-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AUVsYVHfqfsWKEmFyM/bUuPbjkJ1W9AEkpUyyLPwecPbJOuNopqdp0vkt7w9QMwI Af/sdWm4+AXheMqoDk4qtw== 0000097854-95-000009.txt : 19951120 0000097854-95-000009.hdr.sgml : 19951120 ACCESSION NUMBER: 0000097854-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951001 FILED AS OF DATE: 19951115 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: THOMAS & BETTS CORP CENTRAL INDEX KEY: 0000097854 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 221326940 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04682 FILM NUMBER: 95593887 BUSINESS ADDRESS: STREET 1: 1555 LYNNFIELD ROAD CITY: MEMPHIS STATE: TN ZIP: 38117 BUSINESS PHONE: 9016827766 MAIL ADDRESS: STREET 1: 1555 LYNNFIELD ROAD CITY: MEMPHIS STATE: TN ZIP: 38117 10-Q 1 FORM 10-Q FOR QE OCTOBER 1, 1995 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 1, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4682 THOMAS & BETTS CORPORATION (Exact name of registrant as specified in its charter) New Jersey 22-1326940 (State or other jurisdiction of (I.R.S. Employer) incorporation or organization) (Identification No.) 1555 Lynnfield Road, Memphis, Tennessee 38119 (Address of principal executive offices) (Zip Code) (901) 682-7766 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock Par Value $ .50 20,000,487 (Title of each class) (Outstanding at October 29, 1995) THOMAS & BETTS CORPORATION INDEX Page PART I. Financial Information: Consolidated Balance Sheet October 1, 1995 and January 1, 1995 . . . . . . . . . . 3 Consolidated Statement of Earnings Periods Ended Oct. 1, 1995 and Oct. 2, 1994. . . . . . . 4 Consolidated Statement of Cash Flows Periods Ended Oct. 1, 1995 and Oct. 2, 1994. . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . 6 Management's Discussion and Analysis of Results of Operations and Financial Condition. . . . . . . . . . 8 PART II. Other Information . . . . . . . . . . . . . . . . . . . 12 Signatures . . . . . . . . . . . . . . . . . . . . . . 13 PART I. FINANCIAL INFORMATION THOMAS & BETTS CORPORATION Consolidated Balance Sheet (Thousands of Dollars)
October 1, January 1, 1995 1995 ASSETS (Unaudited) (Audited) Current Assets: Cash and cash equivalents $ 53,496 $ 69,671 Marketable securities 52,048 52,569 Receivables, net 195,688 168,077 Inventories: Finished goods 106,492 96,159 Work in process 29,174 33,663 Raw materials 76,835 68,600 Total inventories 212,501 198,422 Deferred income taxes 31,296 40,059 Prepaid expenses 5,405 5,195 Total Current Assets 550,434 533,993 Property, plant and equipment, at cost 571,114 547,099 Less accumulated depreciation 270,126 271,574 Net property, plant and equipment 300,988 275,525 Intangible assets - net 316,315 323,228 Investments and other assets 70,524 75,466 TOTAL ASSETS $1,238,261 $1,208,212 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term bank borrowings $ 13,731 $ 15,355 Current maturities of long-term debt 9,452 3,304 Accounts payable 105,836 118,052 Accrued liabilities 98,807 116,875 Income taxes 15,033 15,779 Dividends payable 11,021 10,979 Total Current Liabilities 253,880 280,344 Long-term debt 343,853 319,519 Other long-term liabilities 43,036 40,408 Deferred income taxes 16,028 14,898 Shareholders' Equity: Common stock 9,857 9,822 Additional paid-in capital 172,224 169,291 Retained earnings 396,456 373,011 Unrealized gain on marketable securities 1,344 867 Foreign currency translation adjustment 3,872 2,661 Cost of treasury stock (2,289) (2,609) Total Shareholders' Equity 581,464 553,043 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,238,261 $1,208,212 See accompanying notes to consolidated financial statements.
THOMAS & BETTS CORPORATION Consolidated Statement of Earnings (Thousands of Dollars) (Unaudited)
Quarter Ended Nine Months Ended Oct. 1, Oct. 2, Oct. 1, Oct. 2, 1995 1994 1995 1994 Net sales. . . . . . . . . . . . . .$303,108 $277,407 $903,831 $787,376 Costs and expenses: Cost of sales. . . . . . . . . . . . 198,825 184,660 594,873 524,440 Marketing, general and administrative . . . . . . . . . . 62,048 63,618 185,874 169,781 Research and development . . . . . . 5,756 4,947 17,251 15,312 Amortization of intangibles. . . . . 2,428 2,664 7,380 8,488 Provision for restructured operations . . . . . . . . . . . - 79,011 - 79,011 $269,057 $334,900 $805,378 $797,032 Earnings (loss) from operations. . 34,051 (57,493) 98,453 (9,656) Other expense-net. . . . . . . . . 4,141 5,354 14,981 18,735 Earnings (loss) from continuing operations before income taxes. . 29,910 (62,847) 83,472 (28,391) Income taxes (benefit). . . . . . . 8,671 (22,132) 26,722 (10,712) Earnings (loss) from continuing operations. . . . . . . . . . . . 21,239 (40,715) 56,750 (17,679) Earnings from discontinued operations net of income tax expense of $258 for third quarter 1994, and $4,628 for nine months ended October 2, 1994 . . . . . . - 409 - 7,350 Gain on sale of discontinued operations net of income tax expense of $40,492. . . . . . . . - 58,583 - 58,583 Net earnings. . . . . . . . . . . . $ 21,239 $ 18,277 $ 56,750 $ 48,254 Per Share Data: Earnings (loss) from continuing operations . . . . . . . . . . $ 1.08 $ (2.11) $ 2.89 $ (.90) Earnings from discontinued operations . . . . . . . . . . - .02 - .38 Gain on sale of discontinued operations . . . . . . . . . . - 3.03 - 3.03 Earnings per share. . . . . . . . $ 1.08 $ 0.94 $ 2.89 $ 2.51 Dividends declared per share. . . $ .56 $ .56 $ 1.68 $ 1.68 Average shares outstanding. . . . . 19,668 19,438 19,642 19,216 See accompanying notes to consolidated financial statements.
THOMAS & BETTS CORPORATION Consolidated Statement of Cash Flows (Thousands of Dollars) (Unaudited)
Nine Months Ended Oct. 1, Oct. 2, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Earnings (loss) from continuing operations $ 56,750 $ (17,679) Adjustments: Depreciation and amortization 41,421 38,525 Provision for restructured operations - 79,011 Provision for facilities-related operating charges - 10,632 Deferred income taxes 9,403 (26,905) Changes in operating assets and liabilities, net: Receivables (25,307) (26,893) Inventories (10,949) (10,028) Accounts payable (12,953) 20,512 Accrued liabilities (20,126) (1,084) Income taxes payable (791) 28,313 Cash from discontinued operations - 7,606 Other 4,567 1,841 Net cash provided by operating activities 42,015 103,851 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of Vitramon, net of tax - $ 144,700 Purchases of and investments in businesses (3,452) (76,851) Purchases of property, plant and equipment (61,663) (36,683) Net investments in discontinued operations - (7,781) Proceeds from sale of property, plant and equipment 1,237 7,168 Marketable securities acquired (26,701) (17,968) Proceeds from sale of product lines 4,900 - Proceeds from matured marketable securities 34,728 12,888 Other (669) 6 Net cash provided by (used in) investing activities (51,620) 25,479 CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in borrowings with original maturities less than 90 days 26,804 (8,457) Proceeds from long-term debt and other borrowings 10,106 6,918 Repayment of long-term debt and other borrowings (9,474) (77,643) Stock options exercised 1,936 3,259 Cash dividends paid (32,974) (32,032) Net cash provided by (used in) financing activities (3,602) (107,955) EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,968) (4,910) Net increase (decrease) in cash and cash equivalents (16,175) 16,465 Cash and cash equivalents-beginning of year 69,671 72,509 Cash and cash equivalents-end of period $ 53,496 $ 88,974 Cash payments for interest $ 22,466 $ 23,051 Cash payments for taxes $ 17,337 $ 28,990 Common stock issued for acquisitions $ 971 $ 39,289 See accompanying notes to consolidated financial statements.
THOMAS & BETTS CORPORATION Notes to Consolidated Financial Statements (Unaudited) 1 In the opinion of Management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary for the fair presentation of the financial position as of October 1, 1995 and January 1, 1995, and the results of operations and cash flows for the periods ended October 1, 1995 and October 2, 1994. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Corporation's Annual Report to Shareholders for the fiscal year ended January 1, 1995. The results of operations for the periods ended October 1, 1995 and October 2, 1994 are not necessarily indicative of the operating results for the full year. 3. Earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the reporting period. The effect on earnings per share resulting from the assumed exercise of outstanding stock options is not material. 4. Acquisitions/Divestitures: On February 6, 1995 the Corporation purchased certain assets (primarily inventories and equipment) relating to the manufacture, sale and distribution of the Anchor Electric meter center business for $3.5 million in cash. On July 25, 1995 E. K. Campbell Company, a custom industrial heating and cooling equipment manufacturer, was acquired in exchange for 14,045 shares of the Corporation's common stock. On September 28, 1995 the Corporation sold its residential lighting, multiple outlet center and surge protection consumer product lines; 1995 sales from these product lines would have been about $20 million. Cash generated by this sale and related working capital reductions will approximate $14 million. On October 27, 1995 the Corporation acquired Catamount Manufacturing, Inc., a manufacturer of cable ties, wire connectors and related electrical products, for approximately $35 million consisting of $22 million of the Corporation's common stock and the assumption of approximately $13 million of Catamount's debt. Subsequent to the end of the third quarter, the Corporation agreed to acquire all of the outstanding stock of Amerace Corporation, a manufacturer of electrical products for utility and industrial markets with 1995 sales projected at approximately $215 million. Its most significant products are underground power and distribution connectors sold under its Elastimold brand name. This acquisition is expected to be completed near the end of the year. The Anchor Electric and Amerace acquisitions are being accounted for using the purchase method of accounting. The E. K. Campbell and Catamount acquisitions are being accounted for using the pooling-of-interests method of accounting, however, prior-year results have not been restated due to immateriality. 5.In March 1995, the Corporation renegotiated and increased its revolving credit facility to $500 million from $280 million, making these funds available for a term of five years from the renegotiation date. This credit facility includes covenants, among which are limitations on the amount of future indebtedness and the maintenance of certain financial ratios. Dividends are permitted to continue at the current rate per share and may be increased provided the payout does not exceed 50 percent of earnings. THOMAS & BETTS CORPORATION Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS QUARTERLY COMPARISON Thomas & Betts Corporation reported record sales and earnings for the third quarter of 1995. Sales from continuing operations were 9 percent higher than 1994. Net earnings grew 16 percent, with earnings per share increasing to $1.08 from $.94 last year. Results for the third quarter of 1994 included two significant, financially offsetting events. In July 1994 the Corporation sold its Vitramon subsidiary and recorded a pretax gain of $99 million. In September 1994, the Corporation announced $90 million in special charges, $79 million of which related to a worldwide restructuring of operations. All three business segments of the Corporation experienced sales growth in the third quarter of 1995. Of the total consolidated sales increase of 9 percent, 8 percentage points came from increased volume and acquisitions and 1 point was the result of stronger foreign currencies. Prices were nominally higher than last year. Worldwide sales of Electrical Construction and Maintenance Components, representing approximately half of the Corporation's revenues, rose 8 percent. Worldwide Electronic/OEM Components sales increased 12 percent, with contributions from operations in all three geographic sectors: North America, Europe and the Pacific Region. This segment represents approximately one-fourth of total revenues. Other Products and Components yielded an 8 percent sales increase. This segment, which serves utility, heating and telecommunications markets, accounts for approximately one-fourth of total revenues. Consolidated gross margin for the quarter was 34.4 percent of sales compared to 33.4 percent last year. The higher margin was due to savings from the Corporation's restructuring initiatives and a non-recurring charge related to idle facilities of $3.8 million included in last year's cost of sales, partially offset by slightly less favorable product sales mix and lower margins on the recently divested consumer product lines. Marketing, General and Administrative expenses, at 20.5 percent of sales for the quarter, were lower than last year's expenses at 22.9 percent primarily due to the non-recurring idle-facility-related charge of $6.8 million included in administrative expense last year. Current year decreases in marketing and administrative expenses as a percent of sales have offset temporarily higher restructuring-related shipping and warehousing expenses. The effective tax rate of 29.0 percent for the quarter was lower than the rate for the first half, due primarily to higher than expected tax benefits resulting from increased employment in Puerto Rico and a favorable state tax adjustment. The rate is not comparable to last year's rate because of the tax benefit associated with last year's restructuring charge. RESULTS OF OPERATIONS YEAR-TO-DATE OPERATIONS Net sales from continuing operations for the first nine months of 1995 were up 15 percent from the comparable period in 1994. Earnings from continuing operations increased to nearly $57 million as compared to last year's loss that included the special charge as previously noted. Net earnings were up 18 percent from 1994 and earnings per share were $2.89 compared to $2.51 per share in 1994. All three business segments of the Corporation achieved sales gains for the first nine months of the year. Of the 15 percent increase in sales, 13 percentage points came from increased volume and acquisitions and 2 points from stronger foreign currencies. Price changes have been nominally positive. Worldwide sales of Electrical Construction and Maintenance Components rose 17 percent reflecting strong growth in existing products and the inclusion of acquisitions. Worldwide Electronic/OEM Component sales grew 16 percent, with sales gains in all three geographic sectors: North America, Europe and the Pacific Region. The Other Products and Components business segment yielded a 9 percent sales increase. Consolidated gross margin year-to-date was 34.2 percent of sales compared to 33.4 percent last year. Margins improved due to restructuring-related manufacturing cost reductions and the non-recurring idle-facility-related charge of $3.8 million recorded in last year's cost of sales. Marketing, general and administrative expense, at 20.6 percent of sales, was down from 21.6 percent last year due to the non-recurring idle-facility-related charge of $6.8 million recorded in administrative expense last year and efficiencies that have more than offset this year's temporarily higher shipping and warehousing expense resulting from implementation of restructuring actions. The year-to-date effective tax rate of 32.0 percent reflects the higher tax benefit from the Puerto Rico operations and the favorable state tax adjustment recorded in the third quarter. The rate is not comparable to last year's tax rate because of the tax benefit associated with last year's restructuring charge. The prior year's earnings from discontinued operations reflect the earnings from the Corporation's former Vitramon subsidiary. The Vitramon subsidiary was sold in July 1994 and generated a $58.6 million after-tax gain on sale of discontinued operations. LIQUIDITY AND CAPITAL RESOURCES The Corporation believes it will continue to fund its capital and operating needs with cash flows from operations, augmented by borrowings available under its revolving credit facility and from other sources. Total debt represented 39 percent of total capitalization (shareholders' equity and total debt) at October 1, 1995, up from 38 percent at January 1, 1995, and equal to the 39 percent at October 2, 1994. Cash from operations as a result of restructuring savings and operating efficiencies has enabled the Corporation to fund record investments in capital expenditures and restructuring activities, maintaining the debt-to-total-capitalization ratio at the previous year's level. Net cash flow from operating activities for the first nine months of 1995 was $42 million. Earnings from continuing operations plus non-cash charges totaled $98 million. This was used for working capital needs, which included asset investments required by sales growth, expenditures and inventory build relating to ongoing restructuring activities, payment of prior- year sales volume incentives, a reduction in the amount of year-end 1994 vendor payables, and working capital needs related to the acquisition of the Anchor Electric meter center business and the E.K. Campbell industrial heating and cooling equipment business. Capital spending year-to-date increased to $62 million, reflecting expenditures related to restructuring projects, capital investments for new products and expenditures for manufacturing and service improvements. These improvements include three new state-of-the-art warehouse facilities in the U.S., Canada and Belgium, expansion of production capabilities in Puerto Rico and new equipment and efficiency-related improvements at facilities in Jonesboro, Arkansas and Monterrey, Mexico. On September 28, 1995 the Corporation sold its residential lighting, multiple outlet center and surge protection consumer products lines. Cash generated by this sale and related working capital reductions will approximate $14 million of which $4.9 million was received in the third quarter. On July 25, 1995 the Corporation completed its acquisition of E.K. Campbell Company by issuance of 14,045 shares of common stock. On October 27, 1995 the Corporation acquired Catamount Manufacturing, Inc., a manufacturer of cable ties, wire connectors, and related electrical products, for approximately $35 million, consisting of $22 million of the Corporation's common stock and the assumption of approximately $13 million of Catamount's debt. Also subsequent to the end of the third quarter, the Corporation agreed to acquire all of the outstanding stock of Amerace Corporation, a manufacturer of electrical products for utility and industrial markets, for approximately $220 million in cash. This acquisition is expected to be completed prior to the end of the year. The cash portion of the purchase price of these acquisitions will initially be funded from the Corporation's revolving credit facility, leaving approximately $125 to $150 million of revolving credit commitments unused at year end. RESTRUCTURING Activities related to the $79 million restructuring charge taken in the third quarter of 1994 are generally proceeding as anticipated. Forecasted spending related to operations in Mexico, however, was delayed earlier in the year as a result of initial uncertainties related to the peso devaluation. This delay will extend this restructuring activity into fiscal year 1996. During the third quarter, the Corporation incurred $3 million of previously accrued cash restructuring expenditures primarily for severance and other employee benefits, and $5 million of non-cash charges to the restructuring reserve for disposal of assets. Total charges applied to the restructuring reserve to date are $19 million for cash spending activities and $30 million for non-cash activities, leaving reserves of $20 million for cash and $10 million for non-cash activities. Of the $20 million of reserves remaining to cover cash restructuring activities, approximately $5 million for severance and other employee benefits is expected to be spent during the remainder of 1995 and approximately $15 million, primarily for environmental clean up and carrying costs for closed facilities, is expected to be spent in 1996 and thereafter. Reserves for non-cash items have been accrued to provide for losses on the disposition of plant, equipment and inventory at facilities to be closed or realigned and to dispose of products to be discontinued. Anticipated proceeds to be received from these disposals are not expected to be significant. Of the remaining $10 million of reserves for non-cash restructuring activities, $4 million is expected to be incurred during the remainder of 1995 with the remaining $6 million forecasted for 1996. These reserves are believed to be adequate for the purposes for which they were established. PART II. OTHER INFORMATION THOMAS & BETTS CORPORATION Item 5. Other Information RATIO OF EARNINGS TO FIXED CHARGES
For the Nine Months Ended For the Years Ended Oct. 1, Jan. 1, Jan. 2, December 31 1995 1995 1994 1992 1991 1990 Ratio of earnings to fixed charges(1) 4.0x 1.0x 2.6x 2.2x 4.3x 4.3x (1) The ratio of earnings to fixed charges represents the number of times fixed charges are covered by earnings from continuing operations. For purposes of computing this ratio, earnings consist of earnings from continuing operations before income taxes, plus fixed charges less capitalized interest and less undistributed earnings from less than 50 percent owned persons. Fixed charges consist of interest expense and such portion of rental expense which the Corporation estimates to be representative of the interest factor attributable to such rental expense. See Exhibit 12.
Item 6. Exhibits and Reports on Form 8-K (a) List of Exhibits (12) Computation of Ratio of Earnings to Fixed Charges. (b) Reports on Form 8-K None EX-12 2 EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 THOMAS & BETTS CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Thousands of Dollars)
Nine Months Ended For The Years Ended Oct. 1, Jan. 1, Jan. 2, December 31, 1995 1995 1994 1992 1991 1990 Earnings from continuing operations before income taxes $ 83,472 $ 494 $59,942 $52,983 $55,465 $56,122 Add: Interest on indebtedness 20,432 26,852 30,247 33,405 12,752 12,998 Amortization of debt expense 1,007 1,133 1,062 2,538 - - Portion of rents representative of the interest factor 5,514 7,377 7,011 6,515 3,816 3,826 Deduct interest capitalized and undistributed earnings from less than 50 percent owned persons (1,980) (1,863) - - (376) - Earnings as adjusted $108,445 $33,993 $98,262 $95,441 $71,657 $72,946 Fixed charges: Interest on indebtedness $ 20,432 $26,852 $30,247 $33,405 $12,752 $12,998 Amortization of debt expense 1,007 1,133 1,062 2,538 - - Portion of rents representative of the interest factor 5,514 7,377 7,011 6,515 3,816 3,826 Total fixed charges $ 26,953 $35,362 $38,320 $42,458 $16,568 $16,824 Ratio of earnings to fixed charges 4.0x 1.0x* 2.6x 2.2x 4.3x 4.3x *The ratio for the year ended January 1, 1995 was 0.96x, inadequate to cover fixed charges by $1.369 million. This is due to a provision for restructuring operations of $79,011 provided in the third quarter.
 EX-27 3 ARTICLE 5 FDS 3RD QUARTER 1995 10-Q
5 1,000 9-MOS JAN-01-1995 OCT-01-1995 53496 52048 195688 (14307) 212501 550434 571114 (270126) 1238261 253880 343853 0 0 9857 571607 1238261 903831 903831 594873 210505 (468) 0 (20432) 83472 26722 56750 0 0 0 56750 2.89 2.89
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