$
|
4.64
|
|
|
|
|
|
|
$
|
3.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2009
Compared with 2008
Overview
Net sales in 2009 decreased significantly from 2008 primarily
reflecting lower sales volumes on weaker global demand in our
Electrical and HVAC segments. Additionally, during 2009, we did
not experience the traditional seasonal summer increase in
non-residential construction-related demand usually seen in our
Electrical segment. A stronger U.S. dollar during 2009 also
negatively impacted net sales in 2009. Although current year
production volumes decreased significantly, gross profit as a
percent of net sales in 2009 decreased only 1.4 percentage
points.
Earnings from operations in dollars and as a percent of sales
decreased from the prior year primarily as a result of lower
sales and production volumes. Prior actions taken to reduce
headcount and cut expenses, the impact of lower current year
commodity costs, and our discipline in managing price muted the
negative impact of lower sales volumes on 2009 earnings.
Earnings from operations in 2009 included a charge related to a
facility consolidation, a non-cash charge for intangible asset
impairment, a charge for an estimate revision for an
environmental remediation site and a benefit from a
self-insurance reserves adjustment. Earnings from operations in
2008 included a non-cash charge for intangible asset impairment
and a benefit from a favorable legal settlement.
During 2009, we refinanced certain long-term debt and recognized
a loss on extinguishment of debt.
Page 23 of 94
During 2008, we sold our minority interest in Leviton
Manufacturing Company (Leviton) and recognized a
pre-tax gain of $170 million.
Net earnings in 2009 were $107.9 million, or $2.04 per
diluted share compared to net earnings of $265.3 million,
or $4.64 per diluted share in 2008. Net earnings in 2009
included a net after-tax charge totaling $12.4 million
($0.23 per diluted share) and net earnings in 2008 included a
net after-tax benefit totaling $74.9 million ($1.31 per
diluted share). Net earnings in 2008 also included an
$8.4 million ($0.15 pre diluted share) after-tax loss from
discontinued operations that reflects a loss on sale in
connection with the completion of planned divestitures of
non-core businesses acquired as part of a 2007 acquisition.
Net
Sales and Gross Profit
Net sales in 2009 were $1.9 billion, down 23.2% from 2008.
The
year-over-year
sales decrease primarily reflects lower sales volumes on weaker
global demand in our Electrical and HVAC segments. The stronger
U.S. dollar negatively impacted sales by approximately
$77 million in 2009 when compared to 2008.
Gross profit in 2009 was $569.9 million, or 30.0% of net
sales, compared to $776.0 million, or 31.4% of net sales,
in 2008. The
year-over-year
decrease as a percent of sales reflects the impact of lower
production volumes. Actions taken in the second half of 2008 and
during 2009 to lower overall manufacturing costs
headcount and expense cuts helped mitigate the
negative impact of lower production volumes. Lower current year
commodity costs and our discipline in managing our price-cost
relationship also benefited current year gross profit. Gross
profit also reflected net charges totaling approximately
$4 million related to a facility consolidation, which
partially offset a benefit from a self-insurance reserve
adjustment.
Selling,
General and Administrative
Selling, general and administrative (SG&A)
expense in 2009 was $372.9 million, or 19.6% of net sales,
compared to $430.7 million, or 17.4% of net sales, in 2008.
SG&A expense in 2009 reflects a $4 million
environmental remediation charge. SG&A expense in 2008
reflects a favorable $12 million legal settlement.
Intangible
Asset Impairment
During 2009, we recognized impairment of
non-amortizing
intangible assets in our Electrical segment of $4.6 million
and in our HVAC segment of $1.2 million. During 2008, we
recognized impairment of intangible assets of $32.7 million
in our Electrical segment.
Interest
Expense, Net
Interest expense, net was $35.5 million in 2009, down
$7.9 million from 2008. The decrease reflects lower average
debt outstanding during 2009 when compared to 2008. Interest
income included in interest expense, net was $0.8 million
in 2009 and $4.7 million in 2008. Interest expense was
$36.3 million for 2009 and $48.1 million for 2008.
Loss
on Extinguishment of Debt
During 2009, we issued $250 million of 5.625% senior
notes due 2021 and used a portion of the net proceeds to retire
$125 million of 7.25% notes due 2013. We recognized a
loss on extinguishment of debt of $6.4 million during 2009
associated with the early repayment of the 2013 notes.
Page 24 of 94
Gain
on Sale of Equity Interest
During 2008, we sold our minority interest in Leviton for net
proceeds of $280 million and recognized a pre-tax gain of
$169.7 million.
Income
Taxes
The effective tax rate in 2009 was 28.6% compared to 36.5% in
2008. The higher prior year effective rate for 2008 reflects the
gain on sale of our minority interest in Leviton, the
$32.7 million non-cash charge for impairment of intangible
assets and a $14 million non-cash tax charge. The effective
rate for both years reflects benefits from our Puerto Rican
manufacturing operations.
Net
Earnings
Net earnings in 2009 were $107.9 million, or $2.04 per
diluted share compared to net earnings of $265.3 million,
or $4.64 per diluted share in 2008. Net earnings in 2009
included a net after-tax charge totaling $12.4 million
($0.23 per diluted share) associated with debt refinancing, a
facility consolidation, a non-cash charge for intangible asset
impairment, a charge for an estimate revision for an
environmental remediation site and a benefit from a
self-insurance reserves adjustment. Net earnings in 2008
included a net after-tax benefit totaling $74.9 million
($1.31 per diluted share) associated with the gain on sale of
Leviton, a non-cash charge for intangible asset impairment, an
out-of-period non-cash tax charge and a benefit from a favorable
legal settlement. Net earnings in 2008 also included an
$8.4 million ($0.15 pre diluted share) after-tax loss from
discontinued operations that reflects a loss on sale in
connection with the completion of planned divestitures of
non-core businesses acquired as part of a 2007 acquisition.
Year 2008
Compared with 2007
Overview
Thomas & Betts 2008 performance exceeded that of
2007, despite the economic turmoil that began to spread beyond
the residential-related markets in the second half of the year.
Net sales and gross profit in 2008 increased from 2007 by 16%
and 17%, respectively. Electrical segment acquisitions completed
in 2007 and early 2008 played a major role in the
year-over-year
increases in net sales and gross profit. Price increases in 2008
related to higher commodity and energy costs helped to offset
lower underlying sales volumes in 2008. Gross profit in 2008 as
a percent of net sales increased modestly over the prior year.
Earnings from operations in 2008 were negatively impacted by a
$32.7 million non-cash charge in the fourth quarter for
intangible asset impairment. Selling, general and administrative
expense in 2008 as a percent of net sales remained flat with the
prior year.
Interest expense, net increased
year-over-year
primarily as a result of funding required for acquisitions.
During 2008, we sold our minority interest in Leviton and
recognized a pre-tax gain of $170 million.
Net earnings from continuing operations in 2008 were
$273.7 million, or $4.79 per diluted share. Net earnings
from continuing operations in 2007 were $183.7 million, or
$3.13 per diluted share.
Page 25 of 94
The 2008 $8.4 million loss from discontinued operations,
net reflects a fourth quarter loss on sale in connection with
the completion of planned divestures of non-core pipe businesses
acquired as part of the 2007 acquisition of Lamson &
Sessions Co.
Net earnings including discontinued operations in 2008 were
$265.3 million, or $4.64 per diluted share. Net earnings
including discontinued operations in 2007 were
$183.2 million, or $3.12 per diluted share.
Net
Sales and Gross Profit
Net sales in 2008 were $2.5 billion, up 15.8% from 2007.
Acquisitions completed in 2007 and early 2008 accounted for
$314 million of the
year-over-year
increase in net sales. Price increases in 2008 related to higher
commodity and energy costs helped to offset lower underlying
sales volumes in 2008. Favorable foreign currency exchange
driven by strong Canadian and European currencies against a
weaker U.S. dollar, primarily in the first half of the
year, accounted for approximately $19 million of the sales
increase.
Gross profit in 2008 was $776.0 million, or 31.4% of net
sales, compared to $661.5 million, or 31.0% of net sales,
in 2007. The
year-over-year
improvement in gross profit dollars and percent of net sales
largely reflects the favorable impact of acquisitions.
Selling,
General and Administrative
SG&A expense in 2008 was $430.7 million, or 17.4% of
net sales, compared to $371.9 million, or 17.4% of net
sales, in the prior year. The $59 million increase in
SG&A expense largely reflects the impact of the
acquisitions. SG&A expense in 2008 included
$26.6 million of intangible asset amortization and a
favorable $12 million legal settlement. SG&A expense
in 2007 included $8.3 million of intangible asset
amortization ($7 million of which related to the 2007
acquisitions), a $7 million charge for a legal settlement
and $7 million in expenses for revised estimates for
certain environmental site remediation.
Intangible
Asset Impairment
During 2008, we recognized impairment of non-amortizing
intangible assets of $32.7 million in our Electrical
segment.
Interest
Expense, Net
Interest expense, net was $43.4 million for 2008 up
$19.9 million from the prior year primarily as a result of
funding required for the acquisitions and lower interest income.
Interest income included in interest expense, net was
$4.7 million for 2008 compared to $10.6 million for
2007. Interest expense was $48.1 million for 2008 and
$34.1 million for 2007.
Gain
on Sale of Equity Interest
During 2008, we sold our minority interest in Leviton for net
proceeds of $280 million and recognized a pre-tax gain of
$169.7 million.
Income
Taxes
The effective tax rate in 2008 was 36.5 percent compared to
30.4 percent in 2007. The higher 2008 rate reflects the
impact on domestic pre-tax earnings of the $170 million
gain on sale of our minority interest in Leviton and the
$32.7 million non-cash charge for intangible asset
impairment.
Page 26 of 94
Additionally, the 2008 rate reflects an
out-of-period,
non-cash tax charge of $14 million. The effective rate for
both years reflects benefits from our Puerto Rican manufacturing
operations.
Net
Earnings
Net earnings from continuing operations in 2008 were
$273.7 million, or $4.79 per diluted share. Net earnings
from continuing operations in 2007 were $183.7 million, or
$3.13 per diluted share. Higher 2008 net earnings from
continuing operations reflect the previously noted gain on sale
of our minority interest in Leviton, a favorable legal
settlement, a non-cash tax charge related to an adjustment of
prior period deferred income taxes and a non-cash charge for
intangible asset impairment (collectively, $1.31 per diluted
share).
Loss from discontinued operations, net in 2008 was
$8.4 million, or $0.15 per diluted share, in 2008 compared
to $0.5 million, or $0.01 per diluted share, in 2007. Loss
from discontinued operations, net in 2008 reflects an
$8.1 million loss on sale in conjunction with the
completion of planned divestures of non-core pipe businesses
acquired as part of the 2007 acquisition of Lamson &
Sessions Co.
Net earnings including discontinued operations in 2008 were
$265.3 million, or $4.64 per diluted share. Net earnings
including discontinued operations in 2007 were
$183.2 million, or $3.12 per diluted share.
Page 27 of 94
Summary
of Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
In
|
|
|
% of Net
|
|
|
In
|
|
|
% of Net
|
|
|
In
|
|
|
% of Net
|
|
Net Sales
|
|
Thousands
|
|
|
Sales
|
|
|
Thousands
|
|
|
Sales
|
|
|
Thousands
|
|
|
Sales
|
|
|
Electrical
|
|
$
|
1,554,326
|
|
|
|
81.9
|
|
|
$
|
2,103,121
|
|
|
|
85.0
|
|
|
$
|
1,766,598
|
|
|
|
82.7
|
|
Steel Structures
|
|
|
234,462
|
|
|
|
12.3
|
|
|
|
231,554
|
|
|
|
9.4
|
|
|
|
227,356
|
|
|
|
10.6
|
|
HVAC
|
|
|
109,912
|
|
|
|
5.8
|
|
|
|
139,149
|
|
|
|
5.6
|
|
|
|
142,934
|
|
|
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,898,700
|
|
|
|
100.0
|
|
|
$
|
2,473,824
|
|
|
|
100.0
|
|
|
$
|
2,136,888
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
In
|
|
|
% of Net
|
|
|
In
|
|
|
% of Net
|
|
|
In
|
|
|
% of Net
|
|
Segment Earnings
|
|
Thousands
|
|
|
Sales
|
|
|
Thousands
|
|
|
Sales
|
|
|
Thousands
|
|
|
Sales
|
|
|
Electrical
|
|
$
|
270,154
|
|
|
|
17.4
|
|
|
$
|
416,732
|
|
|
|
19.8
|
|
|
$
|
352,901
|
|
|
|
20.0
|
|
Steel Structures
|
|
|
47,433
|
|
|
|
20.2
|
|
|
|
44,336
|
|
|
|
19.1
|
|
|
|
42,623
|
|
|
|
18.7
|
|
HVAC
|
|
|
18,213
|
|
|
|
16.6
|
|
|
|
25,693
|
|
|
|
18.5
|
|
|
|
27,175
|
|
|
|
19.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment earnings
|
|
|
335,800
|
|
|
|
17.7
|
|
|
|
486,761
|
|
|
|
19.7
|
|
|
|
422,699
|
|
|
|
19.8
|
|
Corporate expense
|
|
|
(47,423
|
)
|
|
|
|
|
|
|
(41,634
|
)
|
|
|
|
|
|
|
(62,768
|
)
|
|
|
|
|
Depreciation, amortization and share-based compensation
|
|
|
(91,421
|
)
|
|
|
|
|
|
|
(99,864
|
)
|
|
|
|
|
|
|
(70,243
|
)
|
|
|
|
|
Intangible asset impairment
|
|
|
(5,794
|
)
|
|
|
|
|
|
|
(32,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(35,483
|
)
|
|
|
|
|
|
|
(43,426
|
)
|
|
|
|
|
|
|
(23,521
|
)
|
|
|
|
|
Loss on extinguishment of debt
|
|
|
(6,391
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income, net
|
|
|
1,846
|
|
|
|
|
|
|
|
(7,737
|
)
|
|
|
|
|
|
|
(2,276
|
)
|
|
|
|
|
Gain on sale of equity interest
|
|
|
|
|
|
|
|
|
|
|
169,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes
|
|
$
|
151,134
|
|
|
|
|
|
|
$
|
431,084
|
|
|
|
|
|
|
$
|
263,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have three reportable segments: Electrical, Steel Structures
and HVAC. We evaluate our business segments primarily on the
basis of segment earnings, with segment earnings defined as
earnings before corporate expense, depreciation and amortization
expense, share-based compensation expense, interest, income
taxes and certain other items.
Our segment earnings are significantly influenced by the
operating performance of our Electrical segment that accounted
for more than 80% of our consolidated net sales and consolidated
segment earnings during 2009, 2008, and 2007.
Electrical
Segment
Year
2009 Compared with 2008
Electrical segment net sales in 2009 were $1.6 billion,
down 26.1% from 2008. Decreased sales compared to 2008 reflect
weaker demand for electrical products used in construction,
industrial utility and communications markets. Virtually all
product and geographic markets in the Electrical segment
experienced significant year-over-year volume declines. During
2009, we did not experience the traditional seasonal summer
increase in non-residential construction-related demand usually
seen in our Electrical segment. The stronger U.S. dollar
negatively impacted sales by approximately $75 million in
2009.
Page 28 of 94
Electrical segment earnings in 2009 were $270.2 million,
down 35.2% from 2008. Electrical segment earnings in 2009
included net charges totaling approximately $4 million
related to a facility consolidation, which were partially offset
an adjustment of self-insurance reserves. The decline in
year-over-year segment earnings compared to 2008 reflects
primarily the impact of lower sales and production volumes.
Year
2008 Compared with 2007
Electrical segment net sales in 2008 were $2.1 billion, up
19.1% from 2007. Acquisitions completed in 2007 and early 2008
accounted for $314 million of the
year-over-year
increase in net sales. Price increases in 2008 related to higher
commodity and energy costs helped to offset lower underlying
sales volumes in 2008. Favorable foreign currency exchange
accounted for approximately $17 million of the sales
increase.
Electrical segment earnings in 2008 were $416.7 million, up
18.1% from 2007. The improvement in
year-over-year
segment earnings largely reflects the favorable impact of
acquisitions. Price increases in 2008 related to higher
commodity and energy costs helped to offset the earnings impact
of lower underlying sales volumes.
Steel
Structures Segment
Year
2009 Compared with 2008
Net sales in 2009 in our Steel Structures segment were
$234.5 million, up 1.3% from 2008. Relatively flat
year-over-year net sales reflect an increase in volumes that
were partially offset by price decreases from lower steel costs.
Segment earnings in 2009 were $47.4 million, up 7.0% from
2008, primarily reflecting improved project mix.
Year
2008 Compared with 2007
Net sales in 2008 in our Steel Structures segment were
$231.6 million, up 1.9% from 2007. Segment earnings in 2008
were $44.3 million, up 4.0% from 2007, primarily reflecting
changes in project mix.
HVAC
Segment
Year
2009 Compared with 2008
Net sales in 2009 in our HVAC segment were $109.9 million,
down 21.0% from 2008. HVAC segment earnings in 2009 were
$18.2 million, down 29.1% from 2008. The sales and earnings
declines reflect volume declines resulting from weak commercial
construction markets and the curtailment of maintenance and
replacement spending in key end markets.
Year
2008 Compared with 2007
Net sales in 2008 in our HVAC segment were $139.1 million,
down 2.7% from 2007. HVAC segment earnings in 2008 were
$25.7 million, down 5.5% from 2007, primarily due to lower
sales volumes.
Liquidity
and Capital Resources
We had cash and cash equivalents of $478.6 million and
$292.5 million at December 31, 2009 and 2008,
respectively.
Page 29 of 94
The following table reflects the primary category totals in our
Consolidated Statements of Cash Flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
237,862
|
|
|
$
|
257,861
|
|
|
$
|
261,360
|
|
Net cash provided by (used in) investing activities
|
|
|
(35,091
|
)
|
|
|
224,272
|
|
|
|
(809,778
|
)
|
Net cash provided by (used in) financing activities
|
|
|
(53,110
|
)
|
|
|
(312,685
|
)
|
|
|
317,836
|
|
Effect of exchange-rate changes on cash and cash equivalents
|
|
|
36,458
|
|
|
|
(26,880
|
)
|
|
|
9,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
186,119
|
|
|
|
142,568
|
|
|
|
(221,042
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
292,494
|
|
|
|
149,926
|
|
|
|
370,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
478,613
|
|
|
$
|
292,494
|
|
|
$
|
149,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
Cash provided by operating activities in 2009 was primarily
attributable to net income of $107.9 million. Operating
activities in 2009 included depreciation and amortization of
$75.1 million, a non-cash charge for intangible asset
impairment of $5.8 million, share-based compensation
expense of $16.3 million and loss on extinguishment of debt
of $6.4 million. Net changes in working capital (accounts
receivable, inventories and accounts payable) and accrued
liabilities positively impacted cash flows by $35.9 million
in 2009. Funding to qualified pension plans of
$51.7 million negatively impacted cash flows in 2009.
Operating activities were also unfavorably impacted by change in
control payments of $5.4 million related to the
Lamson & Sessions Co. (LMS) acquisition.
Cash provided by operating activities in 2008 was primarily
attributable to net income of $265.3 million. Net income in
2008 reflected the second quarter pre-tax gain on sale of our
minority interest in Leviton of $169.7 million.
Additionally, income taxes related to divestitures during 2008
negatively impacted cash flows by approximately
$70 million. Operating activities in 2008 included
depreciation and amortization of $80.4 million, a non-cash
charge for intangible asset impairment of $32.7 million and
share-based compensation expense of $19.4 million. Changes
in working capital (accounts receivable, inventories and
accounts payable) as well as accrued liabilities positively
impacted cash flows by $36.8 million in 2008. Operating
activities in 2008 were also unfavorably impacted by change in
control payments related to the LMS acquisition of
$13.6 million.
Cash provided by operating activities in 2007 was primarily
attributable to net income of $183.2 million. Operating
activities in 2007 included depreciation and amortization of
$57.8 million and share-based compensation expense of
$12.5 million. Changes in working capital (accounts
receivable, inventories and accounts payable) as well as accrued
liabilities had a negligible impact on cash flows in 2007.
Operating activities in 2007 also reflected $8.8 million in
merger-related transaction costs incurred by LMS that were
subsequently paid by Thomas & Betts.
Investing
Activities
During 2009, we had capital expenditures to support our ongoing
business plans totaling $41.1 million. We expect capital
expenditures to be in the mid-$40 million to
low-$60 million range for the full year 2010. Investing
activities in 2009 also reflect the release of restricted cash
for change in control payments related to the LMS acquisition of
$5.1 million.
Investing activities in 2008 included the sale of the
held-for-sale
operations and LMS headquarters building that were acquired as
part of the LMS acquisition totaling approximately
$65.4 million. Investing activities in 2008 also reflect
the sale of our minority interest in Leviton for
Page 30 of 94
net proceeds of $280 million. Two acquisitions totaling
$91 million and capital expenditures totaling
$42.1 million also impacted investing activities during
2008. Investing activities in 2008 also reflect release of
restricted cash for change in control payments related to the
LMS acquisition of $8.7 million.
Investing activities in 2007 included the acquisitions of LMS
for approximately $450 million, the Joslyn Hi-Voltage and
Power Solutions businesses from Danaher Corporation for
approximately $280 million and Drilling Technical Supply SA
for approximately $23 million. Capital expenditures
totaling $40.7 million also impacted investing activities
during 2007. Investing activities in 2007 also reflect
establishment of restricted cash used for change in control
payments related to the LMS acquisition of $16.7 million.
Financing
Activities
Financing activities in 2009 included the repurchase of
1.0 million common shares for $25 million. During the
fourth quarter of 2009, we issued $250 million of
5.625% senior notes due 2021 and used a portion of the net
proceeds to retire $125 million of 7.25% notes due
2013 and repay $95 million of outstanding indebtedness on
our revolving credit facility. In the first quarter of 2009, we
repaid $148 million of debt using a combination of cash and
borrowings under our revolving credit facility. Financing
activities in 2009 resulted in no net change in the balance of
our revolving credit facility from year-end 2008 to year-end
2009. During 2009, the Corporation reduced its total outstanding
debt by approximately $26 million.
Financing activities in 2008 reflected cash used for the
repurchase of approximately 5.2 million common shares for
$161 million. Financing activities in 2008 also reflected
repayment of $124 million of debt and net repayments on our
revolving credit facility of $30 million.
Financing activities in 2007 reflected cash used for the
repurchase of approximately 2.5 million common shares for
$133 million. Financing activities in 2007 also reflected
net proceeds on our revolving credit facility of
$420 million and cash provided by stock option exercises of
$25 million.
$750 million
Credit Facility
We have a revolving credit facility with total availability of
$750 million and a five-year term expiring in October 2012.
All borrowings and other extensions of credit under our
revolving credit facility are subject to the satisfaction of
customary conditions, including absence of defaults and accuracy
in material respects of representations and warranties. The
proceeds of any loans under the revolving credit facility may be
used for general operating needs and for other general corporate
purposes in compliance with the terms of the facility. At
December 31, 2009 and 2008, $390 million was
outstanding under this facility.
In 2007, the Corporation entered into an interest rate swap to
hedge its exposure to changes in the LIBOR rate on
$390 million of borrowings under this facility. See
Item 7A.
Fees to access the facility and letters of credit under the
facility are based on a pricing grid related to our debt ratings
with Moodys, S&P, and Fitch during the term of the
facility.
Our amended and restated revolving credit facility requires that
we maintain:
|
|
|
|
|
a maximum leverage ratio of 3.75 to 1.00; and
|
|
|
|
a minimum interest coverage ratio of 3.00 to 1.00.
|
It also contains customary covenants that could restrict our
ability to: incur additional indebtedness; grant liens; make
investments, loans, or guarantees; declare dividends; or
repurchase
Page 31 of 94
company stock. We do not expect these covenants to restrict our
liquidity, financial condition, or access to capital resources
in the foreseeable future.
Outstanding letters of credit, which reduced availability under
the credit facility, amounted to $20.7 million at
December 31, 2009. The letters of credit relate primarily
to third-party insurance claims processing.
Other
Credit Facilities
We have a EUR 10.0 million (approximately
US$14.4 million) committed revolving credit facility with a
European bank that has an indefinite maturity. There were no
balances outstanding or letters of credit that reduced
availability under the European facility at December 31,
2009. This credit facility contains standard covenants similar
to those contained in the $750 million credit agreement and
standard events of default such as covenant default and
cross-default.
We have a CAN 30.0 million (approximately
US$28.7 million) committed revolving credit facility with a
Canadian bank that matures in 2011. There were no outstanding
balances or letters of credit that reduced availability under
the Canadian facility at December 31, 2009. This credit
facility contains standard covenants similar to those contained
in the $750 million credit agreement and standard events of
default such as covenant default and cross-default.
Other
Letters of Credit
As of December 31, 2009, we also had letters of credit in
addition to those discussed above that do not reduce
availability under our credit facilities. We had
$11.4 million of such additional letters of credit that
relate primarily to environmental assurances, third-party
insurance claims processing, performance guarantees and
acquisition obligations.
Compliance
and Availability
We are in compliance with all covenants or other requirements
set forth in our credit facilities. However, if we fail to be in
compliance with the financial or other covenants of our credit
agreements, then the credit agreements could be terminated, any
outstanding borrowings under the agreements could be accelerated
and immediately due, and we could have difficulty replacing
those credit facilities or obtaining credit facilities in the
future.
As of December 31, 2009, the aggregate availability of
funds under our credit facilities is approximately
$382.4 million, after deducting outstanding letters of
credit. Availability is subject to the satisfaction of various
covenants and conditions to borrowing.
Credit
Ratings
As of December 31, 2009, we had investment grade credit
ratings from Standard & Poors, Moodys
Investor Service and Fitch Ratings on our senior unsecured debt.
Should these credit ratings drop, repayment under our credit
facilities and securities will not be accelerated; however, our
credit costs may increase. Similarly, if our credit ratings
improve, we could potentially have a decrease in our credit
costs. The maturity of any of our debt securities does not
accelerate in the event of a credit downgrade.
Page 32 of 94
Debt
Securities
Thomas & Betts had the following unsecured debt
securities outstanding as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Amount
|
|
|
Interest Rate
|
|
|
Interest Payable
|
|
|
Maturity Date
|
|
|
November 2009
|
|
$
|
250.0 million
|
|
|
|
5.625
|
%
|
|
|
May 15 and November 15
|
|
|
|
November 2021
|
|
The indentures underlying the unsecured 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. We are in compliance with all covenants and
other requirements set forth in the indentures.
Other
In 2007, our Board of Directors approved a share repurchase plan
that authorized us to buy 3,000,000 of our common shares. In
2007, we repurchased, with available cash resources, 200,700
common shares through open-market transactions. During 2008, we
repurchased, with available cash resources, the remaining
2,799,300 common shares authorized by this plan through
open-market transactions.
In 2008, our Board of Directors approved a share repurchase plan
that authorized us to buy an additional 5,000,000 of our common
shares. In 2008, we repurchased, with available cash resources,
2,425,000 common shares through open-market transactions. During
2009, we repurchased, with available cash resources, 1,000,000
common shares through
open-market
transactions. The timing of future repurchases, if any, will
depend upon a variety of factors, including market conditions.
This authorization expires in October 2010.
We do not currently pay cash dividends. Future decisions
concerning the payment of cash dividends on the common stock
will depend upon our results of operations, financial condition,
strategic investment opportunities, continued compliance with
credit facilities and other factors that the Board of Directors
may consider relevant.
As of December 31, 2009, we have $478.6 million in
cash and cash equivalents and $382.4 million of aggregate
availability under our credit facilities. We renewed our
effective shelf registration with the Securities and Exchange
Commission on December 3, 2008, utilizing the well-known
seasoned issuer (WKSI) process. The registration permits us to
issue common stock, preferred stock and debt securities. The
registration is effective for a period of three years from the
date of filing. We continue to have cash requirements to, among
other things, support working capital and capital expenditure
needs, service debt and fund our retirement plans as required.
We generally intend to use available cash and internally
generated funds to meet these cash requirements and may borrow
under existing credit facilities or access the capital markets
as needed for liquidity. During 2008, credit markets were
materially disrupted, significantly limiting the availability of
credit. Those conditions mitigated somewhat during 2009. To
date, our liquidity has not been adversely affected by the
current credit market. We believe that we have sufficient
liquidity to satisfy both short-term and long-term requirements.
Off-Balance
Sheet Arrangements
As of December 31, 2009, we did not have any off-balance
sheet arrangements.
Page 33 of 94
Refer to Note 19 in the Notes to Consolidated Financial
Statements for information regarding our guarantee and
indemnification arrangements.
Contractual
Obligations
The following table reflects our total contractual cash
obligations as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
through
|
|
|
through
|
|
|
|
|
(In millions)
|
|
Total
|
|
|
2010
|
|
|
2012
|
|
|
2014
|
|
|
Thereafter
|
|
|
Long-Term Debt Including Current Maturities(a)
|
|
$
|
638.5
|
|
|
$
|
0.5
|
|
|
$
|
390.0
|
|
|
$
|
|
|
|
$
|
248.0
|
(b)
|
Estimated Interest Payments(c)
|
|
|
228.9
|
|
|
|
34.4
|
|
|
|
52.8
|
|
|
|
45.0
|
|
|
|
96.7
|
|
Operating Lease Obligations
|
|
|
54.9
|
|
|
|
15.7
|
|
|
|
21.1
|
|
|
|
10.9
|
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Contractual Cash Obligations(d)
|
|
$
|
922.3
|
|
|
$
|
50.6
|
|
|
$
|
463.9
|
|
|
$
|
55.9
|
|
|
$
|
351.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes capital leases. |
|
(b) |
|
Principal amount excluding unamortized discount is
$250 million. |
|
(c) |
|
Reflects stated interest rates for fixed rate debt (including
debt hedged via an interest rate swap) and year-end interest
rates for variable rate debt. |
|
(d) |
|
We have liabilities associated with our qualified and
non-qualified pension and postretirement benefit plans reflected
in our consolidated balance sheet. Future contribution
obligations associated with these liabilities are not reflected
in the table above due to the absence of scheduled maturities.
Funding of these obligations will be dependent on future events
such as the funded status of benefit plans, laws and regulations
and the employment decisions of participants. Therefore, the
timing of these payments cannot be precisely determined. In
2009, we made a $50 million voluntary tax-deductible
contribution to one of our major domestic qualified pension
plans that was not legally required. We expect required
contributions to our qualified pension plans in 2010 to be
minimal. |
Credit
Risk
We continually evaluate the credit risk associated with our
customers. Credit risk with respect to trade receivables is
mitigated in part by the large number of customers comprising
our customer base and their dispersion across many different
industries and geographic areas. No customer receivable exceeds
10% of total accounts receivable as of December 31, 2009.
See also Risk Factors.
Qualified
Pension Plans
We have domestic and foreign qualified pension plans with
domestic plans accounting for a substantial portion of total
plan liabilities and assets. Our contributions to all qualified
pension plans were $52 million in 2009, $2 million in 2008
and $2 million in 2007. We expect required contributions to
our qualified pension plans in 2010 to be minimal. The following
information indicates the funded status for our qualified
pension plans:
Page 34 of 94
All
qualified pension plans:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
(In millions)
|
|
2009
|
|
2008
|
|
Benefit obligation
|
|
$
|
480
|
|
|
$
|
441
|
|
Fair value of plan assets
|
|
$
|
420
|
|
|
$
|
320
|
|
Our qualified pension plan assets at December 31, 2009 and
2008, were included in the following asset categories:
|
|
|
|
|
|
|
|
|
|
|
Plan Assets
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Asset Category
|
|
|
|
|
|
|
|
|
Domestic equity securities
|
|
|
38
|
%
|
|
|
37
|
%
|
International equity securities
|
|
|
24
|
%
|
|
|
20
|
%
|
Debt securities
|
|
|
27
|
%
|
|
|
31
|
%
|
Other, including alternative investments
|
|
|
11
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
The financial objectives of our investment policy is (1) to
maximize returns in order to minimize contributions and
long-term cost of funding pension liabilities, within reasonable
and prudent levels of risk, (2) to match liability growth
with the objective of fully funding benefits as they accrue and
(3) to achieve annualized returns in excess of the policy
benchmark. The Corporations asset allocation targets are
43% U.S. domestic equity securities, 15% international
equity securities, 26% fixed income and high yield debt
securities and 16% other, including alternative investments. As
of December 31, 2009 and 2008, no pension plan assets were
directly invested in Thomas & Betts Corporation common
stock.
The long-term rates of return we use for our qualified pension
plans take into account historical investment experience over a
multi-year period, as well as mix of plan asset investment
types, market conditions, investment practices of our Retirement
Plans Committee and advice from investment professionals and
actuarial advisors. The weighted-average long-term rates of
return used to determine net periodic pension cost for all
qualified pension plans are as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
Weighted-average long-term rates of return used to determine
net periodic pension cost
|
|
|
8.59
|
%
|
|
|
8.41
|
%
|
|
|
8.52
|
%
|
Reflected in the rates above are domestic weighted-average
long-term rates of return of 8.75% for 2009, 2008 and 2007.
The assumed discount rates we use for our qualified pension
plans represent long-term high quality corporate bond rates
commensurate with liability durations of our plans. Discount
rates used to determine net periodic pension cost for all
qualified pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
Discount rates used to determine net periodic pension cost
|
|
|
6.30
|
%
|
|
|
6.18
|
%
|
|
|
5.62
|
%
|
Page 35 of 94
Reflected in the rates above are domestic discount rates to
determine net periodic pension cost of 6.25% in 2009 and 2008
and 5.75% in 2007.
Discount rates used to determine pension benefit obligations as
of December 31, 2009 and 2008 for all qualified pension
plans were 5.62% and 6.30%, respectively, and reflect domestic
discount rates of 5.63% for 2009 and 6.25% for 2008.
The potential impact on the 2009 net periodic pension cost
resulting from a hypothetical
one-percentage-point
change in the assumed weighted-average long-term rate of return
while maintaining a constant discount rate would be
approximately $3 million. The potential impact on the
2009 net periodic pension cost resulting from a
hypothetical one-percentage-point increase in the assumed
discount rate while maintaining a constant weighted-average
long-term rate of return would be a decrease of approximately
$5 million, and a hypothetical one-percentage-point
decrease in the assumed discount rate while maintaining a
constant weighted-average long-term rate of return would be an
increase of approximately $6 million.
Effective January 1, 2008, substantially all domestic
defined benefit pension plans were closed to new entrants.
During the fourth quarter of 2009, our Board of Directors
approved a plan for the suspension of future pension plan
benefit accruals after December 31, 2010 for the domestic
non-bargaining plan participants under the Thomas & Betts
Pension Plan.
For additional information regarding our qualified and
non-qualified pension plans and other post-retirement plans,
refer to Note 14 in the Notes to Consolidated Financial
Statements.
Lamson &
Sessions Co. (LMS) Restructuring and Integration
Plan
The merger of Lamson & Sessions Co. into
Thomas & Betts Corporation was completed in November
2007. Our senior management began assessing and formulating a
restructuring and integration plan as of the acquisition date.
Approval of the plan by our senior management and Board of
Directors occurred during the first quarter of 2008. The
objective of the restructuring and integration plan was to
achieve operational efficiencies and eliminate duplicative
operating costs resulting from the LMS acquisition. We also
intended to achieve greater efficiency in sales, marketing,
administration and other operational activities. We identified
certain liabilities and other costs for restructuring and
integration actions. Included in this amount are approximately
$14 million of planned severance costs for involuntary
termination of approximately 320 employees of LMS and
approximately $8 million of lease cancellation costs
associated with the closure of LMS distribution centers, which
was recorded as part of our purchase price allocation of LMS.
Severance and lease cancellation costs have been reflected in
our consolidated balance sheets in accrued liabilities and
reflect cash paid or to be paid for these actions. Integration
costs were recognized as incurred and either expensed or
capitalized, as appropriate. The amount recognized as
integration expense during 2008 was approximately
$3 million. The actions required by the plan began soon
after the plan was approved, including the communication to
affected employees of our intent to terminate as soon as
possible.
We ceased operations at all LMS distribution centers during the
second quarter of 2008, consolidating these activities into our
existing distribution centers. As of December 31, 2009,
substantially all employees planned for involuntary termination
under the plan have been terminated. Payments associated with
certain of the restructuring and integration actions taken are
expected to extend beyond 2009 due to compliance with applicable
regulations and other considerations. The cash payments
necessary to fund the plan are expected to come from operations
or available cash resources including restricted cash.
Page 36 of 94
We decided at the time of acquisition to divest the rigid
polyvinyl chloride (PVC) and high-density
polyethylene (HDPE) conduit, duct and pressure pipe
businesses, which were acquired as part of the LMS acquisition.
The operations associated with these businesses since the date
of acquisition were reflected as discontinued operations in our
consolidated statements of operations. During 2008, we completed
the divestiture of these discontinued operations. Results from
discontinued operations for 2008 reflected net sales of
approximately $164 million, loss before income taxes of
$12.9 million, an income tax benefit of $4.5 million
and net loss of $8.4 million.
|
|
Item 7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Market
Risk and Financial Instruments
Thomas & Betts is exposed to market risk from changes
in interest rates, foreign exchange rates and raw material
prices. At times, we may enter into various derivative
instruments to manage certain of these risks. We do not enter
into derivative instruments for speculative or trading purposes.
Interest
Rate Risk
During the fourth quarter of 2007, we entered into a
forward-starting amortizing interest rate swap for a notional
amount of $390 million. The notional amount reduces to
$325 million on December 15, 2010, $200 million
on December 15, 2011 and $0 on October 1, 2012. The
interest rate swap hedges $390 million of our exposure to
changes in interest rates on borrowings under our
$750 million credit facility. We have designated the
receive variable/pay fixed interest rate swap as a cash flow
hedge for accounting purposes. Under the interest rate swap, we
receive one-month LIBOR and pay an underlying fixed rate of
4.86%. As of December 31, 2009, we recorded a swap
liability of $28.7 million and a related contra equity
amount, net of tax, of $17.6 million in accumulated other
comprehensive income. We recognized a $0.1 million benefit
to interest expense in 2009, a $0.1 million benefit to
interest expense in 2008 and a $0.5 million charge in 2007
for the ineffective portion of the swap.
The following table reflects our interest rate sensitive
derivative financial instruments as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
Expected Maturities During
|
|
|
2009
|
|
|
|
Year Ended December 31,
|
|
|
Fair Value
|
|
(In millions)
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
(Liability)
|
|
|
Maturities on floating to fixed
interest rate swap
|
|
|
$65.0
|
|
|
|
$125.0
|
|
|
|
$200.0
|
|
|
|
|
|
|
|
|
|
|
|
$(28.7
|
)
|
Average pay rate
|
|
|
4.86%
|
|
|
|
4.86%
|
|
|
|
4.86%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average receive rate
|
|
|
1-month
LIBOR
|
|
|
|
1-month
LIBOR
|
|
|
|
1-month
LIBOR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward
Foreign Exchange Contracts
We had no outstanding forward sale or purchase contracts as of
December 31, 2009 and 2008. During 2008 and 2007, we were a
party to currency forward exchange contracts that amortized
monthly. The contracts were not designated as a hedge for
accounting purposes. These contracts were intended to reduce
cash flow volatility from exchange rate risk related to a
short-term intercompany financing transaction. Under the terms
of the contracts, we sold U.S. dollars at current spot
rates and purchased Canadian dollars at a fixed forward exchange
rate. During 2008 and 2007, we recognized a
mark-to-market
loss of $0.7 million on these contracts and a
mark-to-market
gain
Page 37 of 94
on these contracts of $0.7 million, respectively, that
effectively matched foreign exchange gains on the
short-term
intercompany financing transaction.
Commodities
Futures Contracts
During 2009, 2008 and 2007, we had no outstanding commodities
futures contracts. We are exposed to risk from fluctuating
prices for certain materials used to manufacture our products,
such as: steel, aluminum, copper, zinc, resins and rubber
compounds. At times, some of the risk associated with usage of
aluminum, copper and zinc has been mitigated through the use of
futures contracts that mitigate the price exposure to these
commodities.
Page 38 of 94
|
|
Item 8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX
|
|
|
|
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
88
|
|
Page 39 of 94
MANAGEMENTS
RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation of the
Corporations consolidated financial statements and related
information appearing in this report. Management believes that
the consolidated financial statements fairly reflect the form
and substance of transactions and that the financial statements
reasonably present the Corporations financial position and
results of operations in conformity with U.S. generally
accepted accounting principles. Management also has included in
the Corporations financial statements amounts that are
based on estimates and judgments which it believes are
reasonable under the circumstances.
The independent registered public accounting firm, KPMG LLP,
audits the Corporations consolidated financial statements
in accordance with the standards of the Public Company
Accounting Oversight Board (United States).
The Board of Directors of the Corporation has an Audit Committee
composed of
non-management
Directors. The committee meets periodically with financial
management, the internal auditors and the independent registered
public accounting firm to review accounting, control, auditing
and financial reporting matters.
MANAGEMENTS
REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
Management is responsible for establishing and maintaining
adequate internal control over financial reporting. Our internal
control system is designed to provide reasonable assurance that
externally published financial statements can be relied upon and
have been prepared in accordance with U.S. generally
accepted accounting principles. Because of its inherent
limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
Under the supervision of and with the participation of
management, including our principal executive officer and
principal financial officer, we conducted an assessment of the
effectiveness of our internal control over financial reporting
based on the framework in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our
assessment under the framework in Internal
Control Integrated Framework, management
concluded that our internal control over financial reporting was
effective as of December 31, 2009. KPMG LLP, the
independent registered public accounting firm that audited our
consolidated financial statements, has issued an attestation
report on our internal control over financial reporting as of
December 31, 2009.
|
|
|
|
|
/s/ Dominic
J. Pileggi
Chairman,
President
and Chief Executive Officer
|
|
/s/ William
E Weaver, Jr.
Senior
Vice President
and Chief Financial Officer
|
|
/s/ David
L. Alyea
Vice
President Controller
|
Page 40 of 94
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Thomas & Betts Corporation:
We have audited the accompanying consolidated balance sheets of
Thomas & Betts Corporation and subsidiaries (the
Corporation) as of December 31, 2009 and 2008, and the
related consolidated statements of operations, cash flows, and
shareholders equity and comprehensive income for each of
the years in the three-year period ended December 31, 2009.
These consolidated financial statements are the responsibility
of the Corporations management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Thomas & Betts Corporation and
subsidiaries as of December 31, 2009 and 2008, and the
results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2009, in
conformity with U.S. generally accepted accounting
principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Thomas & Betts Corporations internal control
over financial reporting as of December 31, 2009, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO), and our report dated February
16, 2010 expressed an unqualified opinion on the effectiveness
of the Corporations internal control over financial
reporting.
KPMG LLP
Memphis, Tennessee
February 16, 2010
Page 41 of 94
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Thomas & Betts Corporation:
We have audited Thomas and Betts Corporations (the
Corporation) internal control over financial reporting as of
December 31, 2009, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Corporations management is responsible for
maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying
Managements Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
Corporations internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Thomas and Betts Corporation maintained, in all
material respects, effective internal control over financial
reporting as of December 31, 2009, based on criteria
established in Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
Page 42 of 94
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Thomas & Betts
Corporation and subsidiaries as of December 31, 2009 and
2008, and the related consolidated statements of operations,
cash flows, and shareholders equity and comprehensive
income for each of the years in the three-year period ended
December 31, 2009, and our report dated February 16, 2010
expressed an unqualified opinion on those consolidated financial
statements.
KPMG LLP
Memphis, Tennessee
February 16, 2010
Page 43 of 94
Thomas &
Betts Corporation and Subsidiaries
Consolidated
Statements of Operations
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net sales
|
|
$
|
1,898,700
|
|
|
$
|
2,473,824
|
|
|
$
|
2,136,888
|
|
Cost of sales
|
|
|
1,328,817
|
|
|
|
1,697,844
|
|
|
|
1,475,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
569,883
|
|
|
|
775,980
|
|
|
|
661,541
|
|
Selling, general and administrative
|
|
|
372,927
|
|
|
|
430,717
|
|
|
|
371,853
|
|
Intangible asset impairment
|
|
|
5,794
|
|
|
|
32,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations
|
|
|
191,162
|
|
|
|
312,563
|
|
|
|
289,688
|
|
Interest expense, net
|
|
|
(35,483
|
)
|
|
|
(43,426
|
)
|
|
|
(23,521
|
)
|
Loss on extinguishment of debt
|
|
|
(6,391
|
)
|
|
|
|
|
|
|
|
|
Other (expense) income, net
|
|
|
1,846
|
|
|
|
(7,737
|
)
|
|
|
(2,276
|
)
|
Gain on sale of equity interest
|
|
|
|
|
|
|
169,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes
|
|
|
151,134
|
|
|
|
431,084
|
|
|
|
263,891
|
|
Income tax provision
|
|
|
43,224
|
|
|
|
157,398
|
|
|
|
80,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings from continuing operations
|
|
|
107,910
|
|
|
|
273,686
|
|
|
|
183,676
|
|
Loss from discontinued operations, net
|
|
|
|
|
|
|
(8,355
|
)
|
|
|
(460
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
107,910
|
|
|
$
|
265,331
|
|
|
$
|
183,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.07
|
|
|
$
|
4.84
|
|
|
$
|
3.17
|
|
Discontinued operations
|
|
|
|
|
|
|
(0.15
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2.07
|
|
|
$
|
4.69
|
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.04
|
|
|
$
|
4.79
|
|
|
$
|
3.13
|
|
Discontinued operations
|
|
|
|
|
|
|
(0.15
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2.04
|
|
|
$
|
4.64
|
|
|
$
|
3.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
52,244
|
|
|
|
56,566
|
|
|
|
57,926
|
|
Diluted
|
|
|
52,958
|
|
|
|
57,159
|
|
|
|
58,720
|
|
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
Page 44 of 94
Thomas &
Betts Corporation and Subsidiaries
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
ASSETS
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
478,613
|
|
|
$
|
292,494
|
|
Restricted cash
|
|
|
2,918
|
|
|
|
7,971
|
|
Receivables, net of allowances of $71,817 and $91,419
|
|
|
197,640
|
|
|
|
229,160
|
|
Inventories
|
|
|
209,268
|
|
|
|
278,098
|
|
Deferred income taxes
|
|
|
31,062
|
|
|
|
33,983
|
|
Prepaid income taxes
|
|
|
7,340
|
|
|
|
9,090
|
|
Other current assets
|
|
|
17,142
|
|
|
|
15,997
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
943,983
|
|
|
|
866,793
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
296,820
|
|
|
|
299,077
|
|
Goodwill
|
|
|
902,053
|
|
|
|
880,410
|
|
Other intangible assets, net
|
|
|
243,930
|
|
|
|
274,672
|
|
Investments in unconsolidated companies
|
|
|
5,182
|
|
|
|
5,050
|
|
Other assets
|
|
|
61,439
|
|
|
|
84,600
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,453,407
|
|
|
$
|
2,410,602
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
522
|
|
|
$
|
148,751
|
|
Accounts payable
|
|
|
149,556
|
|
|
|
180,750
|
|
Accrued liabilities
|
|
|
113,654
|
|
|
|
138,553
|
|
Income taxes payable
|
|
|
8,849
|
|
|
|
7,947
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
272,581
|
|
|
|
476,001
|
|
|
|
|
|
|
|
|
|
|
Long-Term Liabilities
|
|
|
|
|
|
|
|
|
Long-term debt, net of current maturities
|
|
|
638,014
|
|
|
|
512,193
|
|
Long-term benefit plan liabilities
|
|
|
122,573
|
|
|
|
185,472
|
|
Deferred income taxes
|
|
|
8,723
|
|
|
|
9,881
|
|
Other long-term liabilities
|
|
|
70,307
|
|
|
|
82,398
|
|
Contingencies (Note 19)
|
|
|
|
|
|
|
|
|
Shareholders Equity
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
5,179
|
|
|
|
5,263
|
|
Additional paid-in capital
|
|
|
63,835
|
|
|
|
69,082
|
|
Retained earnings
|
|
|
1,375,205
|
|
|
|
1,267,295
|
|
Accumulated other comprehensive income (loss)
|
|
|
(103,010
|
)
|
|
|
(196,983
|
)
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
1,341,209
|
|
|
|
1,144,657
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
2,453,407
|
|
|
$
|
2,410,602
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
Page 45 of 94
Thomas &
Betts Corporation and Subsidiaries
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
107,910
|
|
|
$
|
265,331
|
|
|
$
|
183,216
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
75,106
|
|
|
|
80,441
|
|
|
|
57,766
|
|
Intangible asset impairment
|
|
|
5,794
|
|
|
|
32,700
|
|
|
|
|
|
Share-based compensation expense
|
|
|
16,315
|
|
|
|
19,423
|
|
|
|
12,477
|
|
Deferred income taxes
|
|
|
7,850
|
|
|
|
(10,257
|
)
|
|
|
6,672
|
|
Incremental tax benefits from share-based payment arrangements
|
|
|
(247
|
)
|
|
|
(611
|
)
|
|
|
(7,192
|
)
|
Gain on sale of equity interest
|
|
|
|
|
|
|
(169,684
|
)
|
|
|
|
|
Loss on sale of divested business
|
|
|
|
|
|
|
8,067
|
|
|
|
|
|
Loss on extinguishment of debt
|
|
|
6,391
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
37,669
|
|
|
|
44,997
|
|
|
|
6,541
|
|
Inventories
|
|
|
74,815
|
|
|
|
(2,981
|
)
|
|
|
14,961
|
|
Accounts payable
|
|
|
(36,456
|
)
|
|
|
9,337
|
|
|
|
(24,716
|
)
|
Accrued liabilities
|
|
|
(40,109
|
)
|
|
|
(14,521
|
)
|
|
|
4,651
|
|
Income taxes payable
|
|
|
1,580
|
|
|
|
6,575
|
|
|
|
15,666
|
|
Lamson & Sessions change in control payments
|
|
|
(5,393
|
)
|
|
|
(13,556
|
)
|
|
|
|
|
Merger-related transaction costs incurred by Lamson &
Sessions
|
|
|
|
|
|
|
|
|
|
|
(8,803
|
)
|
Pension and other postretirement benefits
|
|
|
30,201
|
|
|
|
6,342
|
|
|
|
7,253
|
|
Funding to qualified pension plans
|
|
|
(51,655
|
)
|
|
|
(1,849
|
)
|
|
|
(1,887
|
)
|
Other
|
|
|
8,091
|
|
|
|
(1,893
|
)
|
|
|
(5,245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
237,862
|
|
|
|
257,861
|
|
|
|
261,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(41,106
|
)
|
|
|
(42,094
|
)
|
|
|
(40,713
|
)
|
Purchases of businesses, net of cash acquired
|
|
|
|
|
|
|
(90,571
|
)
|
|
|
(752,912
|
)
|
Proceeds from sale of equity interest, net
|
|
|
|
|
|
|
280,000
|
|
|
|
|
|
Proceeds from sale of businesses, net
|
|
|
|
|
|
|
65,378
|
|
|
|
|
|
Restricted cash (established) used for change in control payments
|
|
|
5,053
|
|
|
|
8,712
|
|
|
|
(16,683
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
949
|
|
|
|
2,758
|
|
|
|
373
|
|
Other
|
|
|
13
|
|
|
|
89
|
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(35,091
|
)
|
|
|
224,272
|
|
|
|
(809,778
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common shares
|
|
|
(24,907
|
)
|
|
|
(161,461
|
)
|
|
|
(132,958
|
)
|
Revolving credit facility proceeds (repayments), net
|
|
|
|
|
|
|
(30,000
|
)
|
|
|
420,000
|
|
Proceeds from issuance of debt
|
|
|
247,965
|
|
|
|
|
|
|
|
|
|
Repayment of debt and other borrowings
|
|
|
(273,760
|
)
|
|
|
(123,718
|
)
|
|
|
(1,016
|
)
|
Stock options exercised
|
|
|
2,974
|
|
|
|
1,883
|
|
|
|
24,618
|
|
Debt issuance costs
|
|
|
(2,607
|
)
|
|
|
|
|
|
|
|
|
Redemption premium on early retirement of debt
|
|
|
(3,022
|
)
|
|
|
|
|
|
|
|
|
Incremental tax benefits from share-based payment arrangements
|
|
|
247
|
|
|
|
611
|
|
|
|
7,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(53,110
|
)
|
|
|
(312,685
|
)
|
|
|
317,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange-rate changes on cash and cash equivalents
|
|
|
36,458
|
|
|
|
(26,880
|
)
|
|
|
9,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
186,119
|
|
|
|
142,568
|
|
|
|
(221,042
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
292,494
|
|
|
|
149,926
|
|
|
|
370,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
478,613
|
|
|
$
|
292,494
|
|
|
$
|
149,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for interest
|
|
$
|
36,940
|
|
|
$
|
47,569
|
|
|
$
|
33,329
|
|
Cash payments for income taxes
|
|
$
|
31,240
|
|
|
$
|
154,510
|
|
|
$
|
54,916
|
|
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
Page 46 of 94
Thomas &
Betts Corporation and Subsidiaries
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Comprehensive
|
|
|
Comprehensive
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Retained
|
|
|
Income
|
|
|
Income
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
(Loss)
|
|
|
(Loss)
|
|
|
Total
|
|
|
Balance at December 31, 2006
|
|
|
59,473
|
|
|
$
|
5,924
|
|
|
$
|
294,502
|
|
|
$
|
818,781
|
|
|
$
|
(50,848
|
)
|
|
|
|
|
|
$
|
1,068,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,216
|
|
|
|
|
|
|
$
|
183,216
|
|
|
|
183,216
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,515
|
|
|
|
52,515
|
|
Unrealized gain (loss) on marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Unrealized gain (loss) on interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,141
|
)
|
|
|
(8,141
|
)
|
Defined benefit pension and other post
retirement plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,954
|
|
|
|
19,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,325
|
|
|
|
64,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
247,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common shares
|
|
|
(2,531
|
)
|
|
|
(253
|
)
|
|
|
(132,705
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(132,958
|
)
|
Stock options and incentive awards
|
|
|
1,046
|
|
|
|
99
|
|
|
|
24,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,656
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
12,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,444
|
|
Tax benefits realized from share-based payment arrangements
|
|
|
|
|
|
|
|
|
|
|
8,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
57,988
|
|
|
$
|
5,770
|
|
|
$
|
207,690
|
|
|
$
|
1,001,997
|
|
|
$
|
13,477
|
|
|
|
|
|
|
$
|
1,228,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265,331
|
|
|
|
|
|
|
$
|
265,331
|
|
|
|
265,331
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(104,355
|
)
|
|
|
(104,355
|
)
|
Unrealized gain (loss) on interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,263
|
)
|
|
|
(16,263
|
)
|
Defined benefit pension and other post
retirement plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(89,842
|
)
|
|
|
(89,842
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(210,460
|
)
|
|
|
(210,460
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
54,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common shares
|
|
|
(5,224
|
)
|
|
|
(522
|
)
|
|
|
(160,939
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(161,461
|
)
|
Stock options and incentive awards
|
|
|
525
|
|
|
|
15
|
|
|
|
1,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,925
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
19,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,824
|
|
Tax benefits realized from share-based payment arrangements
|
|
|
|
|
|
|
|
|
|
|
597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
597
|
|
Benefit plan measurement date adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
53,289
|
|
|
$
|
5,263
|
|
|
$
|
69,082
|
|
|
$
|
1,267,295
|
|
|
$
|
(196,983
|
)
|
|
|
|
|
|
$
|
1,144,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,910
|
|
|
|
|
|
|
$
|
107,910
|
|
|
|
107,910
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,537
|
|
|
|
70,537
|
|
Unrealized gain (loss) on interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,762
|
|
|
|
6,762
|
|
Defined benefit pension and other post
retirement plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,674
|
|
|
|
16,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,973
|
|
|
|
93,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
201,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common shares
|
|
|
(1,000
|
)
|
|
|
(100
|
)
|
|
|
(24,807
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,907
|
)
|
Stock options and incentive awards
|
|
|
310
|
|
|
|
14
|
|
|
|
3,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,526
|
|
Share-based compensation
|
|
|
|
|
|
|
2
|
|
|
|
16,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,396
|
|
Tax deficits realized from share-based payment arrangements
|
|
|
|
|
|
|
|
|
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
52,599
|
|
|
$
|
5,179
|
|
|
$
|
63,835
|
|
|
$
|
1,375,205
|
|
|
$
|
(103,010
|
)
|
|
|
|
|
|
$
|
1,341,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock: Authorized 1,000,000 shares, par value
$0.10 per share. None issued.
Common Stock: Authorized 250,000,000 shares, par value
$0.10 per share.
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
Page 47 of 94
Thomas &
Betts Corporation and Subsidiaries
Thomas & Betts Corporation is a leading designer and
manufacturer of electrical components used in industrial,
construction, utility and communications markets. The
Corporation is also a leading producer of commercial heating and
ventilation units and highly engineered steel structures used
for utility transmission. The Corporation has operations in
approximately 20 countries. Manufacturing, marketing and sales
activities are concentrated primarily in North America and
Europe. Thomas & Betts pursues growth through market
penetration, new product development and acquisitions.
The Corporation sells its products through the following
channels: 1) electrical, utility, telephone, cable, and
heating, ventilation and air-conditioning distributors;
2) through mass merchandisers, catalog merchandisers and
home improvement centers; and 3) directly to original
equipment manufacturers, utilities and certain end-users.
|
|
2.
|
Summary
of Significant Accounting Policies
|
Basis of Presentation: The consolidated
financial statements include the accounts of the Corporation and
its controlled domestic and foreign subsidiaries. All
significant intercompany balances and transactions have been
eliminated in consolidation. When appropriate, (1) the
equity method of accounting is used for investments in
non-controlled affiliates in which the Corporations
ownership ranges from 20 to 50 percent, or in instances in
which the Corporation is able to exercise significant influence,
but not control, (2) the Corporation consolidates all
investments in affiliates, which are not considered variable
interest entities, in which the Corporations ownership
exceeds 50 percent or where the Corporation has control,
and (3) the Corporation provides for noncontrolling
interests in consolidated subsidiaries for which the
Corporations ownership is less than 100 percent.
Certain reclassifications have been made to prior periods to
conform to the current year presentation.
Use of Estimates: The preparation of financial
statements in conformity with U.S. generally accepted
accounting principles (GAAP) requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the applicable
reporting period. Due to the inherent uncertainty involved in
making estimates, actual results could differ from those
estimates.
Cash and Cash Equivalents: Cash equivalents
consist of high-quality money market investments and other
investments with maturities at the date of purchase of less than
90 days that have a low risk of change in value. Foreign
currency cash flows have been converted to U.S. dollars at
applicable weighted-average exchange rates or the exchange rates
in effect at the time of the cash flows, where determinable.
Marketable Securities: Investments in
marketable securities are stated at fair value. Fair value is
determined using quoted market prices and, when appropriate,
exchange rates at the end of the applicable reporting period.
Unrealized gains and losses on marketable securities classified
as
available-for-sale
are recorded in accumulated other comprehensive income, net of
tax.
Revenue Recognition: The Corporation
recognizes revenue when products are shipped and the customer
takes ownership and assumes risk of loss, collection of the
relevant receivable is probable,
Page 48 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
2.
|
Summary
of Significant Accounting Policies (Continued)
|
persuasive evidence of an arrangement exists and the sales price
is fixed or determinable. The Corporation also recognizes
revenue for service agreements over the applicable service
periods. Sales discounts, quantity and price rebates, and
allowances are estimated based on contractual commitments and
experience and recorded as a reduction of revenue in the period
in which the sale is recognized. Quantity rebates are in the
form of volume incentive discount plans, which include specific
sales volume targets or
year-over-year
sales volume growth targets for specific customers. Certain
distributors can take advantage of price rebates by subsequently
reselling the Corporations products into targeted
construction projects or markets. Following a distributors
sale of an eligible product, the distributor submits a claim for
a price rebate. A number of distributors, primarily in the
Electrical segment, have the right to return goods under certain
circumstances and those returns, which are reasonably estimable,
are accrued as a reduction of revenue at the time of shipment.
The Corporation provides allowances for doubtful accounts when
credit losses are both probable and estimable.
Foreign Currency Translation: Financial
statements of international subsidiaries are translated into
U.S. dollars using the exchange rate at each balance sheet
date for assets and liabilities and a weighted-average exchange
rate for each period for revenues, expenses, gains and losses.
Where the local currency is the functional currency, translation
adjustments are recorded as accumulated other comprehensive
income (loss). Where the transaction currency differs from the
functional currency, translation adjustments are recorded in
income.
Credit Risk: Credit risk with respect to trade
receivables is not highly concentrated as a large number of
customers comprise the Corporations customer base and they
are dispersed across many different industries and geographic
areas.
Inventories: Inventories are stated at the
lower of cost or market. Cost is determined using the
first-in,
first-out (FIFO) method.
Property, Plant and Equipment: Property, plant
and equipment are stated at cost. Expenditures for maintenance
and repair are charged to expense as incurred. Major renewals
and betterments that significantly extend the lives of assets
are capitalized. Depreciation is computed principally on the
straight-line method over the estimated useful lives of the
assets, which range principally from five to 45 years for
buildings, three to 10 years for machinery and equipment,
and the lesser of the underlying lease term or 10 years for
land and leasehold improvements.
Goodwill and Other Intangible Assets: The
Corporation applies the acquisition (purchase) method of
accounting for all business combinations. Under this method, all
assets and liabilities acquired in a business combination,
including goodwill, indefinite-lived intangibles and other
intangibles, are recorded at fair value. The initial recording
of goodwill and other intangibles requires subjective judgments
concerning estimates of the fair value of the acquired assets
and liabilities. Goodwill consists principally of the excess of
cost over the fair value of net assets acquired in business
combinations and is not amortized. Other intangible assets as of
December 31, 2009 and 2008, include identifiable intangible
assets with indefinite lives totaling approximately
$77 million and $83 million, respectively, and
identifiable intangible assets with finite lives totaling
approximately $167 million and $192 million,
respectively. Intangible assets with indefinite lives are
Page 49 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
2.
|
Summary
of Significant Accounting Policies (Continued)
|
not amortized and intangible assets with finite lives are
amortized over periods ranging from 3 to 15 years. For each
amortizable intangible asset, the Corporation uses a method of
amortization that reflects the pattern in which the economic
benefits of the intangible asset are consumed. If that pattern
cannot be reliably determined, the straight-line amortization
method is used.
The Corporation performs an annual impairment test of goodwill
and indefinite-lived intangible assets. The Corporation performs
its annual impairment assessment as of the beginning of the
fourth quarter of each year, unless circumstances dictate more
frequent interim assessments. In evaluating when an interim
assessment of goodwill is necessary, the Corporation considers,
among other things, the trading level of its common stock,
changes in expected future cash flows and mergers and
acquisitions involving companies in its industry. In evaluating
when an interim assessment of indefinite-lived intangible assets
is necessary, the Corporation reviews for significant events or
significant changes in circumstances.
In conjunction with each test of goodwill the Corporation
determines the fair value of each reporting unit and compares
the fair value to the reporting units carrying amount. A
reporting unit is defined as an operating segment or one level
below an operating segment. The Corporation determines the fair
value of its reporting units using a combination of three
valuation methods: market multiple approach; discounted cash
flow approach; and comparable transactions approach. The market
multiple approach provides indications of value based on market
multiples for public companies involved in similar lines of
business. The discounted cash flow approach calculates the
present value of projected future cash flows using assumptions
consistent with those of market participants. The comparable
transactions approach provides indications of value based on an
examination of recent transactions in which companies in similar
lines of business were acquired. The fair values derived from
these three valuation methods are then weighted to arrive at a
single value for each reporting unit. Relative weights assigned
to the three methods are based upon the availability, relevance
and reliability of the underlying data. The Corporations
determination of fair values as of the beginning of the fourth
quarter of 2009 involved a weighting of 40% to the market
multiple approach and 60% to the discounted cash flow approach.
Due to a low level of transactions during 2009, no weighting was
applied to the comparable transactions approach. The Corporation
then reconciles the total values for all reporting units to its
market capitalization and evaluates the reasonableness of the
implied control premium.
To the extent a reporting units carrying amount exceeds
its fair value, an indication exists that the reporting
units goodwill may be impaired, and the Corporation must
perform a second more detailed impairment assessment. The second
impairment assessment involves allocating the reporting
units fair value to all of its recognized and unrecognized
assets and liabilities in order to determine the implied fair
value of the reporting units goodwill as of the assessment
date. The implied fair value of the reporting units
goodwill is then compared to the carrying amount of goodwill to
quantify an impairment charge as of the assessment date.
Methods used to determine fair values for indefinite-lived
intangible assets involve customary valuation techniques that
are applicable to the particular class of intangible asset and
apply inputs and assumptions that management believes a market
participant would use.
During the fourth quarter of 2009, the Corporation concluded
that the fair value of certain intangible assets with indefinite
lives in the Electrical segment and HVAC segment were impaired
Page 50 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
2.
|
Summary
of Significant Accounting Policies (Continued)
|
by $4.6 million and $1.2 million, respectively. During
the fourth quarter of 2008, the Corporation concluded that the
fair value of certain intangible assets with indefinite lives in
the Electrical segment were impaired by $32.7 million.
Additionally, the Corporations annual assessment as of the
beginning of the fourth quarter of 2009 and 2008 concluded that
there was no impairment of goodwill in either year. See
Note 8.
Long-Lived Assets: 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. Indications of impairment require significant
judgment by management. For purposes of recognizing and
measuring impairment of long-lived assets, the Corporation
evaluates assets at the lowest level of identifiable cash flows
for associated product groups. If the sum of the undiscounted
expected future cash flows over the remaining useful life of the
primary asset in the associated product groups 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 values using the expected future discounted cash
flows using assumptions consistent with those of market
participants. Assets to be disposed of are reported at the lower
of carrying amount or fair value less costs to dispose.
Income Taxes: The Corporation uses the asset
and liability method of accounting for income taxes. This method
recognizes the expected future tax consequences of temporary
differences between book and tax bases of assets and liabilities
and requires an evaluation of asset realizability based on a
more-likely-than-not
criteria. The Corporation recognizes the effect of income tax
positions only if those positions are more-likely-than-not to be
sustained upon examination by the relevant taxing authority.
The Corporations policy is to record interest and
penalties associated with the underpayment of income taxes as a
component of income tax expense.
Environmental Costs: Environmental
expenditures that relate to current operations are expensed or
capitalized, as appropriate. Remediation costs that relate to an
existing condition caused by past operations are accrued when it
is probable that those costs will be incurred and can be
reasonably estimated based on evaluations of currently available
facts related to each site.
Pension and Other Postretirement Benefit
Plans: The Corporation and its subsidiaries have
several defined benefit pension plans covering substantially all
employees. These plans generally provide pension benefits that
are based on compensation levels and years of service. Minimum
annual required contributions to the plans, if any, are based on
laws and regulations of the applicable countries. Effective
January 1, 2008, substantially all domestic defined benefit
pension plans are closed to new entrants. During the fourth
quarter of 2009, the Board of Directors approved a plan for the
suspension of future pension plan benefit accruals after
December 31, 2010 in one of the Corporations major
domestic pension plans covering non-bargaining employees.
The Corporation recognizes the overfunded or underfunded status
of benefit plans in its consolidated balance sheets. Changes in
funded status are recognized through comprehensive income in the
year in which the change occurs. Effective December 31,
2008, the Corporation adopted new
Page 51 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
2.
|
Summary
of Significant Accounting Policies (Continued)
|
accounting guidance requiring the use of the Corporations
December 31 fiscal year end to account for the
Corporations pension and other postretirement plans.
The Corporation provides certain health-care and life insurance
benefits to certain retired employees. The Corporation is
recognizing the estimated liability for those postretirement
benefits over the estimated lives of the individuals covered and
is not pre-funding that liability. All of these plans are closed
to new entrants.
Earnings Per Share: Basic earnings per share
are computed by dividing net earnings (loss) by the
weighted-average number of shares of common stock outstanding
during the period. Diluted earnings per share are computed by
dividing net earnings by the sum of (1) the
weighted-average number of shares of common stock outstanding
during the period and (2) the potential dilution from stock
options and nonvested restricted stock, using the treasury stock
method.
Share-Based Payment Arrangements: All
share-based payments to employees are recognized as compensation
expense in the Corporations consolidated financial
statements based on their fair values over the requisite service
period. Non-employee members of the Board of Directors are
deemed to be employees.
Fair Value Measurements: The Corporation
measures its financial assets and liabilities and
certain nonfinancial assets and liabilities at fair
value and utilizes the established GAAP framework for measuring
fair value and disclosing information about fair value
measurements. Fair value is the price received to transfer an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Measuring
fair value involves a hierarchy of valuation inputs used to
measure fair value. This hierarchy prioritizes the inputs into
three broad levels as follows: Level 1 inputs are quoted
prices (unadjusted) in active markets for identical assets or
liabilities; Level 2 inputs are quoted prices for similar
assets and liabilities in active markets or inputs that are
observable for the asset or liability, either directly or
indirectly; and, Level 3 inputs are unobservable inputs in
which little or no market data exists, therefore requiring a
company to develop its own valuation assumptions.
Derivative Instruments and Hedging
Activities: The Corporation recognizes all
derivative instruments as either assets or liabilities in its
consolidated balance sheets at fair value. Changes in fair value
of derivatives are recorded currently in earnings unless
specific hedge accounting criteria are met. For derivatives that
qualify as cash flow hedges, the effective portion of changes in
fair value of the derivative is reported in accumulated other
comprehensive income and the ineffective portion is recognized
in earnings in the current period. For derivatives that qualify
as fair value hedges, the changes in fair value of both the
derivative instrument and the hedged item are recorded in
earnings. The Corporation formally assesses, both at inception
of the hedge and on an ongoing basis, whether each derivative is
highly effective in offsetting changes in fair values or cash
flows of the hedged item. If it is determined that a derivative
is not highly effective, the Corporation will discontinue hedge
accounting prospectively.
2008
During 2008, the Corporation completed two acquisitions: The
Homac Manufacturing Company and Boreal Braidings Inc.
Page 52 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
3.
|
Acquisitions
(Continued)
|
The following is supplemental cash flow information regarding
the Corporations acquisitions in 2008:
|
|
|
|
|
(In millions)
|
|
|
|
|
Fair value of assets acquired
|
|
$
|
122
|
|
Less liabilities assumed
|
|
|
(30
|
)
|
|
|
|
|
|
Net assets acquired
|
|
|
92
|
|
Less cash acquired
|
|
|
(1
|
)
|
|
|
|
|
|
Purchases of businesses, net of cash acquired
|
|
$
|
91
|
|
|
|
|
|
|
The Homac
Manufacturing Company
In January 2008, the Corporation acquired The Homac
Manufacturing Company, a privately held manufacturer of
components used in utility distribution and substation markets,
as well as industrial and telecommunications markets, for
approximately $75 million. The purchase price allocation
resulted in goodwill of approximately $23 million and other
intangible assets of approximately $25 million, all of
which was assigned to the Corporations Electrical segment.
The results of these operations have been included in the
consolidated financial statements of the Corporation since the
acquisition date.
Boreal
Braidings Inc.
In January 2008, the Corporation acquired Boreal Braidings Inc.,
a privately held Canadian manufacturer of high-quality flexible
connectors for approximately $16 million. The purchase
price allocation resulted in goodwill of approximately
$7 million and other intangible assets of approximately
$8 million, all of which was assigned to the
Corporations Electrical segment. The results of these
operations have been included in the consolidated financial
statements of the Corporation since the acquisition date.
2007
The Corporation completed four acquisitions in 2007:
Lamson & Sessions Co., Joslyn Hi-Voltage, Power
Solutions and Drilling Technical Supply SA.
The following is supplemental cash flow information regarding
the Corporations acquisitions in 2007:
|
|
|
|
|
(In millions)
|
|
|
|
|
Fair value of assets acquired
|
|
$
|
1,000
|
|
Less liabilities assumed
|
|
|
(240
|
)
|
|
|
|
|
|
Net assets acquired
|
|
|
760
|
|
Less cash acquired
|
|
|
(7
|
)
|
|
|
|
|
|
Purchases of businesses, net of cash acquired
|
|
$
|
753
|
|
|
|
|
|
|
Page 53 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
3.
|
Acquisitions
(Continued)
|
Lamson &
Sessions Co.
The merger of Lamson & Sessions Co. (LMS
or Lamson & Sessions) into
Thomas & Betts Corporation was completed in November
2007 for approximately $450 million. LMS is a North
American supplier of non-metallic electrical boxes, fittings,
flexible conduit, and PVC and HDPE pipe. The LMS acquisition
broadened the Corporations existing product portfolio and
enhanced its market position with distributors and end users of
electrical products. As a result of the merger, LMS became a
wholly-owned subsidiary of Thomas & Betts Corporation.
Thomas & Betts Corporation funded the LMS acquisition
through the use of its $750 million revolving credit
facility. The results of these operations have been included in
the consolidated financial statements of the Corporation since
the acquisition date.
The following table summarizes the fair values for the assets
acquired and liabilities assumed at the date of acquisition:
|
|
|
|
|
(In millions)
|
|
|
|
|
Current assets (primarily receivables and inventories)
|
|
$
|
153
|
|
Property, plant and equipment
|
|
|
63
|
|
Long-term assets
|
|
|
16
|
|
Goodwill and other intangible assets
|
|
|
408
|
|
|
|
|
|
|
Total assets acquired
|
|
|
640
|
|
Current liabilities
|
|
|
(80
|
)
|
Long-term liabilities
|
|
|
(105
|
)
|
|
|
|
|
|
Net assets acquired
|
|
$
|
455
|
|
|
|
|
|
|
Of the $408 million of goodwill and other intangible
assets, approximately $60 million has been assigned to
intangible assets with infinite lives (consisting of trade/brand
names) and approximately $123 million has been assigned to
intangible assets with estimated lives ranging up to
11 years (consisting primarily of customer relationships).
Goodwill and other intangible assets are not deductible for tax
purposes. All of the goodwill and other intangible assets have
been assigned to the Corporations Electrical segment.
The Corporations senior management began assessing and
formulating a restructuring and integration plan as of the
acquisition date of LMS. Approval of the plan by the
Corporations senior management and Board of Directors
occurred during the first quarter of 2008. The objective of the
restructuring and integration plan was to achieve operational
efficiencies and eliminate duplicative operating costs resulting
from the LMS acquisition. The Corporation also intended to
achieve greater efficiency in sales, marketing, administration
and other operational activities. The Corporation identified
certain liabilities and other costs for restructuring and
integration actions. Included in this amount are approximately
$14 million of planned severance costs for involuntary
termination of approximately 320 employees of LMS and
approximately $8 million of lease cancellation costs
associated with the closure of LMS distribution centers, which
was recorded as part of the Corporations purchase price
allocation of LMS. Severance and lease cancellation costs have
been reflected in the Corporations consolidated balance
sheets in accrued liabilities and reflect cash paid or to be
paid for these actions. Integration costs were recognized as
incurred and either expensed or
Page 54 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
3.
|
Acquisitions
(Continued)
|
capitalized, as appropriate. The amount recognized as
integration expense during 2008 was approximately
$3 million. The actions required by the plan began soon
after the plan was approved, including the communication to
affected employees of the Corporations intent to terminate
as soon as possible.
The Corporation ceased operations at all LMS distribution
centers during the second quarter of 2008, consolidating these
activities into its existing distribution centers. As of
December 31, 2009, substantially all employees planned for
involuntary termination under the plan have been terminated.
Payments associated with certain of the restructuring and
integration actions taken are expected to extend beyond 2009 due
to compliance with applicable regulations and other
considerations. The cash payments necessary to fund the plan are
expected to come from operations or available cash resources
including restricted cash.
Activities related to the LMS accrual for restructuring during
the years ended December 31, 2009 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Work Force
|
|
|
Facility
|
|
|
|
|
(In millions)
|
|
Reductions
|
|
|
Closures
|
|
|
Total
|
|
|
Balance at December 31, 2007
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Restructuring accrual additions
|
|
|
14.3
|
|
|
|
7.6
|
|
|
|
21.9
|
|
Costs/payments charged against reserves
|
|
|
(5.2
|
)
|
|
|
(2.5
|
)
|
|
|
(7.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
9.1
|
|
|
|
5.1
|
|
|
|
14.2
|
|
Restructuring accrual additions
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost/payments charged against reserves
|
|
|
(8.3
|
)
|
|
|
(2.4
|
)
|
|
|
(10.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
0.8
|
(a)
|
|
$
|
2.7
|
|
|
$
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
A substantial portion of this balance will be satisfied through
the use of restricted cash on-hand as of December 31, 2009. |
The Corporation decided to divest its rigid polyvinyl chloride
(PVC) and high-density polyethylene
(HDPE) conduit, duct and pressure pipe businesses,
which were acquired as part of the LMS acquisition. The
Corporation retained a financial advisor to assist with the sale
of these operations. The operations associated with these
businesses since the date of acquisition were reflected as
discontinued operations in the Corporations consolidated
statements of operations. During 2008, the Corporation completed
the divestiture of these discontinued operations. These sales
resulted in a loss of $8.1 million that was recorded in
discontinued operations. Discontinued operations in 2008
reflected net sales of approximately $164 million, loss
before income taxes of $12.9 million, income tax benefit of
$4.5 million and net loss of $8.4 million.
Discontinued operations in 2007 reflected net sales of
approximately $32 million, loss before income taxes of
$0.7 million, income tax benefit of $0.2 million and
net loss of $0.5 million.
Joslyn
Hi-Voltage and Power Solutions
In July 2007, the Corporation acquired the Joslyn Hi-Voltage and
Power Solutions businesses from Danaher Corporation for
$282 million in cash. The results of these operations have
been
Page 55 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
3.
|
Acquisitions
(Continued)
|
included in the consolidated financial statements of the
Corporation since the acquisition date. Joslyn Hi-Voltage offers
a broad range of high voltage vacuum interrupter attachments,
electric switches, reclosers, and related products used mainly
by electric utilities. Joslyn Hi-Voltage provides the
Corporation with a strong utility market position in specialty
hi-voltage overhead power distribution products that complement
its underground product portfolio. Power Solutions offers a
broad range of products and services designed to ensure a high
quality, reliable flow of power to commercial and industrial
customers for mission critical applications such as data centers.
The following table summarizes fair values for the assets
acquired and liabilities assumed at the date of acquisition:
|
|
|
|
|
(In millions)
|
|
|
|
|
Current assets (primarily receivables and inventories)
|
|
$
|
52
|
|
Property, plant and equipment
|
|
|
8
|
|
Long-term assets
|
|
|
7
|
|
Goodwill and other intangible assets
|
|
|
251
|
|
|
|
|
|
|
Total assets acquired
|
|
|
318
|
|
Current liabilities
|
|
|
(35
|
)
|
Long-term liabilities
|
|
|
(1
|
)
|
|
|
|
|
|
Net assets acquired
|
|
$
|
282
|
|
|
|
|
|
|
Of the $251 million of goodwill and other intangible
assets, approximately $36 million has been assigned to
intangible assets with infinite lives (consisting of trade/brand
names) and approximately $64 million has been assigned to
intangible assets with estimated lives up to 12 years
(consisting primarily of customer relationships). Additionally,
approximately $1 million was assigned to in-process
research and development assets and expensed as of the
acquisition date. Goodwill and other intangible assets are
expected to be deductible for tax purposes. The write-off of
in-process research and development assets was included in
selling, general and administrative expenses in the
Corporations 2007 consolidated statements of operations.
All of the goodwill and other intangible assets have been
assigned to the Corporations Electrical segment.
Drilling
Technical Supply SA
In July 2007, the Corporation acquired Drilling Technical Supply
SA, a privately held French manufacturer of explosion-proof
lighting and electrical protection equipment, for approximately
$23 million in cash. The purchase price allocation resulted
in goodwill of approximately $11 million and other
intangible assets of approximately $9 million, all of which
was assigned to the Corporations Electrical segment.
Page 56 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
4.
|
Basic and
Diluted Earnings Per Share
|
The following is a reconciliation of the basic and diluted
earnings per share computations:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share
data)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net earnings from continuing operations
|
|
$
|
107,910
|
|
|
$
|
273,686
|
|
|
$
|
183,676
|
|
Loss from discontinued operations, net
|
|
|
|
|
|
|
(8,355
|
)
|
|
|
(460
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
107,910
|
|
|
$
|
265,331
|
|
|
$
|
183,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding
|
|
|
52,244
|
|
|
|
56,566
|
|
|
|
57,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.07
|
|
|
$
|
4.84
|
|
|
$
|
3.17
|
|
Discontinued operations
|
|
|
|
|
|
|
(0.15
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2.07
|
|
|
$
|
4.69
|
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding
|
|
|
52,244
|
|
|
|
56,566
|
|
|
|
57,926
|
|
Additional shares on the potential dilution from stock options
and nonvested restricted stock
|
|
|
714
|
|
|
|
593
|
|
|
|
794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,958
|
|
|
|
57,159
|
|
|
|
58,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.04
|
|
|
$
|
4.79
|
|
|
$
|
3.13
|
|
Discontinued operations
|
|
|
|
|
|
|
(0.15
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2.04
|
|
|
$
|
4.64
|
|
|
$
|
3.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Corporation had stock options that were
out-of-the-money
which were excluded because of their anti-dilutive effect. Such
out-of-the-money
options related to 1,873,000 shares of common stock in
2009, 1,574,000 shares in 2008 and 265,000 shares in
2007.
|
|
5.
|
Gain on
Sale of Equity Interest
|
During the second quarter of 2008, the Corporation sold its
entire minority interest (29.1%) in Leviton Manufacturing
Company (Leviton) back to Leviton for net proceeds
of $280 million. Net proceeds reflect $300 million
from Leviton, which was offset in part by a $20 million
contingent payment triggered by the sale of shares. The
transaction resulted in a pre-tax gain of approximately
$170 million. In the event of any subsequent sale of
Leviton shares within three years after June 2008 at a price per
share higher than the value reflected in this transaction,
Leviton has agreed to pay the Corporation its pro-rata share of
the excess.
The following table reflects inventories at December 31,
2009 and 2008:
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
Finished goods
|
|
$
|
94,184
|
|
|
$
|
134,589
|
|
Work-in-process
|
|
|
22,933
|
|
|
|
28,595
|
|
Raw materials
|
|
|
92,151
|
|
|
|
114,914
|
|
|
|
|
|
|
|
|
|
|
Total inventories
|
|
$
|
209,268
|
|
|
$
|
278,098
|
|
|
|
|
|
|
|
|
|
|
Page 57 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
7.
|
Property,
Plant and Equipment
|
The following table reflects property, plant and equipment at
December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
Land
|
|
$
|
23,111
|
|
|
$
|
22,083
|
|
Building
|
|
|
205,941
|
|
|
|
194,887
|
|
Machinery and equipment
|
|
|
714,303
|
|
|
|
686,985
|
|
Construction-in-progress
|
|
|
11,311
|
|
|
|
14,179
|
|
|
|
|
|
|
|
|
|
|
Gross property, plant and equipment
|
|
|
954,666
|
|
|
|
918,134
|
|
Less: Accumulated depreciation
|
|
|
657,846
|
|
|
|
619,057
|
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
296,820
|
|
|
$
|
299,077
|
|
|
|
|
|
|
|
|
|
|
|
|
8.
|
Goodwill
and Other Intangible Assets
|
The following table reflects activity for goodwill by segment
during the three years ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
Primarily
|
|
|
Balance at
|
|
|
|
Beginning of
|
|
|
|
|
|
Currency
|
|
|
End of
|
|
(In thousands)
|
|
Year
|
|
|
Additions
|
|
|
Translation
|
|
|
Year
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
814,948
|
|
|
$
|
|
|
|
$
|
21,634
|
|
|
$
|
836,582
|
|
Steel Structures
|
|
|
64,759
|
|
|
|
|
|
|
|
|
|
|
|
64,759
|
|
HVAC
|
|
|
703
|
|
|
|
|
|
|
|
9
|
|
|
|
712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
880,410
|
|
|
$
|
|
|
|
$
|
21,643
|
|
|
$
|
902,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
808,099
|
|
|
$
|
49,955
|
|
|
$
|
(43,106
|
)
|
|
$
|
814,948
|
|
Steel Structures
|
|
|
64,759
|
|
|
|
|
|
|
|
|
|
|
|
64,759
|
|
HVAC
|
|
|
716
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
873,574
|
|
|
$
|
49,955
|
|
|
$
|
(43,119
|
)
|
|
$
|
880,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
424,802
|
|
|
$
|
367,018
|
|
|
$
|
16,279
|
|
|
$
|
808,099
|
|
Steel Structures
|
|
|
64,759
|
|
|
|
|
|
|
|
|
|
|
|
64,759
|
|
HVAC
|
|
|
649
|
|
|
|
|
|
|
|
67
|
|
|
|
716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
490,210
|
|
|
$
|
367,018
|
|
|
$
|
16,346
|
|
|
$
|
873,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 58 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
8.
|
Goodwill
and Other Intangible Assets (Continued)
|
The following table reflects activity for other intangible
assets during the three years ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
|
|
Primarily
|
|
|
Balance at
|
|
|
|
Beginning of
|
|
|
|
|
|
Impairment
|
|
|
Amortization
|
|
|
Translation
|
|
|
End of
|
|
(In thousands)
|
|
Year
|
|
|
Additions
|
|
|
Charges
|
|
|
Expense
|
|
|
Adjustment
|
|
|
Year
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets subject to amortization
|
|
$
|
226,752
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,168
|
|
|
$
|
227,920
|
|
Accumulated amortization
|
|
|
(34,885
|
)
|
|
|
|
|
|
|
|
|
|
|
(25,842
|
)
|
|
|
(385
|
)
|
|
|
(61,112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,867
|
|
|
|
|
|
|
|
|
|
|
|
(25,842
|
)
|
|
|
783
|
|
|
|
166,808
|
|
Other Intangible assets not subject to amortization
|
|
|
82,805
|
|
|
|
|
|
|
|
(5,794
|
)
|
|
|
|
|
|
|
111
|
|
|
|
77,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
274,672
|
|
|
$
|
|
|
|
$
|
(5,794
|
)
|
|
$
|
(25,842
|
)
|
|
$
|
894
|
|
|
$
|
243,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets subject to amortization
|
|
$
|
206,363
|
|
|
$
|
21,924
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(1,535
|
)
|
|
$
|
226,752
|
|
Accumulated amortization
|
|
|
(8,636
|
)
|
|
|
|
|
|
|
|
|
|
|
(26,582
|
)
|
|
|
333
|
|
|
|
(34,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,727
|
|
|
|
21,924
|
|
|
|
|
|
|
|
(26,582
|
)
|
|
|
(1,202
|
)
|
|
|
191,867
|
|
Other Intangible assets not subject to amortization
|
|
|
101,643
|
|
|
|
14,034
|
|
|
|
(32,700
|
)
|
|
|
|
|
|
|
(172
|
)
|
|
|
82,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
299,370
|
|
|
$
|
35,958
|
|
|
$
|
(32,700
|
)
|
|
$
|
(26,582
|
)
|
|
$
|
(1,374
|
)
|
|
$
|
274,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets subject to amortization
|
|
$
|
12,607
|
|
|
$
|
193,212
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
544
|
|
|
$
|
206,363
|
|
Accumulated amortization
|
|
|
(620
|
)
|
|
|
|
|
|
|
|
|
|
|
(8,004
|
)
|
|
|
(12
|
)
|
|
|
(8,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,987
|
|
|
|
193,212
|
|
|
|
|
|
|
|
(8,004
|
)
|
|
|
532
|
|
|
|
197,727
|
|
Other Intangible assets not subject to amortization
|
|
|
4,841
|
|
|
|
96,298
|
|
|
|
|
|
|
|
|
|
|
|
504
|
|
|
|
101,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
16,828
|
|
|
$
|
289,510
|
|
|
$
|
|
|
|
$
|
(8,004
|
)
|
|
$
|
1,036
|
|
|
$
|
299,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the fourth quarter of 2009, the Corporation concluded
that the fair value associated with certain trade name
intangible assets in the Electrical segment and HVAC segment
were impaired by $4.6 million and $1.2 million,
respectively. During the fourth quarter of 2008, the Corporation
concluded that the fair value associated with certain trade name
intangible assets in the Electrical segment were impaired by
$32.7 million. These charges reflect the impact of revised
future revenue assumptions used to value trade name intangible
assets.
Page 59 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
8.
|
Goodwill
and Other Intangible Assets (Continued)
|
The following table reflects other intangible assets at
December 31, 2009, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
Gross
|
|
|
Accumulated
|
|
|
Net
|
|
|
Amortization
|
|
(In thousands)
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Period
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer Relationships
|
|
$
|
211,265
|
|
|
$
|
(51,174
|
)
|
|
$
|
160,091
|
|
|
|
11 years
|
|
Other
|
|
|
16,655
|
|
|
|
(9,938
|
)
|
|
|
6,717
|
|
|
|
6 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
227,920
|
|
|
$
|
(61,112
|
)
|
|
|
166,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade Names
|
|
|
|
|
|
|
|
|
|
|
75,689
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
1,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
77,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets
|
|
|
|
|
|
|
|
|
|
$
|
243,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer Relationships
|
|
$
|
210,224
|
|
|
$
|
(26,690
|
)
|
|
$
|
183,534
|
|
|
|
11 years
|
|
Other
|
|
|
16,528
|
|
|
|
(8,195
|
)
|
|
|
8,333
|
|
|
|
6 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
226,752
|
|
|
$
|
(34,885
|
)
|
|
|
191,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade Names
|
|
|
|
|
|
|
|
|
|
|
80,968
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
1,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
82,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets
|
|
|
|
|
|
|
|
|
|
$
|
274,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer Relationships
|
|
$
|
186,530
|
|
|
$
|
(4,045
|
)
|
|
$
|
182,485
|
|
|
|
11 years
|
|
Other
|
|
|
19,833
|
|
|
|
(4,591
|
)
|
|
|
15,242
|
|
|
|
5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
206,363
|
|
|
$
|
(8,636
|
)
|
|
|
197,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade Names
|
|
|
|
|
|
|
|
|
|
|
99,772
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
1,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
101,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets
|
|
|
|
|
|
|
|
|
|
$
|
299,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other intangible assets is included in selling,
general and administrative expenses in the Corporations
consolidated statements of operations.
Amortization expense estimates for each of the five years
subsequent to 2009 are as follows:
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
2010
|
|
$
|
26
|
|
|
|
|
|
2011
|
|
|
24
|
|
|
|
|
|
2012
|
|
|
22
|
|
|
|
|
|
2013
|
|
|
20
|
|
|
|
|
|
2014
|
|
|
18
|
|
|
|
|
|
Page 60 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
Overview
The Corporations income tax provisions for 2009, 2008 and
2007 were $43.2 million (effective rate of 28.6%),
$157.4 million (effective rate of 36.5%), and
$80.2 million (effective rate of 30.4%), respectively. The
effective rate for all periods reflects benefits from the
Corporations Puerto Rican manufacturing operations, which
has a significantly lower effective tax rate than the
Corporations overall blended tax rate.
The increase in the 2008 effective rate reflects the impact on
pre-tax earnings of the gain on sale of the minority equity
interest in Leviton Manufacturing Company. The 2008 income tax
provision also included a $14.0 million
out-of-period,
non-cash charge to establish a deferred federal income tax
liability on state net operating loss and state income tax
credit carryforwards incurred in periods prior to
January 1, 2008.
Undistributed earnings of foreign subsidiaries amounted to
$550 million at December 31, 2009. These earnings are
considered to be indefinitely reinvested, and, accordingly, no
provision for U.S. federal or state income taxes has been
made.
Earnings from continuing operations before income taxes and
income tax provision recorded by the Corporation in 2009, 2008
and 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax
|
|
|
|
Tax
|
(In thousands)
|
|
Earnings
|
|
Tax Provision
|
|
Rate
|
|
2009
|
|
$
|
151,134
|
|
|
$
|
43,224
|
|
|
|
28.6
|
%
|
2008
|
|
$
|
431,084
|
|
|
$
|
157,398
|
|
|
|
36.5
|
%
|
2007
|
|
$
|
263,891
|
|
|
$
|
80,215
|
|
|
|
30.4
|
%
|
Discontinued operations in 2008 reflected a loss before income
taxes of $12.9 million, an income tax benefit of
$4.5 million (effective rate of 35%) and net loss of
$8.4 million. Discontinued operations in 2007 reflected
loss before income taxes of $0.7 million, an income tax
benefit of $0.2 million (effective rate of 35%) and net
loss of $0.5 million.
The relationship of domestic and foreign components of earnings
from continuing operations before income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Domestic(a)
|
|
$
|
21,625
|
|
|
$
|
236,061
|
|
|
$
|
94,321
|
|
Foreign
|
|
|
129,509
|
|
|
|
195,023
|
|
|
|
169,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
151,134
|
|
|
$
|
431,084
|
|
|
$
|
263,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Domestic earnings before income taxes in 2009, 2008 and 2007
included interest expense, net of $35.5 million,
$43.4 million and $23.5 million, respectively. The
amount of interest expense related to foreign earnings is
negligible. Domestic earnings also include corporate expense of
$47.4 million in 2009, $41.6 million in 2008 and
$62.8 million in 2007. Domestic earnings before income
taxes in 2008 reflected the $170 million gain on sale of
the minority interest in Leviton Manufacturing Company. |
Page 61 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
9.
|
Income
Taxes (Continued)
|
The components of income tax provision (benefit) on earnings
from continuing operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
2,992
|
|
|
$
|
109,216
|
|
|
$
|
22,984
|
|
Foreign
|
|
|
30,768
|
|
|
|
51,807
|
|
|
|
43,644
|
|
State
|
|
|
1,200
|
|
|
|
9,198
|
|
|
|
2,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current provision
|
|
|
34,960
|
|
|
|
170,221
|
|
|
|
69,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
6,602
|
|
|
|
(8,605
|
)
|
|
|
10,513
|
|
Foreign
|
|
|
1,662
|
|
|
|
(4,218
|
)
|
|
|
640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred provision (benefit)
|
|
|
8,264
|
|
|
|
(12,823
|
)
|
|
|
11,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
43,224
|
|
|
$
|
157,398
|
|
|
$
|
80,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation between the federal statutory tax rate and
the Corporations effective tax rate on earnings from
continuing operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Federal statutory tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
Increase (reduction) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
State tax net of federal tax benefit
|
|
|
0.8
|
|
|
|
3.4
|
|
|
|
1.9
|
|
Taxes on foreign earnings
|
|
|
(2.3
|
)
|
|
|
(2.1
|
)
|
|
|
(1.9
|
)
|
Lower rate on income from Puerto Rico operations
|
|
|
(6.2
|
)
|
|
|
(2.8
|
)
|
|
|
(3.8
|
)
|
Expiration of foreign net operating losses
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
Expiration of foreign tax credits
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
(4.8
|
)
|
|
|
(0.3
|
)
|
|
|
(1.0
|
)
|
Other
|
|
|
1.2
|
|
|
|
3.3
|
(a)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
28.6
|
%
|
|
|
36.5
|
%
|
|
|
30.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The 2008 income tax provision included a $14.0 million
non-cash charge to establish a deferred federal income tax
liability on state net operating loss and state income tax
credit carryforwards incurred in periods prior to
January 1, 2008. |
Page 62 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
9.
|
Income
Taxes (Continued)
|
The Corporations tax years are open for all
U.S. state and federal jurisdictions from 2006 through
2009. Certain state tax years remain open for 2005 filings.
International statutes vary widely, and the open years range
from 2003 through 2009. Taxing authorities have the ability to
review prior tax years to the extent utilized net operating loss
and tax credit carryforwards relate to open tax years.
The components of the Corporations net deferred tax assets
were:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Pension and other benefit plans
|
|
$
|
56,136
|
|
|
$
|
72,916
|
|
Tax credit and loss carryforwards
|
|
|
48,289
|
|
|
|
56,113
|
|
Accrued employee benefits
|
|
|
25,541
|
|
|
|
21,464
|
|
Interest rate swap liability
|
|
|
10,802
|
|
|
|
14,957
|
|
Inventories
|
|
|
10,135
|
|
|
|
7,279
|
|
Accounts receivable
|
|
|
8,958
|
|
|
|
11,407
|
|
Self-insurance liabilities
|
|
|
6,353
|
|
|
|
7,431
|
|
Environmental liabilities
|
|
|
3,763
|
|
|
|
4,860
|
|
Restructure accrual
|
|
|
2,355
|
|
|
|
4,981
|
|
Other
|
|
|
2,944
|
|
|
|
4,600
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets
|
|
|
175,276
|
|
|
|
206,008
|
|
Valuation allowance
|
|
|
(22,593
|
)
|
|
|
(29,874
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
152,683
|
|
|
|
176,134
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Acquired intangibles
|
|
|
(56,043
|
)
|
|
|
(59,963
|
)
|
Goodwill and investments
|
|
|
(18,557
|
)
|
|
|
(16,493
|
)
|
Property, plant and equipment
|
|
|
(17,554
|
)
|
|
|
(15,231
|
)
|
Other
|
|
|
(9,433
|
)
|
|
|
(9,229
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(101,587
|
)
|
|
|
(100,916
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
51,096
|
|
|
$
|
75,218
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Reconciliation
|
|
|
|
|
|
|
|
|
Current deferred income tax assets
|
|
$
|
31,062
|
|
|
$
|
33,983
|
|
Non-current deferred income tax assets
|
|
|
29,908
|
|
|
|
52,034
|
|
Current deferred income tax liabilities
|
|
|
(1,151
|
)
|
|
|
(918
|
)
|
Long-term deferred income tax liabilities
|
|
|
(8,723
|
)
|
|
|
(9,881
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
51,096
|
|
|
$
|
75,218
|
|
|
|
|
|
|
|
|
|
|
Page 63 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
9.
|
Income
Taxes (Continued)
|
A detail of net deferred tax assets associated with tax credits
and loss carryforwards is as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Expiration
|
|
(In thousands)
|
|
2009
|
|
|
Dates
|
|
|
Tax credit and loss carryforwards
|
|
|
|
|
|
|
|
|
U.S. state net operating loss carryforwards
|
|
$
|
20,453
|
|
|
|
2010 2025
|
|
U.S. foreign tax credits
|
|
|
10,616
|
|
|
|
2010 2015
|
|
U.S. state income tax credits
|
|
|
6,953
|
|
|
|
2010 2027
|
|
Foreign net operating loss carryforwards with no expiration dates
|
|
|
8,751
|
|
|
|
|
|
Foreign net operating loss carryforwards
|
|
|
1,516
|
|
|
|
2010 2017
|
|
|
|
|
|
|
|
|
|
|
Total tax credit and loss carryforwards
|
|
$
|
48,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The gross amount of net operating loss carryforwards is
$330 million. The loss carryforwards are composed of
$292 million of U.S. state net operating loss
carryforwards and $38 million of foreign net operating loss
carryforwards.
As of December 31, 2009, the Corporation has reserves for
unrecognized tax benefits of $1.4 million. If subsequently
recognized, these unrecognized tax benefits would affect the
effective tax rate on income from continuing operations. There
were no changes in unrecognized tax benefits related to either
settlements with taxing authorities or lapses of an applicable
statute of limitations during 2009, 2008 or 2007.
Valuation
Allowances
The valuation allowance for deferred tax assets decreased by
$7.3 million in 2009 primarily due to expiration of foreign
net operating losses and foreign tax credits and decreased by
$1.2 million in 2008 due primarily to managements
reassessment of certain state income tax net operating losses
and credit carryforwards. The majority of the $22.6 million
valuation allowance as of December 31, 2009 related to
foreign net operating loss carryforwards and foreign income tax
credit carryforwards and reflects managements assessment
that the probability of generating sufficient taxable income in
certain foreign jurisdictions in the future does not meet the
more-likely-than-not threshold.
Realization of the deferred tax assets is dependent upon the
Corporations ability to generate sufficient future taxable
income and, if necessary, execution of tax planning strategies.
Management believes that it is more-likely-than-not that future
taxable income, based on tax laws in effect as of
December 31, 2009, will be sufficient to realize the
recorded deferred tax assets, net of the existing valuation
allowance at December 31, 2009. Projected future taxable
income is based on managements 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 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 change in
subsequent periods which indicate that a previously
Page 64 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
9.
|
Income
Taxes (Continued)
|
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.
|
|
10.
|
Fair
Value of Financial Instruments
|
The Corporations financial instruments include cash and
cash equivalents, restricted cash, marketable securities,
short-term trade receivables and payables and debt. Financial
instruments also include interest rate swap agreements and
foreign currency contracts. The carrying amounts of the
Corporations financial instruments generally approximated
their fair values at December 31, 2009 and 2008, except
that, based on the borrowing rates available to the Corporation
under current market conditions, the fair value of long-term
debt (including current maturities) was approximately
$630 million at December 31, 2009 and approximately
$669 million at December 31, 2008, and the fair value
of an interest rate swap at December 31, 2009 was a
liability of $28.7 million and a liability of
$39.7 million at December 31, 2008.
|
|
11.
|
Derivative
Instruments
|
The Corporation is exposed to market risk from changes in
interest rates, foreign-exchange rates and raw material prices.
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.
Interest
Rate Swap Agreements
During the fourth quarter of 2007, the Corporation entered into
a forward-starting amortizing interest rate swap for a notional
amount of $390 million. The notional amount reduces to
$325 million on December 15, 2010, $200 million
on December 15, 2011 and $0 on October 1, 2012. The
interest rate swap hedges $390 million of the
Corporations exposure to changes in interest rates on
borrowings under its $750 million credit facility. The
Corporation has designated the receive variable/pay fixed
interest rate swap as a cash flow hedge for accounting purposes.
Under the interest rate swap, the Corporation receives one-month
London Interbank Offered Rate (LIBOR) and pays an
underlying fixed rate of 4.86%. For derivative instruments that
are designated and qualify as cash flow hedges, the effective
portion of the gain or loss on the derivative is reported as a
component of accumulated other comprehensive income (loss) and
reclassified into earnings in the applicable periods during
which the hedged transaction affects earnings. Gains or losses
on the derivative representing hedge ineffectiveness are
recognized in current period earnings.
The Corporations interest rate swap was reflected in the
Corporations consolidated balance sheet in other long-term
liabilities at its fair value of $28.7 million as of
December 31, 2009 and $39.7 million as of
December 31, 2008. This swap is measured at fair value at
the end of each reporting period. The Corporations fair
value estimate was determined using significant unobservable
inputs and assumptions (Level 3) and, in addition, the
liability valuation reflects the Corporations credit
standing. The valuation technique utilized by the Corporation to
calculate the swap fair value is the income approach. This
approach estimates the present value of future cash flows based
upon current market expectations. The credit valuation
adjustment (which was a reduction in the liability) was
approximately $0.2 million as of December 31, 2009.
Page 65 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
11.
|
Derivative
Instruments (Continued)
|
The Corporations balance of accumulated other
comprehensive income has been reduced by $17.6 million, net
of tax of $10.8 million, as of December 31, 2009 and
$24.4 million, net of tax of $15.0 million, as of
December 31, 2008 to reflect the above interest rate swap
liability.
The following is a reconciliation associated with the interest
rate swap of the fair value activity using Level 3 inputs
during 2009:
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
Measures
|
|
|
|
(Level 3)
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In millions)
|
|
2009
|
|
|
2008
|
|
|
Asset (liability) at beginning of period
|
|
$
|
(39.7
|
)
|
|
$
|
(13.6
|
)
|
Total realized/unrealized gains or losses:
|
|
|
|
|
|
|
|
|
Included in earnings
|
|
|
(17.8
|
)
|
|
|
(7.9
|
)
|
Increased (decrease) in fair value included in comprehensive
income
|
|
|
11.1
|
|
|
|
(25.4
|
)
|
Settlements
|
|
|
17.7
|
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
Asset (liability) at end of period
|
|
$
|
(28.7
|
)
|
|
|
(39.7
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense, net reflects a benefit of $0.1 million in
2009, a benefit of $0.1 million in 2008 and a charge of
$0.5 million in 2007 for the ineffective portion of the
swap.
Forward
Foreign Exchange Contracts
The Corporation had no outstanding forward sale or purchase
contracts as of December 31, 2009 or 2008. During 2008 and
2007, the Corporation was a party to currency forward exchange
contracts that amortized monthly. The contracts were not
designated as a hedge for accounting purposes. These contracts
were intended to reduce cash flow volatility from exchange rate
risk related to a short-term intercompany financing transaction.
Under the terms of the contracts, the Corporation sold
U.S. dollars at current spot rates and purchased Canadian
dollars at a fixed forward exchange rate. During 2008 and 2007,
the Corporation recognized a
mark-to-market
loss of $0.7 million on these contracts and a
mark-to-market
gain on these contracts of $0.7 million, respectively, that
effectively matched foreign exchange gains on the short-term
intercompany financing transaction.
Commodities Futures Contracts
During 2009, 2008 and 2007, the Corporation had no outstanding
commodities futures contracts. The Corporation is exposed to
risk from fluctuating prices for certain materials used to
manufacture its products, such as: steel, aluminum, copper,
zinc, resins and rubber compounds. At times, some of the risk
associated with usage of aluminum, copper and zinc has been
mitigated through the use of futures contracts that mitigate the
price exposure to these commodities.
Page 66 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
The Corporations long-term debt at December 31, 2009
and 2008 was:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
Senior credit facility(a)
|
|
$
|
390,000
|
|
|
$
|
390,000
|
|
Unsecured notes:
|
|
|
|
|
|
|
|
|
5.625% Senior Notes due 2021(b)
|
|
|
248,014
|
|
|
|
|
|
6.39% Notes due 2009
|
|
|
|
|
|
|
146,841
|
|
7.25% Notes due 2013
|
|
|
|
|
|
|
121,671
|
|
Other, including capital leases
|
|
|
522
|
|
|
|
2,432
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (including current maturities)
|
|
|
638,536
|
|
|
|
660,944
|
|
Less current maturities
|
|
|
522
|
|
|
|
148,751
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current maturities
|
|
$
|
638,014
|
|
|
$
|
512,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Interest is paid monthly. |
|
(b) |
|
Interest is paid semi-annually. |
Principal payments due on long-term debt including capital
leases in each of the five years subsequent to 2009 are as
follows:
|
|
|
|
|
(In thousands)
|
|
|
|
|
2010
|
|
$
|
522
|
|
2011
|
|
|
|
|
2012
|
|
|
390,000
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
Thereafter
|
|
|
248,014
|
|
|
|
|
|
|
|
|
$
|
638,536
|
|
|
|
|
|
|
During 2009, the Corporation issued $250 million of 5.625%
senior notes due 2021 and used a portion of the net proceeds to
retire $125 million of 7.25% notes due 2013 and repay
$95 million of outstanding indebtedness on its revolving
credit facility. The Corporation recognized a loss on
extinguishment of debt of $6.4 million during 2009
associated with the early repayment of notes due 2013.
The indentures underlying the unsecured notes 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 has a revolving credit facility with total
availability of $750 million and a five-year term expiring
in October 2012. All borrowings and other extensions of credit
under the Corporations revolving credit facility are
subject to the satisfaction of customary conditions, including
absence of defaults and accuracy in material respects of
representations and warranties. The proceeds of any loans under
the revolving credit facility may be used for general operating
needs and for other general corporate purposes in compliance
with the terms of the facility. The
Page 67 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
Corporation pays an annual commitment fee to maintain this
facility of 10 basis points. At December 31, 2009 and
2008, $390 million was outstanding under this facility.
Fees to access the facility and letters of credit under the
facility are based on a pricing grid related to the
Corporations debt ratings with Moodys, S&P, and
Fitch during the term of the facility.
The Corporations revolving credit facility requires that
it maintain:
|
|
|
|
|
a maximum leverage ratio of 3.75 to 1.00; and
|
|
|
|
a minimum interest coverage ratio of 3.00 to 1.00.
|
It also contains customary covenants that could restrict the
Corporations ability to: incur additional indebtedness;
grant liens; make investments, loans, or guarantees; declare
dividends; or repurchase company stock.
Outstanding letters of credit, which reduced availability under
the credit facility, amounted to $20.7 million at
December 31, 2009. The letters of credit relate primarily
to third-party insurance claims processing.
The Corporation has a EUR 10.0 million (approximately
US$14.4 million) committed revolving credit facility with a
European bank. The Corporation pays an annual commitment fee of
20 basis points on the undrawn balance to maintain this
facility. This credit facility contains standard covenants
similar to those contained in the $750 million credit
agreement and standard events of default such as covenant
default and cross-default. This facility has an indefinite
maturity and no borrowings were outstanding as of
December 31, 2009 and 2008.
The Corporation has a CAN 30.0 million (approximately
US$28.7 million) committed revolving credit facility with a
Canadian bank. The Corporation pays an annual commitment fee of
12.5 basis points on the undrawn balance to maintain this
facility. This credit facility contains standard covenants
similar to those contained in the $750 million credit
agreement and standard events of default such as covenant
default and cross-default. This facility matures in 2011, and no
borrowings were outstanding as of December 31, 2009 and
2008.
As of December 31, 2009, the Corporations aggregate
availability of funds under its credit facilities is
approximately $382.4 million, after deducting outstanding
letters of credit. The Corporation has the option, at the time
of drawing funds under any of the credit facilities, 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.
As of December 31, 2009, the Corporation also had letters
of credit in addition to those discussed above that do not
reduce availability under the Corporations credit
facilities. The Corporation had $11.4 million of such
additional letters of credit that relate primarily to
environmental assurances, third-party insurance claims
processing, performance guarantees and acquisition obligations.
Page 68 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
13.
|
Share-Based
Payment Arrangements
|
As of December 31, 2009, 2008 and 2007, the Corporation has
equity compensation plans for key employees and for non-employee
directors. Amounts recognized in the consolidated financial
statements with respect to the Corporations plans are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Total cost of share-based payment plans during the year
|
|
$
|
16,396
|
|
|
$
|
19,824
|
|
|
$
|
12,444
|
|
Amounts capitalized in inventories during the year
|
|
|
(1,476
|
)
|
|
|
(1,771
|
)
|
|
|
(1,364
|
)
|
Amounts recognized in income during the year for amount
previously capitalized
|
|
|
1,395
|
|
|
|
1,370
|
|
|
|
1,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts charged against income during the year, before income
tax benefit
|
|
|
16,315
|
|
|
|
19,423
|
|
|
|
12,477
|
|
Related income tax benefit recognized in income during the year
|
|
|
(6,200
|
)
|
|
|
(7,381
|
)
|
|
|
(4,741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payments compensation expense, net of tax
|
|
$
|
10,115
|
|
|
$
|
12,042
|
|
|
$
|
7,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to 2009, share-based compensation was awarded to key
employees during the first quarter of each year. In December
2008, the Corporations Board of Directors changed the
schedule for annual awards to the fourth quarter of each year.
Share-based compensation expense in 2008 reflects this change in
award timing and includes awards during the first and fourth
quarters of 2008.
Awards granted after the adoption date with features that
shorten the requisite service period, such as retirement
eligibility, are amortized over the minimum period an employee
is required to provide service to vest in the award. The
2009 net of tax share-based compensation expense reflected
approximately $3 million of accelerated amortization over
periods shorter than the stated service periods. The 2008 and
2007 net of tax share-based compensation expense reflected
approximately $6 million and $2 million, respectively,
of accelerated amortization over periods shorter than the stated
service periods.
2008
Stock Incentive Plan
In May 2008, the Corporations shareholders approved the
Thomas & Betts Corporation 2008 Stock Incentive Plan,
which expires in 2018, unless terminated earlier. Pursuant to
the terms of the plan, the Corporation may grant to certain
employees and nonemployee directors of the Corporation and
certain of its subsidiaries, incentive and nonqualified stock
options, stock appreciation rights, restricted stock, restricted
stock units, stock grants and stock credits. The maximum number
of shares of the Corporations common stock available under
the plan for all types of awards is 4,500,000. The maximum
number of shares of the Corporations common stock
available under the plan for restricted stock, restricted stock
units, stock grants and stock credits is 825,000. Restricted
stock represents nonvested shares, with compensation expense
recognized over the requisite service period (vesting period).
Option grants to purchase common stock for cash have a term not
to exceed 10 years and a strike price not less than the
fair market value on the grant date. For awards to employees
under the plan, nonvested restricted stock awards cliff-vest in
three years from the award date. Stock option grants to purchase
common stock have graded-vesting of one-third increments
beginning on the anniversary of the date of grant. Nonvested
restricted stock awards to nonemployee directors cliff-vest in
one year from the award date.
Page 69 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
13.
|
Share-Based
Payment Arrangements (Continued)
|
Change of
Control Provisions
Upon a change of control, as defined in the Corporations
plans, the restrictions applicable to nonvested restricted
shares immediately lapse and all outstanding stock options will
become fully vested and immediately exercisable.
Methods
Used to Measure Compensation
Stock
Options
The Corporations option grants qualify for classification
as equity and such grants contain no provisions to allow an
employee to force cash settlement by the Corporation. The
Corporations options do not contain future market or
performance conditions. The fair value of grants has been
estimated on the grant date using a Black-Scholes-Merton
option-pricing model. The measurement date is the grant date.
The Corporation has elected a straight-line amortization method
over the requisite service period (vesting period). The
Corporations current estimate of forfeitures ranges from
1.5% to 5.0%. Compensation expense associated with option grants
was recorded as selling, general and administrative
(SG&A) expense and cost of sales, similar to
other compensation expense.
The Corporation has three homogenous groups which are expected
to have different option exercise behaviors: executive
management, non-executive management and the Board of Directors.
Expected lives of share options were derived from historical
data. The risk-free rate is based on the U.S. Treasury
yield curve for the expected terms. Expected volatility is based
on a combination of historical volatility of the
Corporations common stock and implied volatility from
traded options in the Corporations common stock.
The following are assumptions used in Black-Scholes-Merton
valuations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Weighted-average volatility
|
|
|
40%-45%
|
|
|
|
30%-45%
|
|
|
|
30%
|
|
Expected dividends
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
|
Expected lives in years
|
|
|
4.0-5.0
|
|
|
|
4.0-5.0
|
|
|
|
4.5-5.5
|
|
Risk-free rate
|
|
|
2.00%-2.25%
|
|
|
|
1.50%-3.00%
|
|
|
|
4.50%-4.75%
|
|
Nonvested
Shares
The Corporations nonvested share (restricted stock) awards
qualify for classification as equity and such awards contain no
provisions to allow an employee to force cash settlement by the
Corporation. The initial measurement date is the award date. The
Corporation has elected a straight-line amortization method over
the requisite service period (vesting period). The fair value of
awards has been determined as the stock price on the award date.
The Corporations current estimate of forfeitures is 1.5%
to 5.0%. Compensation expense associated with nonvested
restricted stock awards was recorded as SG&A expense and
cost of sales, similar to other compensation expense.
Page 70 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
13.
|
Share-Based
Payment Arrangements (Continued)
|
Summary
of Option Activity
The following is a summary of option transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
|
|
|
Average
|
|
Average
|
|
|
|
|
Number
|
|
Exercise
|
|
Contractual
|
|
Aggregate
|
|
|
of Shares
|
|
Price
|
|
Term
|
|
Intrinsic Value
|
|
|
|
|
|
|
(Years)
|
|
(In thousands)
|
|
Outstanding at December 31, 2006
|
|
|
2,560,687
|
|
|
$
|
30.98
|
|
|
|
6.24
|
|
|
$
|
42,933
|
|
Granted
|
|
|
404,282
|
|
|
|
47.91
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(904,858
|
)
|
|
|
27.32
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(99,821
|
)
|
|
|
43.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2007
|
|
|
1,960,290
|
|
|
$
|
35.47
|
|
|
|
6.61
|
|
|
$
|
28,110
|
|
Granted
|
|
|
2,163,442
|
|
|
|
27.36
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(73,420
|
)
|
|
|
25.63
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(173,832
|
)
|
|
|
47.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
3,876,480
|
|
|
$
|
30.59
|
|
|
|
7.86
|
|
|
$
|
9,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
795,391
|
|
|
|
36.58
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(129,938
|
)
|
|
|
22.89
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(172,662
|
)
|
|
|
35.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
4,369,271
|
|
|
$
|
31.71
|
|
|
|
7.27
|
|
|
$
|
33,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2007
|
|
|
1,044,843
|
|
|
$
|
28.37
|
|
|
|
5.13
|
|
|
$
|
22,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2008
|
|
|
1,357,871
|
|
|
$
|
31.40
|
|
|
|
5.11
|
|
|
$
|
2,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009
|
|
|
2,227,441
|
|
|
$
|
31.89
|
|
|
|
5.57
|
|
|
$
|
18,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average grant date fair value of options granted
during 2009 was $13.35, during 2008 was $9.43 and during 2007
was $16.91. The total intrinsic value of options exercised
during 2009 was $1.6 million, during 2008 was
$1.1 million and during 2007 was $25.4 million.
Page 71 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
13.
|
Share-Based
Payment Arrangements (Continued)
|
Summary
of Nonvested Shares Activity
The following is a summary of nonvested shares (restricted
stock) transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Number
|
|
Average
|
|
|
of
|
|
Grant Date
|
|
|
Shares
|
|
Fair Value
|
|
Nonvested at December 31, 2006
|
|
|
237,974
|
|
|
$
|
32.51
|
|
Granted
|
|
|
135,645
|
|
|
$
|
48.43
|
|
Vested
|
|
|
(84,650
|
)
|
|
$
|
23.14
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2007
|
|
|
288,969
|
|
|
$
|
42.73
|
|
Granted
|
|
|
446,709
|
|
|
$
|
26.34
|
|
Vested
|
|
|
(103,359
|
)
|
|
$
|
32.93
|
|
Forfeited
|
|
|
(8,941
|
)
|
|
$
|
45.44
|
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2008
|
|
|
623,378
|
|
|
$
|
32.57
|
|
Granted
|
|
|
165,877
|
|
|
$
|
36.28
|
|
Vested
|
|
|
(98,078
|
)
|
|
$
|
43.02
|
|
Forfeited
|
|
|
(16,519
|
)
|
|
$
|
26.47
|
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2009
|
|
|
674,658
|
|
|
$
|
32.11
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009, there was $10.7 million of
total unrecognized compensation cost related to nonvested
restricted stock. That cost is expected to be recognized over a
weighted-average period of 2.1 years. The total grant date
fair value of restricted stock that vested during 2009 was
$4.2 million, during 2008 was $3.4 million and during
2007 was $2.0 million.
Recognized
Tax Benefits
During 2009, 2008 and 2007, the Corporation recognized tax
benefits (deficits) of $(0.3) million, $0.6 million
and $8.9 million, respectively, related to the exercise of
stock options and vesting of restricted stock. These adjustments
were reflected in additional paid-in capital.
Page 72 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits
|
The following is information regarding the Corporations
2009 and 2008 domestic and international pension benefit and
other postretirement benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Postretirement
|
|
|
|
Pension Benefits
|
|
|
Benefits
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at January 1
|
|
$
|
483,590
|
|
|
$
|
491,310
|
|
|
$
|
21,166
|
|
|
$
|
25,034
|
|
Service cost
|
|
|
12,268
|
|
|
|
12,410
|
|
|
|
6
|
|
|
|
60
|
|
Interest cost
|
|
|
30,096
|
|
|
|
31,785
|
|
|
|
1,238
|
|
|
|
1,346
|
|
Plan participants contributions
|
|
|
91
|
|
|
|
102
|
|
|
|
658
|
|
|
|
644
|
|
Plan amendments
|
|
|
|
|
|
|
296
|
|
|
|
|
|
|
|
|
|
Actuarial loss (gain)
|
|
|
51,543
|
|
|
|
(3,035
|
)
|
|
|
2,219
|
|
|
|
(279
|
)
|
Foreign-exchange impact
|
|
|
4,927
|
|
|
|
(14,618
|
)
|
|
|
|
|
|
|
|
|
Curtailments/settlements(a)
|
|
|
(21,245
|
)
|
|
|
(5,541
|
)
|
|
|
|
|
|
|
(2,561
|
)
|
Benefits paid
|
|
|
(27,848
|
)
|
|
|
(29,119
|
)
|
|
|
(3,442
|
)
|
|
|
(3,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at December 31
|
|
|
533,422
|
|
|
|
483,590
|
|
|
|
21,845
|
|
|
|
21,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at January 1
|
|
|
319,506
|
|
|
|
482,820
|
|
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
71,052
|
|
|
|
(123,190
|
)
|
|
|
|
|
|
|
|
|
Employer contributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified pension plans
|
|
|
51,655
|
|
|
|
1,849
|
|
|
|
|
|
|
|
|
|
Non-qualified pension plans
|
|
|
1,827
|
|
|
|
1,944
|
|
|
|
|
|
|
|
|
|
Postretirement benefit plans
|
|
|
|
|
|
|
|
|
|
|
2,784
|
|
|
|
2,434
|
|
Plan participants contributions
|
|
|
91
|
|
|
|
102
|
|
|
|
658
|
|
|
|
644
|
|
Foreign-exchange impact
|
|
|
4,066
|
|
|
|
(14,900
|
)
|
|
|
|
|
|
|
|
|
Curtailments/settlements
|
|
|
(638
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(27,848
|
)
|
|
|
(29,119
|
)
|
|
|
(3,442
|
)
|
|
|
(3,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at December 31
|
|
|
419,711
|
|
|
|
319,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation in excess of plan assets
|
|
$
|
113,711
|
|
|
$
|
164,084
|
|
|
$
|
21,845
|
|
|
$
|
21,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Amounts in 2009 reflect a plan to freeze future benefits of The
Thomas & Betts Pension Plan. Amounts in 2008 reflect
primarily curtailments of benefit plans associated with the
Lamson & Sessions acquisition. |
Page 73 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits (Continued)
|
Pre-tax amounts recognized in the balance sheet for pension and
other postretirement benefits included the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Postretirement
|
|
|
|
Pension Benefits
|
|
|
Benefits
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Prepaid benefit cost (non-current asset)
|
|
$
|
(365
|
)
|
|
$
|
(4,617
|
)
|
|
$
|
|
|
|
$
|
|
|
Accrued benefit liability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liability
|
|
|
10,476
|
|
|
|
1,548
|
|
|
|
2,872
|
|
|
|
2,847
|
|
Non-current liability
|
|
|
103,600
|
|
|
|
167,153
|
|
|
|
18,973
|
|
|
|
18,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accrued benefit liability
|
|
|
114,076
|
|
|
|
168,701
|
|
|
|
21,845
|
|
|
|
21,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
113,711
|
|
|
$
|
164,084
|
|
|
$
|
21,845
|
|
|
$
|
21,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax amounts recognized in accumulated other comprehensive
income consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Net actuarial loss (gain)
|
|
$
|
177,745
|
|
|
$
|
206,374
|
|
|
$
|
1,484
|
|
|
$
|
(626
|
)
|
Prior service cost (credit)
|
|
|
6,734
|
|
|
|
8,042
|
|
|
|
(375
|
)
|
|
|
(627
|
)
|
Net transition obligation (asset)
|
|
|
(44
|
)
|
|
|
(52
|
)
|
|
|
2,299
|
|
|
|
3,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
184,435
|
|
|
$
|
214,364
|
|
|
$
|
3,408
|
|
|
$
|
1,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accumulated benefit obligation for all pension plans was
$521.4 million at December 31, 2009 and
$451.8 million at December 31, 2008.
Assumed weighted-average rates used in determining the benefit
obligations were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Discount rate
|
|
|
5.62
|
%
|
|
|
6.30
|
%
|
|
|
5.00
|
%
|
|
|
6.25
|
%
|
Rate of increase in compensation level
|
|
|
3.18
|
%
|
|
|
4.01
|
%
|
|
|
|
%
|
|
|
|
%
|
Reflected in the weighted-average rates above used in
determining the benefit obligations are the U.S. discount
rates of 5.63% for 2009 and 6.25% for 2008.
Page 74 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits (Continued)
|
The following information is for pension plans with plan assets
in excess of accumulated benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
Projected benefit obligation
|
|
$
|
33,489
|
|
|
$
|
37,058
|
|
Accumulated benefit obligation
|
|
|
21,453
|
|
|
|
35,221
|
|
Fair value of plan assets
|
|
|
33,085
|
|
|
|
41,390
|
|
The following information is for pension plans with plan assets
less than accumulated benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
Projected benefit obligation
|
|
$
|
499,333
|
|
|
$
|
446,532
|
|
Accumulated benefit obligation
|
|
|
489,164
|
|
|
|
416,553
|
|
Fair value of plan assets
|
|
|
386,626
|
|
|
|
278,116
|
|
The Corporation maintains non-qualified supplemental pension
plans covering certain key employees, which provide for benefit
payments that exceed the limit for deductibility imposed by
income tax regulations. The projected benefit obligation above
related to these unfunded plans was $53.6 million at
December 31, 2009 and $42.6 million at
December 31, 2008.
Net periodic cost for the Corporations pension and other
postretirement benefits for 2009, 2008 and 2007 included the
following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Pension Benefits
|
|
|
Postretirement Benefits
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Service cost
|
|
$
|
12,268
|
|
|
$
|
11,779
|
|
|
$
|
11,139
|
|
|
$
|
6
|
|
|
$
|
60
|
|
|
$
|
121
|
|
Interest cost
|
|
|
30,096
|
|
|
|
30,229
|
|
|
|
23,216
|
|
|
|
1,238
|
|
|
|
1,346
|
|
|
|
1,064
|
|
Expected return on plan assets
|
|
|
(26,560
|
)
|
|
|
(39,210
|
)
|
|
|
(31,953
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan net loss (gain)
|
|
|
15,172
|
|
|
|
2,462
|
|
|
|
4,181
|
|
|
|
(138
|
)
|
|
|
121
|
|
|
|
562
|
|
Prior service cost (gain)
|
|
|
1,096
|
|
|
|
1,135
|
|
|
|
1,068
|
|
|
|
(252
|
)
|
|
|
(238
|
)
|
|
|
(225
|
)
|
Transition obligation (asset)
|
|
|
(10
|
)
|
|
|
(14
|
)
|
|
|
(15
|
)
|
|
|
766
|
|
|
|
766
|
|
|
|
766
|
|
Curtailment and settlement loss/(gain)(a)
|
|
|
1,958
|
|
|
|
(938
|
)
|
|
|
198
|
|
|
|
|
|
|
|
(477
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
34,020
|
|
|
$
|
5,443
|
|
|
$
|
7,834
|
|
|
$
|
1,620
|
|
|
$
|
1,578
|
|
|
$
|
2,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Amounts in 2009 reflect a plan to freeze future benefits of The
Thomas & Betts Pension Plan. Amounts in 2008 reflect
primarily curtailments of benefit plans associated with the
Lamson & Sessions acquisition. |
Page 75 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits (Continued)
|
During 2007, the Board of Directors of the Corporation approved
an amendment to one of the Corporations major domestic
pension plans covering non-bargaining employees (The
Thomas & Betts Pension Plan) that precludes entry to
employees hired after December 31, 2007.
During the fourth quarter of 2009, the Board of Directors of the
Corporation approved a plan for the suspension of future pension
plan benefit accruals (freeze) after
December 31, 2010 for the domestic non-bargaining plan
participants under The Thomas & Betts Pension Plan.
Additionally, the Corporation will provide as a replacement
benefit certain non-elective contributions, including certain
transition benefits, under its existing domestic defined
contribution plan. As a result of the plan to freeze defined
benefits effective December 31, 2010, the Corporation
reduced the plans projected benefit obligation as of
December 31, 2009 by approximately $21 million,
increased shareholders equity-accumulated other
comprehensive income (loss) by a similar amount,
net-of-tax,
and recognized a negligible curtailment loss during 2009.
The following table summarizes components included in
accumulated other comprehensive income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in
|
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Pension Related
|
|
Other
|
|
|
Net Actuarial
|
|
Prior Service
|
|
Net Transition
|
|
Tax Valuation
|
|
Comprehensive
|
(In thousands)
|
|
Gains (Losses)
|
|
Credit (Cost)
|
|
Asset (Obligation)
|
|
Adjustment
|
|
Income
|
|
Pre-Tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
$
|
(89,424
|
)
|
|
$
|
(8,714
|
)
|
|
$
|
(4,498
|
)
|
|
$
|
|
|
|
$
|
(102,636
|
)
|
Comprehensive Income
|
|
|
30,397
|
|
|
|
680
|
|
|
|
749
|
|
|
|
|
|
|
|
31,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
(59,027
|
)
|
|
|
(8,034
|
)
|
|
|
(3,749
|
)
|
|
|
|
|
|
|
(70,810
|
)
|
Comprehensive Income (Loss)
|
|
|
(146,721
|
)
|
|
|
619
|
|
|
|
735
|
|
|
|
|
|
|
|
(145,367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
(205,748
|
)
|
|
|
(7,415
|
)
|
|
|
(3,014
|
)
|
|
|
|
|
|
|
(216,177
|
)
|
Comprehensive Income (Loss)
|
|
|
26,519
|
|
|
|
1,056
|
|
|
|
759
|
|
|
|
|
|
|
|
28,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
(179,229
|
)
|
|
$
|
(6,359
|
)
|
|
$
|
(2,255
|
)
|
|
$
|
|
|
|
$
|
(187,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Impacts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
$
|
32,393
|
|
|
$
|
3,236
|
|
|
$
|
1,720
|
|
|
$
|
(10,977
|
)
|
|
$
|
26,372
|
|
Comprehensive Loss
|
|
|
(11,291
|
)
|
|
|
(294
|
)
|
|
|
(287
|
)
|
|
|
|
|
|
|
(11,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
21,102
|
|
|
|
2,942
|
|
|
|
1,433
|
|
|
|
(10,977
|
)
|
|
|
14,500
|
|
Comprehensive Income (Loss)
|
|
|
56,051
|
|
|
|
(243
|
)
|
|
|
(283
|
)
|
|
|
|
|
|
|
55,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
77,153
|
|
|
|
2,699
|
|
|
|
1,150
|
|
|
|
(10,977
|
)
|
|
|
70,025
|
|
Comprehensive Income (Loss)
|
|
|
(10,969
|
)
|
|
|
(402
|
)
|
|
|
(289
|
)
|
|
|
|
|
|
|
(11,660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
66,184
|
|
|
$
|
2,297
|
|
|
$
|
861
|
|
|
$
|
(10,977
|
)
|
|
$
|
58,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of Tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
$
|
(57,031
|
)
|
|
$
|
(5,478
|
)
|
|
$
|
(2,778
|
)
|
|
$
|
(10,977
|
)
|
|
$
|
(76,264
|
)
|
Comprehensive Income
|
|
|
19,106
|
|
|
|
386
|
|
|
|
462
|
|
|
|
|
|
|
|
19,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
(37,925
|
)
|
|
|
(5,092
|
)
|
|
|
(2,316
|
)
|
|
|
(10,977
|
)
|
|
|
(56,310
|
)
|
Comprehensive Income (Loss)
|
|
|
(90,670
|
)
|
|
|
376
|
|
|
|
452
|
|
|
|
|
|
|
|
(89,842
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
(128,595
|
)
|
|
|
(4,716
|
)
|
|
|
(1,864
|
)
|
|
|
(10,977
|
)
|
|
|
(146,152
|
)
|
Comprehensive Income (Loss)
|
|
|
15,550
|
|
|
|
654
|
|
|
|
470
|
|
|
|
|
|
|
|
16,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
(113,045
|
)
|
|
$
|
(4,062
|
)
|
|
$
|
(1,394
|
)
|
|
$
|
(10,977
|
)
|
|
$
|
(129,478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The remaining balance for pension related tax valuation
adjustment relates to a prior income tax valuation allowance
recognized in accumulated other comprehensive income. The
December 31,
Page 76 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits (Continued)
|
2009 balance of net actuarial losses, prior service costs, and
net transition obligation expected to be amortized in 2010 is
$11.7 million, $0.9 million and $0.8 million,
respectively.
The Corporations contributions to all qualified pension
plans were $52 million in 2009 and $2 million in each
of the years 2008 and 2007. The Corporation expects 2010
required contributions to its qualified pension plans to be
minimal.
The following pension and other postretirement benefit payments,
which reflect expected future service, as appropriate, are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
Pension
|
|
retirement
|
(In millions)
|
|
Benefits
|
|
Benefits
|
|
2010
|
|
$
|
37.3
|
|
|
$
|
2.9
|
|
2011
|
|
|
29.0
|
|
|
|
2.5
|
|
2012
|
|
|
30.4
|
|
|
|
2.4
|
|
2013
|
|
|
31.1
|
|
|
|
2.3
|
|
2014
|
|
|
51.2
|
|
|
|
2.1
|
|
2015 2019
|
|
|
166.9
|
|
|
|
8.2
|
|
|
|
|
|
|
|
|
|
|
Expected benefit payments over next ten years
|
|
$
|
345.9
|
|
|
$
|
20.4
|
|
|
|
|
|
|
|
|
|
|
Assumed weighted-average rates used in determining the net
periodic pension cost were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Pension Benefits
|
|
|
Postretirement Benefits
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Discount rate
|
|
|
6.30
|
%
|
|
|
6.18
|
%
|
|
|
5.62
|
%
|
|
|
6.25
|
%
|
|
|
6.07
|
%
|
|
|
5.50
|
%
|
Rate of increase in compensation level
|
|
|
4.01
|
%
|
|
|
4.45
|
%
|
|
|
4.39
|
%
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
Expected long-term rate of return on plan assets
|
|
|
8.59
|
%
|
|
|
8.41
|
%
|
|
|
8.52
|
%
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
Reflected in the weighted-average rates above used in
determining the net periodic pension benefit cost are the
U.S. discount rate of 6.25% for 2009, 6.25% for 2008 and
5.75% for 2007, and the U.S. expected long-term rate of
return on plan assets of 8.75% for 2009, 2008 and 2007.
Certain actuarial assumptions, such as the assumed discount
rate, the long-term rate of return and the assumed health care
cost trend rates have an effect on the amounts reported for net
periodic pension and postretirement medical benefit expense as
well as the respective benefit obligation amounts. The
Corporation reviews external data and its own historical trends
for health care costs to determine the health care cost trend
rates for the postretirement medical benefit plans. The assumed
discount rates represent long-term high quality corporate bond
rates commensurate with liability durations of its plans. The
long-term rates of return used by the Corporation take into
account historical investment experience over a multi-year
period, as well as, mix of plan asset investment types, current
market conditions, investment practices of its Retirement Plans
Committee, and advice from its actuaries.
Page 77 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits (Continued)
|
The assumed annual increases in health care cost at
December 31, 2009 and 2008 are:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Health care cost trend rate assumed for next year
|
|
|
8.0
|
%
|
|
|
8.0
|
%
|
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate)
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
Year that the rate reaches the ultimate trend rate
|
|
|
2012
|
|
|
|
2012
|
|
Assumed health care cost trend rates have an effect on the
amounts reported for the health care plans. A
one-percentage-point change in assumed annual increases in
health care cost would have the following effects:
|
|
|
|
|
|
|
|
|
|
|
1-Percentage-Point
|
|
1-Percentage-Point
|
(In thousands)
|
|
Increase
|
|
Decrease
|
|
Effect on total of service and interest cost
|
|
$
|
54
|
|
|
$
|
(48
|
)
|
Effect on postretirement benefit obligation
|
|
|
1,134
|
|
|
|
(1,010
|
)
|
The financial objectives of the Corporations investment
policy for pension plan assets are (1) to maximize returns
in order to minimize contributions and long-term cost of funding
pension liabilities, within reasonable and prudent levels of
risk, (2) to match liability growth with the objective of
fully funding benefits as they accrue and (3) to achieve
annualized returns in excess of the applicable policy benchmark.
The Corporations asset allocation targets are 43%
U.S. domestic equity securities, 15% international equity
securities, 26% fixed income and high yield debt securities and
16% other, including alternative investments. As of
December 31, 2009 and 2008, no pension plan assets were
directly invested in Thomas & Betts Corporation common
stock.
The fair values of the Corporations pension plan assets at
December 31, 2009 by asset category are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
Significant
|
|
Significant
|
|
|
|
|
Active Markets
|
|
Observable
|
|
Unobservable
|
|
|
|
|
for Identical Assets
|
|
Inputs
|
|
Inputs
|
(In millions)
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Asset Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collective trust funds
|
|
$
|
287.6
|
|
|
$
|
|
|
|
$
|
287.6
|
|
|
$
|
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income mutual fund
|
|
|
32.4
|
|
|
|
32.4
|
|
|
|
|
|
|
|
|
|
Other fixed income securities
|
|
|
26.7
|
|
|
|
26.7
|
|
|
|
|
|
|
|
|
|
Equity securities, primarily U.S.
|
|
|
29.8
|
|
|
|
29.8
|
|
|
|
|
|
|
|
|
|
Hedge fund
|
|
|
35.1
|
|
|
|
|
|
|
|
35.1
|
|
|
|
|
|
Other alternative investments
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
5.3
|
|
Cash and equivalents
|
|
|
2.8
|
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
419.7
|
|
|
$
|
91.7
|
|
|
$
|
322.7
|
|
|
$
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collective trust funds: Collective trust funds
are comprised of units in commingled funds that are not publicly
traded. The underlying assets in these funds (domestic and
foreign equity securities and fixed income securities) are
publicly traded on exchanges and price quotes for the assets
held by these funds are readily available. The investment
strategies of these funds are to invest in specific sectors or
securities consistent with the overall investment policy of the
Corporation. A significant
Page 78 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
14.
|
Pension
and Other Postretirement Benefits (Continued)
|
portion of the underlying assets in these funds are invested in
domestic large-cap, mid-cap and small-cap equity securities.
Collective trust funds have been classified as Level 2.
Fixed income securities: Fixed income
securities include a publicly traded bond mutual fund comprised
principally of U.S. government bonds. Fixed income securities
also reflect directly held domestic and foreign government bonds
and corporate bonds. Such securities are measured using quoted
market prices which are readily available. Fixed income
securities have been classified as Level 1.
Equity securities: Equity securities represent
directly held domestic and foreign common stocks. Such
securities are publicly traded on exchanges and price quotes for
these assets are readily available. Equity securities have been
classified as Level 1.
Hedge fund: The hedge fund operates as a
fund of funds investing in a group of funds or other
pooled investment vehicles
(sub-funds)
and the funds investment objective is to seek attractive
risk-adjusted rates of return through investment in a
diversified portfolio of assets. The hedge fund is valued based
on net asset values (NAV) calculated by the
sub-fund
managers, as well as other considerations of the hedge fund
manager. This information is generally not publicly available.
Due to the hedge fund having a redemption period of 90 days
or less, the Corporation has elected as a practical expedient to
reflect the hedge fund fair value on the basis of NAV and has
classified it as Level 2.
The following is a reconciliation of the fair value activity of
assets valued with fair value measurements using significant
unobservable inputs:
|
|
|
|
|
|
|
Fair Value
|
|
|
Measurements
|
|
|
Using Significant
|
|
|
Unobservable Inputs
|
|
|
(Level 3)
|
|
|
Other Alternative
|
(In millions)
|
|
Investments
|
|
Balance at December 31, 2008
|
|
$
|
6.2
|
|
Actual return on plan assets
|
|
|
(1.0
|
)
|
Purchases, sales and settlements
|
|
|
0.1
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
5.3
|
|
|
|
|
|
|
Other
Benefits
The Corporation sponsors defined contribution plans for its
U.S. employees for which the Corporation makes matching
contributions based on percentages of employee contributions and
non-elective contributions. The cost of these plans was
$6.3 million in 2009, $7.1 million in 2008 and
$4.5 million in 2007.
Page 79 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
The Corporation and its subsidiaries are parties to various
leases relating to plants, distribution facilities, office
facilities, vehicles and other equipment. Related real estate
taxes, insurance and maintenance expenses are normally
obligations of the Corporation. Capitalized leases are not
significant.
Future minimum payments under non-cancelable operating leases
consisted of the following at December 31, 2009:
|
|
|
|
|
|
|
Operating
|
(In thousands)
|
|
Leases
|
|
2010
|
|
$
|
15,711
|
|
2011
|
|
|
11,919
|
|
2012
|
|
|
9,160
|
|
2013
|
|
|
7,404
|
|
2014
|
|
|
3,536
|
|
Thereafter
|
|
|
7,148
|
|
|
|
|
|
|
Total minimum operating lease payments
|
|
$
|
54,878
|
|
|
|
|
|
|
Rent expense for operating leases was $30.6 million in
2009, $32.5 million in 2008, and $25.7 million in 2007.
Repurchase
of Common Shares
In 2006, the Corporations Board of Directors approved
another share repurchase plan that authorized the Corporation to
buy up to 3,000,000 of its common shares. During December 2006,
the Corporation repurchased, with available cash resources,
667,620 common shares through
open-market
transactions. During 2007, the Corporation repurchased, with
available cash resources, the remaining 2,332,380 common shares
authorized by this plan through open-market transactions.
In 2007, the Corporations Board of Directors approved a
share repurchase plan that authorized the Corporation to buy an
additional 3,000,000 of its common shares. In 2007, the
Corporation repurchased, with available cash resources, 200,700
common shares through open-market transactions. During 2008, the
Corporation repurchased, with available cash resources, the
remaining 2,799,300 common shares authorized by this plan
through open-market transactions.
In 2008, the Corporations Board of Directors approved a
share repurchase plan that authorized the Corporation to buy an
additional 5,000,000 of its common shares. In 2008, the
Corporation repurchased, with available cash resources,
2,425,000 common shares through open-market transactions. During
2009, the Corporation repurchased, with available cash
resources, 1,000,000 common shares through open-market
transactions. The timing of future repurchases, if any, will
depend upon a variety of factors, including market conditions.
This authorization expires in October 2010.
Page 80 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
16.
|
Other
Financial Data (Continued)
|
Accumulated
Other Comprehensive Income
The following table summarizes the components of accumulated
other comprehensive income, net of taxes.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
(In thousands)
|
|
2009
|
|
2008
|
|
Cumulative translation adjustment
|
|
$
|
44,110
|
|
|
$
|
(26,427
|
)
|
Net actuarial gains (losses)
|
|
|
(113,045
|
)
|
|
|
(128,595
|
)
|
Prior service credit (cost)
|
|
|
(4,062
|
)
|
|
|
(4,716
|
)
|
Net transition asset (obligation)
|
|
|
(1,394
|
)
|
|
|
(1,864
|
)
|
Pension related tax valuation adjustment(a)
|
|
|
(10,977
|
)
|
|
|
(10,977
|
)
|
Unrealized gain (loss) on interest rate swap
|
|
|
(17,642
|
)
|
|
|
(24,404
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
$
|
(103,010
|
)
|
|
$
|
(196,983
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The remaining balance at December 31, 2009 for pension
related tax valuation adjustment relates to a prior income tax
valuation allowance recognized in accumulated other
comprehensive income. |
Other
Financial Disclosures
Depreciation expense was $49.3 million in 2009,
$53.9 million in 2008 and $49.5 million in 2007.
Research, development and engineering expenditures were
$34.9 million in 2009, $35.1 million in 2008 and
$29.9 million in 2007. These expenditures are included in
cost of sales.
The Corporation expenses the cost of advertising as it is
incurred. Total advertising expense was $16.4 million in
2009, $20.9 million in 2008 and $20.9 million in 2007.
Interest expense, net in the accompanying consolidated
statements of operations includes interest income of
$0.8 million in 2009, $4.7 million in 2008 and
$10.6 million in 2007.
Foreign exchange gain (loss) included in the accompanying
consolidated statements of operations was $1.8 million in
2009, $(7.7) million in 2008 and $(2.3) million in
2007.
Accrued liabilities included salaries, fringe benefits and other
compensation of $45.0 million in 2009 and
$55.0 million in 2008.
In conjunction with the Lamson & Sessions Co.
acquisition, the Corporation assumed the liability under
employment agreements with certain former executives of that
company. Restricted cash for funding associated with the
employment agreements was approximately $3 million at
December 31, 2009 and $8 million at December 31,
2008. In 2009, the Corporation has paid approximately
$5 million to former executive officers from restricted
cash and approximately $0.8 million related to income tax
gross-up
provisions from available cash resources. In 2008, the
Corporation paid approximately $9 million to former
executive officers from restricted cash and approximately
$5 million related to income tax
gross-up
provisions from available cash resources.
Page 81 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
16.
|
Other
Financial Data (Continued)
|
The following table reflects activity for accounts receivable
allowances, sales discounts and allowances, quantity and price
rebates, and bad debts during the three years ended
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
Balance at
|
|
|
Beginning
|
|
Acquired
|
|
|
|
|
|
End
|
(In thousands)
|
|
of Year
|
|
Balances
|
|
Provisions
|
|
Deductions
|
|
of Year
|
|
2009
|
|
$
|
91,419
|
|
|
$
|
|
|
|
$
|
252,062
|
|
|
$
|
(271,664
|
)
|
|
$
|
71,817
|
|
2008
|
|
$
|
85,356
|
|
|
$
|
130
|
|
|
$
|
332,997
|
|
|
$
|
(327,064
|
)
|
|
$
|
91,419
|
|
2007
|
|
$
|
79,493
|
|
|
$
|
6,420
|
|
|
$
|
263,664
|
|
|
$
|
(264,221
|
)
|
|
$
|
85,356
|
|
|
|
17.
|
Segment
and Other Related Disclosures
|
The Corporation has three reportable
segments: Electrical, Steel Structures and HVAC. The
Corporations reportable segments are based primarily on
product lines and represent the primary mode used to assess
allocation of resources and performance. The Corporation
evaluates its business segments primarily on the basis of
segment earnings, with segment earnings defined as earnings
before corporate expense, depreciation and amortization expense,
share-based compensation expense, interest, income taxes and
certain other items. Corporate expense includes legal, finance
and administrative costs. The Corporation has no material
inter-segment sales.
During 2008, the Corporation began to report segment earnings
before depreciation, amortization and share-based compensation
expenses. Management believes this change provides improved
visibility into the underlying operating trends in the business
segments and the contributions from the Corporations
recent acquisitions. This change is also in line with how the
Corporation measures performance internally. Segment information
for the prior periods have been revised to conform to the
current presentation.
The Electrical segment designs, manufactures and markets
thousands of different electrical connectors, components and
other products for industrial, construction, utility and
communications applications. The Steel Structures segment
designs, manufactures and markets highly engineered steel
transmission structures. The HVAC segment designs, manufactures
and markets heating and ventilation products for commercial and
industrial buildings. The Companys U.S. Electrical
and International Electrical operating segments have been
aggregated in the Electrical reporting segment since they have
similar economic characteristics as well as similar products and
services, production processes, types of customers and methods
used for distributing their products.
As a result of the Corporations decision to divest the PVC
and HDPE pipe operations acquired as part of Lamson &
Sessions Co., operating results for the pipe business are
reported as discontinued operations and are shown on
a net basis on the consolidated financial statements. These
results are not included in segment reporting.
Page 82 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
17.
|
Segment
and Other Related Disclosures (Continued)
|
Segment
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
1,554,326
|
|
|
$
|
2,103,121
|
|
|
$
|
1,766,598
|
|
Steel Structures
|
|
|
234,462
|
|
|
|
231,554
|
|
|
|
227,356
|
|
HVAC
|
|
|
109,912
|
|
|
|
139,149
|
|
|
|
142,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,898,700
|
|
|
$
|
2,473,824
|
|
|
$
|
2,136,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
270,154
|
|
|
$
|
416,732
|
|
|
$
|
352,901
|
|
Steel Structures
|
|
|
47,433
|
|
|
|
44,336
|
|
|
|
42,623
|
|
HVAC
|
|
|
18,213
|
|
|
|
25,693
|
|
|
|
27,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
335,800
|
|
|
$
|
486,761
|
|
|
$
|
422,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
34,983
|
|
|
$
|
34,508
|
|
|
$
|
32,754
|
|
Steel Structures
|
|
|
5,495
|
|
|
|
4,187
|
|
|
|
6,358
|
|
HVAC
|
|
|
628
|
|
|
|
3,399
|
|
|
|
1,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
41,106
|
|
|
$
|
42,094
|
|
|
$
|
40,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
68,029
|
|
|
$
|
72,327
|
|
|
$
|
49,865
|
|
Steel Structures
|
|
|
3,777
|
|
|
|
3,730
|
|
|
|
3,442
|
|
HVAC
|
|
|
2,427
|
|
|
|
2,628
|
|
|
|
3,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
74,233
|
|
|
$
|
78,685
|
|
|
$
|
56,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
|
|
$
|
1,608,746
|
|
|
$
|
1,727,522
|
|
|
$
|
2,063,759
|
|
Steel Structures
|
|
|
144,201
|
|
|
|
147,426
|
|
|
|
132,772
|
|
HVAC
|
|
|
43,109
|
|
|
|
52,147
|
|
|
|
53,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,796,056
|
|
|
$
|
1,927,095
|
|
|
$
|
2,250,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 83 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
17.
|
Segment
and Other Related Disclosures (Continued)
|
The following are reconciliations of the reportable segments to
the consolidated Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Earnings from Continuing Operations Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reportable segment earnings
|
|
$
|
335,800
|
|
|
$
|
486,761
|
|
|
$
|
422,699
|
|
Corporate expense
|
|
|
(47,423
|
)
|
|
|
(41,634
|
)
|
|
|
(62,768
|
)
|
Depreciation, amortization and share-based compensation expense
|
|
|
(91,421
|
)
|
|
|
(99,864
|
)
|
|
|
(70,243
|
)
|
Intangible asset impairment
|
|
|
(5,794
|
)
|
|
|
(32,700
|
)
|
|
|
|
|
Interest expense, net
|
|
|
(35,483
|
)
|
|
|
(43,426
|
)
|
|
|
(23,521
|
)
|
Loss on extinguishment of debt
|
|
|
(6,391
|
)
|
|
|
|
|
|
|
|
|
Other (expense) income, net
|
|
|
1,846
|
|
|
|
(7,737
|
)
|
|
|
(2,276
|
)
|
Gain on sale of equity interest
|
|
|
|
|
|
|
169,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes
|
|
$
|
151,134
|
|
|
$
|
431,084
|
|
|
$
|
263,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from reportable segments
|
|
$
|
1,796,056
|
|
|
$
|
1,927,095
|
|
|
$
|
2,250,443
|
|
General corporate
|
|
|
657,351
|
|
|
|
483,507
|
|
|
|
317,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,453,407
|
|
|
$
|
2,410,602
|
|
|
$
|
2,567,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 84 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
18.
|
Financial
Information Relating to Operations in Different Geographic
Areas
|
The Corporation conducts business in three principal areas:
U.S., Canada and Europe. Net sales are attributed to geographic
areas based on customer location.
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
1,244,268
|
|
|
$
|
1,622,819
|
|
|
$
|
1,394,139
|
|
Canada
|
|
|
331,776
|
|
|
|
433,490
|
|
|
|
382,336
|
|
Europe
|
|
|
209,251
|
|
|
|
268,650
|
|
|
|
240,108
|
|
Other countries
|
|
|
113,405
|
|
|
|
148,865
|
|
|
|
120,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,898,700
|
|
|
$
|
2,473,824
|
|
|
$
|
2,136,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
1,143,150
|
|
|
$
|
1,181,926
|
|
|
$
|
1,295,321
|
|
Canada
|
|
|
171,835
|
|
|
|
145,997
|
|
|
|
163,968
|
|
Europe
|
|
|
123,660
|
|
|
|
125,095
|
|
|
|
154,120
|
|
Other countries
|
|
|
22,329
|
|
|
|
22,842
|
|
|
|
26,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,460,974
|
|
|
$
|
1,475,860
|
|
|
$
|
1,640,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export sales originating in the U.S. were approximately
$58 million in 2009, $64 million in 2008, and
$62 million in 2007.
Legal
Proceedings
The Corporation is 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 which
are not predictable with assurance. The Corporation has provided
for losses to the extent probable and estimable. The legal
matters that have been recorded in the Corporations
consolidated financial statements are based on gross assessments
of expected settlement or expected outcome and do not reflect
possible recovery from insurance companies or other parties.
Additional losses, even though not anticipated, could have a
material adverse effect on the Corporations financial
position, results of operations or liquidity in any given period.
Environmental
Matters
Under the requirements of the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended,
(the Superfund Act) and certain other laws, the
Corporation is potentially liable for the cost of
clean-up at
various contaminated sites identified by the United States
Environmental Protection Agency and other agencies. The
Corporation has been notified that it is named a potentially
responsible party (PRP) at various sites for study
and clean-up
costs. In some cases there are several named PRPs and in others
there are hundreds. The Corporation
Page 85 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
19.
|
Contingencies
(Continued)
|
generally participates in the investigation or
clean-up of
potentially contaminated sites through
cost-sharing
agreements with terms which vary from site to site. Costs are
typically allocated based upon the volume and nature of the
materials sent to the site. However, under the Superfund Act and
certain other laws, as a PRP, the Corporation can be held
jointly and severally liable for all environmental costs
associated with the site.
In conjunction with the acquisition of Lamson &
Sessions Co., Joslyn Hi-Voltage, Power Solutions, Drilling
Technical Supply SA, The Homac Manufacturing Company and Boreal
Braidings Inc., the Corporation assumed responsibility for
environmental matters for those entities. Related to the
acquisition of Lamson & Sessions Co., the Corporation
assumed responsibility for environmental liabilities involving a
site in Ohio.
When the Corporation becomes aware of a potential liability at a
particular site, it conducts studies to estimate the amount of
the liability. If determinable, the Corporation accrues what it
considers to be the most accurate estimate of its liability at
that site, taking into account the other participants involved
in the site and their ability to pay. The Corporation has
acquired facilities subject to environmental liability where, in
one case, the seller has committed to indemnify the Corporation
for those liabilities, and, in another, subject to an asset
purchase agreement, the seller assumed responsibility for paying
its proportionate share of the environmental
clean-up
costs.
The Corporations accrual for probable environmental costs
was approximately $11 million and $14 million as of
December 31, 2009 and 2008, respectively. The Corporation
is not able to predict the extent of its ultimate liability with
respect to all of its pending or future environmental matters,
and liabilities arising from potential environmental obligations
that have not been reserved at this time may be material to the
operating results of any single quarter or year in the future.
The operation of manufacturing plants involves a high level of
susceptibility in these areas, and there is no assurance that
the Corporation will not incur material environmental or
occupational health and safety liabilities in the future.
Moreover, expectations of remediation expenses could be affected
by, and potentially significant expenditures could be required
to comply with, environmental regulations and health and safety
laws that may be adopted or imposed in the future. Future
remediation technology advances could adversely impact
expectations of remediation expenses.
Guarantee
and Indemnification Arrangements
The Corporation generally warrants its products against certain
manufacturing and other defects. These product warranties are
provided for specific periods of time and usage of the product
depending on the nature of the product, the geographic location
of its sale and other factors. The accrued product warranty
costs are based primarily on historical experience of actual
warranty claims as well as current information on repair costs.
Page 86 of 94
Thomas &
Betts Corporation and Subsidiaries
Notes to
Consolidated Financial Statements
|
|
19.
|
Contingencies
(Continued)
|
The following table provides the changes in the
Corporations accruals for estimated product warranties:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Balance at beginning of year
|
|
$
|
3,112
|
|
|
$
|
3,894
|
|
|
$
|
1,737
|
|
Acquired liabilities for warranties
|
|
|
|
|
|
|
|
|
|
|
2,714
|
|
Liabilities accrued for warranties issued during the year
|
|
|
1,605
|
|
|
|
2,648
|
|
|
|
1,486
|
|
Changes in liability for pre-existing warranties during the
year, including expirations
|
|
|
(137
|
)
|
|
|
11
|
|
|
|
697
|
|
Warranty claims paid during the year
|
|
|
(1,516
|
)
|
|
|
(3,441
|
)
|
|
|
(2,740
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
3,064
|
|
|
$
|
3,112
|
|
|
$
|
3,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Corporation also continues to monitor events that are
subject to guarantees and indemnifications to identify whether
it is probable that a loss has occurred, and would recognize any
such losses under the guarantees and indemnifications at fair
value when those losses are estimable.
Management performed an evaluation of the Corporations
activities through the time of filing this Annual Report on Form
10-K and has concluded that there are no significant subsequent
events requiring recognition or disclosure in these consolidated
financial statements.
Page 87 of 94
Thomas &
Betts Corporation and Subsidiaries
SUPPLEMENTARY
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
(In thousands, except per share
data)
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
First Quarter
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
459,835
|
|
|
$
|
595,504
|
|
Gross profit
|
|
|
137,408
|
|
|
|
186,261
|
|
Net earnings
|
|
|
26,069
|
|
|
|
38,252
|
|
Per share net earnings(a)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.50
|
|
|
|
0.66
|
|
Diluted
|
|
|
0.49
|
|
|
|
0.66
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
460,996
|
|
|
$
|
641,317
|
|
Gross profit
|
|
|
131,943
|
|
|
|
199,975
|
|
Net earnings
|
|
|
22,661
|
|
|
|
147,840
|
(b)
|
Per share net earnings(a)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.43
|
|
|
|
2.56
|
|
Diluted
|
|
|
0.43
|
|
|
|
2.54
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
485,075
|
|
|
$
|
665,679
|
|
Gross profit
|
|
|
147,590
|
|
|
|
208,273
|
|
Net earnings
|
|
|
32,111
|
|
|
|
62,159
|
|
Per share net earnings(a)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.62
|
|
|
|
1.10
|
|
Diluted
|
|
|
0.61
|
|
|
|
1.09
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
492,794
|
|
|
$
|
571,324
|
|
Gross profit
|
|
|
152,942
|
|
|
|
181,471
|
|
Net earnings
|
|
|
27,069
|
|
|
|
17,080
|
|
Per share net earnings(a)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.52
|
|
|
|
0.31
|
|
Diluted
|
|
|
0.51
|
|
|
|
0.31
|
|
|
|
|
|
|
|
|
|
|
Note: As a result of the Corporations decision to divest
the PVC and HDPE pipe operations acquired as part of
Lamson & Sessions Co., operating results for the pipe
businesses are reported as discontinued operations
and are shown on a net basis on the consolidated financial
statements. Discontinued operations in 2008 reflected net sales
of approximately $164 million and net loss of
$8.4 million.
|
|
|
(a) |
|
Basic per share amounts are based on average shares outstanding
in each quarter. Diluted per share amounts reflect potential
dilution from stock options and nonvested restricted stock, when
applicable. |
|
(b) |
|
Net earnings for the second quarter of 2008 reflects a gain of
approximately $170 million from the Corporations sale
of its minority interest in Leviton Manufacturing Company. |
Page 88 of 94
|
|
Item 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
None.
|
|
Item 9A.
|
CONTROLS
AND PROCEDURES
|
|
|
(a)
|
Evaluation
of Disclosure Controls and Procedures
|
We have established disclosure controls and procedures to ensure
that material information relating to the Company is made known
to the Chief Executive Officer and Chief Financial Officer who
certify the Companys financial reports.
Our Chief Executive Officer and Chief Financial Officer have
evaluated the Companys disclosure controls and procedures
as of the end of the period covered by this report and they have
concluded that these controls and procedures are effective.
|
|
(b)
|
Managements
Annual Report on Internal Control over Financial
Reporting
|
Managements report on internal control over financial
reporting is on page 40 of this
Form 10-K
and is incorporated by reference into this Item.
|
|
(c)
|
Changes
in Internal Control over Financial Reporting
|
There have been no significant changes in internal control over
financial reporting that occurred during the fourth quarter of
2009 that have materially affected or are reasonably likely to
materially affect the Corporations internal control over
financial reporting.
|
|
Item 9B.
|
OTHER
INFORMATION
|
None.
Page 89 of 94
PART III
|
|
Item 10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
|
|
|
|
|
EXECUTIVE OFFICERS
|
|
DIRECTORS
|
|
|
|
|
Dominic J. Pileggi
Chairman of the Board,
and Chief Executive Officer
William E. Weaver, Jr.
Senior Vice President and
Chief Financial Officer
Charles L. Treadway
Senior Vice President and
Group President Electrical
Imad Hajj
Senior Vice President Global
Operations
J.N. Raines
Vice President General Counsel and Secretary
Stanley P. Locke
Vice President Business
Development and Strategic
Planning
|
|
Dominic J. Pileggi
Chairman of the Board,
and Chief Executive Officer
Director since 2004
Jeananne K. Hauswald
Managing Director
Solo Management Group, LLC
Director since
1993(2)(3)
Dean Jernigan
Chief Executive Officer
U-Store-It Trust
Director since
1999(1)
Ronald B. Kalich, Sr.
Former President and Chief Executive
Officer of FastenTech, Inc.
Director since
1998(3)(*)
Kenneth R. Masterson
Former Executive Vice President General Counsel and Secretary
FedEx Corporation
Director since
1993(2)(*)(3)(4)
|
|
Jean-Paul Richard
Chairman of the Board and
Chief Executive Officer
H-E Parts, International
Director since
1996(3)
Rufus H. Rivers
Managing Director
RJL Equity Partners, LLC
Director since
2008(1)
Kevin L. Roberg
Former President and Chief Executive
Officer of ProStaff, Inc.
Director since
2007(1)
David D. Stevens
Former Chief Executive Officer
Accredo Health, Incorporated
Director since
2004(1)(*)(2)
William H. Waltrip
Former Chairman of Technology Solutions Company
Director since
1983(2)
|
|
|
|
(1) |
|
Audit Committee |
|
(2) |
|
Nominating and Governance Committee |
|
(3) |
|
Compensation Committee |
|
(4) |
|
Lead Director |
|
(*) |
|
Committee Chair |
Information regarding members of the Board of Directors is
incorporated by reference from the section Corporate
Governance, Certain Relationships and Related Transactions of
the definitive Proxy Statement for our Annual Meeting of
Shareholders.
Information regarding executive officers of the Corporation is
included in Part I of this
Form 10-K
under the caption Executive Officers of the
Registrant pursuant to Instruction 3 to
Item 401(b) of
Regulation S-K
and General Instruction G(3) of
Form 10-K.
Information required by Item 405 of
Regulation S-K
is presented in the section entitled Section 16(a)
Beneficial Ownership Reporting Compliance in the
definitive Proxy Statement for our Annual Meeting of
Shareholders, and is incorporated herein by reference.
Information regarding Director Independence and Corporate
Governance as required by Item 407(c)(3), (d)(4) and (d)(5)
is incorporated by reference from the Corporate Governance
sections of the definitive Proxy Statement for our Annual
Meeting of Shareholders.
We have adopted a code of conduct that applies to all of our
employees, officers, and directors. A copy of our code of
conduct can be found on our internet site at www.tnb.com. Any
amendment to or waiver from any provision in our code of conduct
required to be disclosed as Item 10 on
Form 8-K
will be posted on our Internet site.
Page 90 of 94
|
|
Item 11.
|
EXECUTIVE
COMPENSATION
|
Information related to executive compensation appears in the
section entitled Executive Compensation in the
definitive Proxy Statement for our Annual Meeting of
Shareholders, is incorporated by reference.
|
|
Item 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
|
Information required by Item 403 of
Regulation S-K
appears in the section entitled Security Ownership
in the definitive Proxy Statement for our Annual Meeting of
Shareholders, is incorporated by reference.
As of December 31, 2009, we had the following compensation
plans under which common stock has been issued or may be issued.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
remaining available
|
|
|
|
|
|
|
for future issuance
|
|
|
Number of securities
|
|
Weighted-average
|
|
under equity
|
|
|
to be issued upon
|
|
exercise price of
|
|
compensation plans
|
|
|
exercise of
|
|
outstanding
|
|
(excluding securities
|
|
|
outstanding options,
|
|
options, warrants
|
|
reflected in
|
|
|
warrants and rights
|
|
and rights
|
|
column(a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Stock Incentive Plan
|
|
|
2,168,303
|
|
|
$
|
25.36
|
|
|
|
1,791,600
|
*
|
Equity Compensation Plan
|
|
|
1,689,149
|
|
|
|
43.05
|
|
|
|
|
|
Non-employee Directors Equity Compensation Plan
|
|
|
50,283
|
|
|
|
34.43
|
|
|
|
|
|
1993 Management Stock Ownership Plan
|
|
|
214,355
|
|
|
|
19.80
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Fee Plan for Non-employee Directors
|
|
|
26,515
|
|
|
|
|
|
|
|
|
|
Non-employee Directors Stock Option Plan
|
|
|
79,000
|
|
|
|
20.19
|
|
|
|
|
|
2001 Stock Incentive Plan
|
|
|
168,181
|
|
|
|
19.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,395,786
|
|
|
$
|
31.71
|
|
|
|
1,791,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Of the 1,791,600 securities
remaining available for future issuance under the 2008 Stock
Incentive Plan, 1,482,885 may only be issued as stock options or
stock appreciation rights and 308,715 may be issued as
restricted stock, restricted stock units, stock grants, stock
credits, performance stock, performance stock units, stock
appreciation rights or stock options.
|
The 1993 Management Stock Ownership Plan, the Deferred Fee Plan
for Non-Employee Directors, the Non-Employee Directors Stock
Option Plan and the 2001 Stock Incentive Plan were terminated in
May 2004. The Equity Compensation Plan and the Non-Employee
Directors Equity Compensation Plan were terminated in May 2008.
No new awards may be made under any of the aforementioned plans;
however, awards issued under the plans prior to the May 2004 and
May 2008, respectively, will continue under the terms of the
plans.
Page 91 of 94
Description
of equity compensation plans not approved by security
holders:
Deferred
Fee Plan for Non-employee Directors
The Deferred Fee Plan for Non-employee Directors permitted a
non-employee director to defer all or a portion of compensation
earned for services as a director, and permitted the granting of
stock appreciation rights as compensation to our directors. Any
amount deferred was valued, in accordance with the
directors election, in a hypothetical investment in our
common stock as stock appreciation rights or in one or more
mutual funds from the Vanguard Group. The stock appreciation
rights fluctuate in value as the value of the common stock
fluctuates. Each participant was credited with a dividend
equivalent in stock appreciation rights for any dividends paid
on our common stock. Stock appreciation rights are distributed
in shares of our common stock and mutual fund accounts are
distributed in cash upon a directors termination of
service.
Non-employee
Directors Stock Option Plan
The Non-employee Directors Stock Option Plan provided that each
non-employee director, upon election at either an annual meeting
or by the Board to fill a vacancy or new position, received a
nonqualified stock option grant for shares of common stock in an
amount determined by the Board of Directors. The option exercise
price was the fair market value of our common stock on the
option grant date. Each option grant was fully vested and
exercisable on the date it was granted and has a term of ten
years, subject to earlier expiration upon a directors
termination of service prior to exercise.
2001
Stock Incentive Plan
The 2001 Stock Incentive Plan provided that key employees could
receive nonqualified stock option grants for shares of common
stock in an amount determined by the Board of Directors. The
option exercise price was the fair market value of a share of
common stock on the date the option is granted. Each option
grant usually vests in increments of one-third over a three year
period, and had a ten year life, subject to earlier expiration
upon an employees termination of service.
|
|
Item 13.
|
CERTAIN
RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
The information required by this item appears in the section
entitled Certain Relationships, Related Transactions and
Director Independence in the definitive Proxy Statement
for our Annual Meeting of Shareholders and is incorporated
herein by reference in response to this item.
Information regarding Director Independence and Corporate
Governance as required by Item 407(c)(3), (d)(4) and (d)(5)
is incorporated by reference from the Corporate Governance
sections of the definitive Proxy Statement for our Annual
Meeting of Shareholders.
|
|
Item 14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
The sections entitled Independent Registered Public
Accounting Firms Fees and Pre-Approval
Policies and Procedures in the definitive Proxy Statement
for our Annual Meeting of Shareholders, are incorporated by
reference.
Page 92 of 94
PART IV
|
|
Item 15.
|
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES
|
The following documents are filed as a part of this Report:
1. Financial Statements
The following financial statements, related notes and reports of
the independent registered public accounting firm are filed with
this Annual Report in Part II, Item 8:
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for 2009, 2008 and 2007
Consolidated Balance Sheets as of December 31, 2009 and 2008
Consolidated Statements of Cash Flows for 2009, 2008 and 2007
Consolidated Statements of Shareholders Equity and
Comprehensive Income for 2009, 2008 and 2007
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
All financial statement schedules have been omitted because they
are not applicable, not material, or the required information is
included in the financial statements listed above or the notes.
3. Exhibits
The Exhibit Index on pages
E-1 through
E-6 is
incorporated by reference.
Page 93 of 94
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Thomas &
Betts Corporation
(Registrant)
Date: February 16, 2010
|
|
|
|
By:
|
/s/ Dominic
J. Pileggi
|
Dominic J. Pileggi
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
/s/ Dominic
J. Pileggi
Dominic
J. Pileggi
|
|
Chairman of the Board, and Chief Executive Officer
(Principal Executive Officer)
|
|
February 16, 2010
|
/s/ Jeananne
K. Hauswald
Jeananne
K. Hauswald
|
|
Director
|
|
February 16, 2010
|
/s/ Dean
Jernigan
Dean
Jernigan
|
|
Director
|
|
February 16, 2010
|
/s/ Ronald
B. Kalich, Sr.
Ronald
B. Kalich, Sr.
|
|
Director
|
|
February 16, 2010
|
/s/ Kenneth
R. Masterson
Kenneth
R. Masterson
|
|
Director
|
|
February 16, 2010
|
/s/ Jean-Paul
Richard
Jean-Paul
Richard
|
|
Director
|
|
February 16, 2010
|
/s/ Rufus
H. Rivers
Rufus
H. Rivers
|
|
Director
|
|
February 16, 2010
|
/s/ Kevin
L. Roberg
Kevin
L. Roberg
|
|
Director
|
|
February 16, 2010
|
/s/ David
D. Stevens
David
D. Stevens
|
|
Director
|
|
February 16, 2010
|
/s/ William
H. Waltrip
William
H. Waltrip
|
|
Director
|
|
February 16, 2010
|
/s/ William
E. Weaver, Jr.
William
E. Weaver, Jr.
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
February 16, 2010
|
/s/ David
L. Alyea
David
L. Alyea
|
|
Vice President Controller
|
|
February 16, 2010
|
Page 94 of 94
|
|
|
|
|
Exhibit No.
|
|
Description of
Exhibit
|
|
|
3
|
.1
|
|
Amended and Restated Charter of Thomas & Betts Corporation
(Filed as Exhibit 3.1 to the Registrants Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 and
incorporated herein by reference).
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Thomas & Betts Corporation
(Filed as Exhibit 3.2 to the Registrants Annual Report on
Form 10-K for the fiscal year ended December 31, 2003 and
incorporated herein by reference).
|
|
3
|
.3
|
|
Amended and Restated Bylaws of Thomas & Betts Corporation
(Filed as Exhibit 3.1 to the Registrants Current
Report on
Form 8-K
dated June 3, 2009 and incorporated herein by reference).
|
|
4
|
.1
|
|
Second Supplemental Indenture dated as of February 10, 1998,
between Thomas & Betts Corporation and The Chase Manhattan
Bank, as Trustee (Filed as Exhibit 4.1 to the Registrants
Current Report on Form 8-K dated February 2, 1998 and
incorporated herein by reference).
|
|
4
|
.2
|
|
Third Supplemental Indenture dated as of May 7, 1998 between
Thomas & Betts Corporation and The Chase Manhattan Bank, as
Trustee (Filed as Exhibit 4.1 to the Registrants Current
Report on Form 8-K dated May 4, 1998 and incorporated herein by
reference).
|
|
4
|
.3
|
|
Trust Indenture dated as of August 1, 1998 between Thomas &
Betts Corporation and The Bank of New York, as Trustee (Filed as
Exhibit 4.3 to the Registrants Registration Statement on
Form S-3 dated December 3, 2008 and incorporated herein by
reference).
|
|
4
|
.4
|
|
Supplemental Indenture No. 1 dated February 10, 1999, between
Thomas and Betts Corporation and The Bank of New York, a Trustee
(Filed as Exhibit 4.5 to the Registrants Registration
Statement on Form S-3 dated December 3, 2008 and incorporated
herein by reference).
|
|
4
|
.5
|
|
Supplemental Indenture No. 2 dated May 27, 2003, between Thomas
& Betts Corporation and The Bank of New York, as Trustee
(Filed as Exhibit 4.6 to the Registrants Registration
Statement on Form S-3 dated December 3, 2008 and incorporated
herein by reference).
|
|
4
|
.6
|
|
Form of Supplemental Indenture No. 3 between Thomas &
Betts Corporation and The Bank of New York Mellon Trust Company,
N.A. (Filed as Exhibit 4.1 to the Registrants Current
Report on
Form 8-K
dated November 16, 2009 and incorporated herein by
reference).
|
|
10
|
.1
|
|
Thomas & Betts Corporation 1993 Management Stock Ownership
Plan, as amended through June 5, 2001, and Forms of Grant
Agreement (Filed as Exhibit 10.3 to the Registrants
Quarterly Report on Form 10-Q for the quarter ended July 1, 2001
and incorporated herein by reference).
|
|
10
|
.2
|
|
Deferred Fee Plan for Non-employee Directors as amended and
restated effective May 6, 1998 (Filed as Exhibit 10.11 to the
Registrants Annual Report on Form 10-K for the fiscal year
ended January 3, 1999 and incorporated herein by reference).
|
Page E-1 of E-6
|
|
|
|
|
Exhibit No.
|
|
Description of
Exhibit
|
|
|
10
|
.3
|
|
Restricted Stock Plan for Non-employee Directors as amended
March 7, 2003 (Filed as Exhibit 10.7 to the Registrants
Annual Report on Form 10-K for the fiscal year ended December
31, 2003 and incorporated herein by reference).
|
|
10
|
.4
|
|
Non-employee Directors Stock Option Plan and Form of Stock
Option Agreement, as amended March 9, 2001 (Filed as Exhibit
10.18 to the Registrants Annual Report on Form 10-K for
the fiscal year ended December 31, 2000 and incorporated herein
by reference).
|
|
10
|
.5
|
|
Thomas & Betts Corporation 2001 Stock Incentive Plan (Filed
as Exhibit 10.1 to Registrants Registration Statement on
Form S-8 dated May 2, 2001 (File
No. 333-60074),
and incorporated herein by reference).
|
|
10
|
.6
|
|
Executive Retirement Plan, as amended February 4, 2004 (Filed as
Exhibit 10.13 to the Registrants Annual Report on Form
10-K for the fiscal year ended December 31, 2003 and
incorporated herein by reference).
|
|
10
|
.7
|
|
Non-employee Directors Equity Compensation Plan (Filed as
Exhibit 10.19 to the Registrants Annual Report on Form
10-K for the fiscal year ended December 31, 2003 and
incorporated herein by reference).
|
|
10
|
.8
|
|
Form of Non-Qualified Stock Option Agreement pursuant to the
Thomas & Betts Corporation Non-employee Directors Equity
Compensation Plan (Filed as Exhibit 10 to the Registrants
Current Report on Form 8-K dated August 31, 2004 and
incorporated herein by reference).
|
|
10
|
.9
|
|
Equity Compensation Plan (Filed as Exhibit 10.20 to the
Registrants Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 and incorporated herein by reference).
|
|
10
|
.10
|
|
Form of Restricted Stock Agreement pursuant to the Thomas &
Betts Corporation Equity Compensation Plan (Filed as Exhibit
10.2 to the Registrants Current Report on Form 8-K dated
February 2, 2005 and incorporated herein by reference).
|
|
10
|
.11
|
|
Form of Incentive Stock Option Agreement pursuant to the Thomas
& Betts Corporation Equity Compensation Plan (Filed as
Exhibit 10.3 to the Registrants Current Report on Form 8-K
dated February 2, 2005 and incorporated herein by reference).
|
|
10
|
.12
|
|
Form of Nonqualified Stock Option Agreement pursuant to the
Thomas & Betts Corporation Equity Compensation Plan
(Filed as Exhibit 10.4 to the Registrants Current Report
on Form 8-K dated February 2, 2005 and incorporated herein by
reference).
|
|
10
|
.13
|
|
Form of Restricted Stock Agreement Pursuant to Thomas &
Betts Corporation
Non-employee
Directors Equity Compensation Plan. (Filed as Exhibit 10.28 to
the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2005 and incorporated herein by
reference.)
|
|
10
|
.14
|
|
Credit Agreement, dated June 25, 2003, among Thomas & Betts
Corporation, as borrower, certain of its subsidiaries, as
guarantors, the lenders listed therein, Wachovia Bank, National
Association, as issuing bank, Wachovia Securities, Inc., as
arranger, and Wachovia Bank, National Association, as
administrative agent (Filed as Exhibit 10.3 to the
Registrants Quarterly Report on Form 10-Q for the quarter
ended June 29, 2003 and incorporated herein by reference).
|
Page E-2 of E-6
|
|
|
|
|
Exhibit No.
|
|
Description of
Exhibit
|
|
|
10
|
.15
|
|
Security Agreement, dated June 25, 2003, among Thomas &
Betts Corporation and certain of its subsidiaries, as grantors,
and Wachovia Bank, National Association, as administrative
agent. (Filed as Exhibit 10.4 to the Registrants Quarterly
Report on Form 10-Q for the fiscal quarter ended June 29, 2003
and incorporated herein by reference).
|
|
10
|
.16
|
|
Amended and Restated Credit Agreement dated as of June 14, 2005
among Thomas & Betts Corporation, as Borrower, The
Guarantors Party Thereto, The Financial Institutions Party
Thereto, Bank of America, N.A., Suntrust Bank and Regions Bank,
as Co-Syndication Agents, LaSalle Bank, N.A., as Documentation
Agent and Wachovia Bank, National Association, as Administrative
Agent, Swing Bank and Issuing Bank (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K dated June 14, 2005
and incorporated herein by reference).
|
|
10
|
.17
|
|
First Amendment to Amended and Restated Credit Agreement dated
August 12, 2005, among Thomas & Betts Corporation, as
Borrower, the Lenders named therein, and Wachovia Bank, National
Association, as Administrative Agent (Filed as Exhibit 10.1 to
the Registrants Current Report of Form 8-K dated August
17, 2005 and incorporated herein by reference).
|
|
10
|
.18
|
|
Second Amendment to Amended and Restated Credit Agreement dated
December 18, 2006, as borrower, the lenders party thereto, and
Wachovia Bank National Association, as administrative agent
(Filed as Exhibit 10.1 to the Registrants Current Report
on Form 8-K dated December 18, 2006, and incorporated herein by
reference).
|
|
10
|
.19
|
|
Amended and Restated Thomas & Betts Corporation Pension
Restoration Plan (Filed as Exhibit 10.5 to the
Registrants Current Report on Form 8-K dated September 11,
2007 and incorporated herein by reference).
|
|
10
|
.20
|
|
Amended and Restated Termination Protection Agreement (Locke)
(Filed as Exhibit 10.12 to the Registrants Current
Report on Form 8-K dated September 11, 2007 and incorporated
herein by reference).
|
|
10
|
.21
|
|
Amended and Restated Thomas & Betts Corporation
Indemnification Agreement (Filed as Exhibit 10.13 to the
Registrants Current Report on Form 8-K dated September 11,
2007 and incorporated herein by reference).
|
|
10
|
.22
|
|
Second Amended and Restated Credit Agreement dated October 16,
2007, among Thomas & Betts Corporation, as Borrower, the
Lenders party hereto, and Wachovia Bank, N.A., as Administrative
Agent, and Wachovia Capital Markets, LLC and Banc of America
Securities LLC, as Joint Lead Arrangers and Joint Book Runners
(Filed as Exhibit 10.15 to the Registrants Current
Report on Form 8-K dated October 17, 2007 and incorporated
herein by reference).
|
|
10
|
.23
|
|
Health Benefits Continuation Agreement dated September 5, 2007
between Thomas & Betts Corporation and Dominic J. Pileggi
(Filed as Exhibit 10.14 to the Registrants Current Report
on Form 8-K dated September 11, 2007 and incorporated herein by
reference).
|
|
10
|
.24
|
|
The Thomas & Betts Corporation Supplemental Executive
Investment Plan, Amended and Restated effective as of January 1,
2007 Incorporating Amendments through December 20, 2007 (Filed
as Exhibit 10.36 to the Registrants Annual Report on Form
10-K for year ended December 31, 2008 and incorporated herein by
reference).
|
Page E-3 of E-6
|
|
|
|
|
Exhibit No.
|
|
Description of
Exhibit
|
|
|
10
|
.25
|
|
The Thomas & Betts Corporation Management Incentive Plan,
as Amended and Restated effective January 1, 2009 (Filed as
Exhibit 10.41 to the Registrants Current Report on Form
8-K dated May 7, 2008 and incorporated herein by reference).
|
|
10
|
.26
|
|
The Thomas & Betts Corporation 2008 Stock Incentive Plan
(Filed as Exhibit 10.42 to the Registrants Current Report
on Form 8-K dated May 7, 2008 and incorporated herein by
reference).
|
|
10
|
.27
|
|
Form of Restricted Stock Agreement pursuant to the Thomas &
Betts Corporation 2008 Stock Incentive Plan (Filed as
Exhibit 10.39 to the Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.28
|
|
Form of Nonqualified Stock Option Agreement pursuant to the
Thomas & Betts Corporation 2008 Stock Incentive Plan (Filed
as Exhibit 10.40 to the Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.29
|
|
Form of Restricted Stock Agreement for Nonemployee Directors
pursuant to the Thomas & Betts Corporation 2008 Stock
Incentive Plan (Filed as Exhibit 10.41 to the
Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.30
|
|
Form of Nonqualified Stock Option Agreement for Nonemployee
Directors pursuant to the Thomas & Betts Corporation 2008
Stock Incentive Plan. (Filed as Exhibit 10.42 to the
Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.31
|
|
Minority Stock Purchase Agreement, dated as of June 24, 2008
among Thomas & Betts, and Leviton (Filed as Exhibit 10.1 to
Registrants Current Report on Form 8-K dated June 24,
2008).
|
|
10
|
.32
|
|
Termination Protection Agreement, effective December 3, 2008,
between William E. Weaver, Jr. and Thomas & Betts
Corporation (Filed as Exhibit 10.1 to Registrants Current
Report of Form 8-K dated December 3, 2008 and incorporated
herein by reference).
|
|
10
|
.33
|
|
Executive Retirement Plan, as Amended and Restated Effective
January 1, 2005, Including Amendments and Appendix A Adopted
through December 3, 2008. (Filed as Exhibit 10.45 to the
Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.34
|
|
Amended and Restated Termination Protection Agreement between
Thomas & Betts Corporation and Dominic J. Pileggi dated
December 16, 2008. (Filed as Exhibit 10.46 to the
Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.35
|
|
Amended and Restated Termination Protection Agreement between
Thomas & Betts Corporation and Kenneth W. Fluke dated
December 30, 2008. (Filed as Exhibit 10.47 to the
Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.36
|
|
Amended and Restated Termination Protection Agreement between
Thomas & Betts Corporation and Imad Hajj dated December 16,
2008. (Filed as Exhibit 10.48 to the Registrants
Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
Page E-4 of E-6
|
|
|
|
|
Exhibit No.
|
|
Description of
Exhibit
|
|
|
10
|
.37
|
|
Amended and Restated Termination Protection Agreement between
Thomas & Betts Corporation and J.N. Raines dated December
16, 2008. (Filed as Exhibit 10.49 to the Registrants
Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.38
|
|
Amended and Restated Termination Protection Agreement between
Thomas & Betts Corporation and William E. Weaver, Jr. dated
December 30, 2008. (Filed as Exhibit 10.50 to the
Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.39
|
|
First Amendment to the Amended and Restated Termination
Protection Agreement between Thomas & Betts Corporation and
Stanley P. Locke dated December 19, 2008. (Filed as
Exhibit 10.51 to the Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.40
|
|
First Amendment to the Thomas & Betts Supplemental
Executive Investment Plan Effective January 1, 2008. (Filed as
Exhibit 10.52 to the Registrants Annual Report on
Form 10-K
for year ended December 31, 2008 and incorporated herein by
reference).
|
|
10
|
.41
|
|
Amended and Restated Termination Protection Agreement between
Thomas & Betts Corporation and Stanley P. Locke
dated January 15, 2009 (Filed as Exhibit 10.1 to the
Registrants Quarterly Report on
Form 10-Q
for quarter ended March 31, 2009 and incorporated herein by
reference).
|
|
10
|
.42
|
|
Termination Protection Agreement, effective May 6, 2009,
between Charles L. Treadway and Thomas & Betts
Corporation (Filed as Exhibit 10.1 to the Registrants
Current Report on
Form 8-K
dated May 6, 2009 and incorporated herein by reference).
|
|
10
|
.43
|
|
Retirement and Consulting Agreement between Kenneth W. Fluke and
Thomas & Betts Corporation executed June 8, 2009
(Filed as Exhibit 10.1 to the Registrants Current
Report on
Form 8-K
dated June 8, 2009 and incorporated herein by reference).
|
|
10
|
.44
|
|
First Amendment to Retirement and Consulting Agreement between
Thomas & Betts Corporation and Kenneth W. Fluke
executed September 2, 2009 (Filed as Exhibit 10.1 to
the Registrants Current Report on
Form 8-K
dated September 2, 2009 and incorporated herein by
reference).
|
|
10
|
.45
|
|
Amendment to the Thomas & Betts Corporation Executive
Retirement Plan, dated December 2, 2009 (Filed as
Exhibit 10.1 to Registrants Current Report on
Form 8-K
dated December 2, 2009 and incorporated herein by
reference).
|
|
10
|
.46
|
|
Second Amendment to the Thomas & Betts Supplemental
Executive Investment Plan (As Amended and Restated Effective
January 1, 2007 and executed July 23, 2009).
|
|
10
|
.47
|
|
First Amendment to Second Amended and Restated Credit Agreement
dated as of November 13, 2009 between Thomas &
Betts Corporation, as Borrower, the Lenders named therein and
Wachovia Bank, as Administrative Agent.
|
|
12
|
|
|
Statement re Computation of Ratio of Earnings to Fixed Charges.
|
|
21
|
|
|
Subsidiaries of the Registrant.
|
|
23
|
|
|
Consent of KPMG LLP.
|
|
31
|
.1
|
|
Certification of Principal Executive Officer under Securities
Exchange Act
Rules 13a-14(a)
or 15d-14(a).
|
Page E-5 of E-6
|
|
|
|
|
Exhibit No.
|
|
Description of
Exhibit
|
|
|
31
|
.2
|
|
Certification of Principal Financial Officer under Securities
Exchange Act
Rules 13a-14(a)
or 15d-14(a).
|
|
32
|
.1
|
|
Certification of Principal Executive Officer Pursuant to Rule
13a-14(b) or
Rule 15d-14(b)
of the Securities Exchange Act of 1934 and furnished solely
pursuant to 18 U.S.C. § 1350 and not filed as part of
the Report or as a separate disclosure document.
|
|
32
|
.2
|
|
Certification of Principal Financial Officer Pursuant to Rule
13a-14(b) or
Rule 15d-14(b)
of the Securities Exchange Act of 1934 and furnished solely
pursuant to 18 U.S.C. § 1350 and not filed as part of
the Report or as a separate disclosure document.
|
|
|
|
|
|
Management contract or compensatory plan or arrangement.
|
Page E-6 of E-6