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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-4682
THOMAS & BETTS CORPORATION
(Exact name of registrant as specified in its charter)
Tennessee 22-1326940
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1555 Lynnfield Road, Memphis, Tennessee 38119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 682-7766
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, No Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 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 registrant's 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. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 14, 1997: $2,482,249,157.
(For purposes of this filing only, the registrant classified all executive
officers and directors as affiliates).
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class Outstanding at March 10, 1997
Common Stock, No Par Value 53,726,110 Shares
DOCUMENTS OR PARTS THEREOF INCORPORATED BY REFERENCE
Form 10-K Part Into Which the
Document or Part Thereof Document is Incorporated
1996 Annual Report to Shareholders Part I, Item 1
Part II, Items 5-8
Part IV, Items 14(a)(1)
1997 Proxy Statement Part III, Items 10-13
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(Items either not applicable or not material have been
excluded.)
(a),(c) GENERAL DEVELOPMENT AND NARRATIVE DESCRIPTION OF
BUSINESS
Thomas & Betts Corporation and its subsidiaries (the
"Corporation") design, manufacture and market, on a global basis,
electrical and electronic connectors and components as well as
other related products and accessories, with manufacturing
facilities and marketing activities in North America, Europe and
the Far East. The Corporation's products are sold worldwide
through electrical, electronic and HVAC distributors, mass
merchandisers, catalogs and home centers, and directly to
original equipment manufacturer ("OEM") markets. No one of the
Corporation's end users or distributors accounted for more than
6% of the Corporation's 1996 net sales. The Corporation is a
worldwide designer and manufacturer of a broad range of
electromechanical components and subsystems that provide
solutions for the automotive, communication and information
industries in North America, Europe and the Far East. The
Corporation is also one of the largest manufacturers in North
America of electrical connectors and accessories for industrial,
commercial and residential construction, renovation and
maintenance applications, and is a leading supplier of
transmission poles, towers and roadway lighting products to the
utility and telecommunications industries and of products and
components to the heating, mechanical and refrigeration markets
in North America and Europe.
The Corporation operates in three business segments.
Electrical Construction and Maintenance Components are sold
primarily in North America, and manufactured and assembled at
facilities located in the United States, Puerto Rico, Canada and
Mexico. Electronic/OEM Components are sold in North America,
Europe and the Far East, and manufactured at facilities in the
United States, Europe, Mexico, Japan and Singapore. Other
Products and Components principally heaters, heating/ventilation
systems, components for transmission and distribution of electric
power, utility poles and transmission towers, and telecommunications
products are sold primarily in North America and Europe, and
manufactured in the United States, Europe and Mexico.
Thomas & Betts' objective is to continue to achieve profitable
growth by offering its distributors and its OEM and end-user
customers a broad family of high-quality products and
state-of-the-art distribution services and by maintaining
leadership positions in the markets that it serves. Its strategy
for achieving this objective consists of the following elements:
- designing continuous improvements and making customer-
specific modifications in widely used products allowing
value to be added to mature product lines;
- selectively acquiring product lines that complement the
Corporation's existing product lines allowing the
Corporation to reduce significantly the time required to
bring new products to its markets;
- expanding the use and features of the Corporation's state-
of-the-art Distributor/Manufacturer Integration ("DMI")
system allowing the Corporation to provide its distributors
with an inventory and distribution management system that
achieves significant transaction cost savings for both the
Corporation and its distributors; and
- globally locating and coordinating manufacturing facilities
and marketing personnel allowing the Corporation to achieve
low-cost manufacturing and to provide worldwide service to
those of its OEM customers with globally dispersed
operations.
Selective acquisitions have been made to broaden Thomas &
Betts' business worldwide. In 1992, the Corporation acquired
American Electric, a leading manufacturer of a broad range of
electrical products and accessories. As a result of this
acquisition the Corporation's sales approximately doubled
(excluding the impact of the Augat pooling). Since the
acquisition of American Electric, the Corporation has made
numerous acquisitions involving complementary product lines. The
most recent was the merger with Augat Inc. ("Augat"), the
Corporation's largest-ever acquisition, completed on December 11,
1996. The Augat transaction has been accounted for as a pooling
of interests; as a result, all financial information which
follows has been restated to reflect the combined results of the
Corporation and Augat for all periods presented. Augat is a
worldwide manufacturer of electronic connectors and devices used
in markets such as telecommunications, automotive, information
processing and cable television. This acquisition places Thomas
& Betts among the world's five largest electronic connector
manufacturers and evens the balance between the Corporation's
electronic and electrical businesses, providing a critical mass
in higher-growth markets. Augat's sales in 1996 were $577
million. Other recent acquisitions include: the $212.5 million
acquisition of Amerace Corporation, a manufacturer of electrical
components for utility and industrial markets, in January 1996;
the $51.2 million acquisition of Commander Electrical Products,
Inc., a Canadian manufacturer of electrical outlet boxes, in
August 1994; and the $35.0 million acquisition of Catamount
Manufacturing Co., a manufacturer of cable ties, in October 1995.
In addition, in August 1994, the Corporation completed the
purchase, for $50.6 million, of a 29% interest in Leviton
Manufacturing Co., Inc., a private company that is the largest
U.S. manufacturer of wiring devices.
The Corporation was established in 1898 as a sales agency for
electrical wires and raceways, was incorporated in New Jersey in
1917 and reincorporated in Tennessee in May, 1996. The
Corporation's executive offices are located at 1555 Lynnfield
Road, Memphis, Tennessee 38119, telephone number (901)682-7766.
Electrical Construction and Maintenance Components ("Electrical")
The Corporation's Electrical Construction and Maintenance
Components' markets include industrial, commercial and
residential construction and renovation companies, electrical
contractors and telecommunications businesses, and maintenance,
repair and overhaul operations ("MRO") customers. Total
Electrical Construction and Maintenance Components sales were
$627.3, $580.0 and $493.7 million, or 32%, 33% and 31% of the
Corporation's total sales for 1996, 1995 and 1994, respectively.
The Corporation designs, manufactures and markets thousands
of different electrical connectors, components and other products
for industrial, commercial and residential construction
applications, including (i) fittings and accessories for
electrical raceways; (ii) fastening products, such as plastic and
metallic ties for bundling wire and flexible tubing; (iii)
terminals for small wires and power cables; (iv) power
connectors, such as compression and mechanical connectors for
high current power and grounding applications; (v) indoor and
outdoor switch and outlet boxes, covers and accessories; (vi)
floor boxes; (vii) metal framing used as structural supports for
conduits, cable trays, electrical enclosures and lighting
raceways; (viii) ground rods and clamps; (ix) products for
outdoor security, roadway and adverse and hazardous location
lighting; (x) circuit breakers, safety switches and meter
centers; and (xi) other products, including insulation products,
wire markers, cable tray and application tooling products.
The Corporation markets its electrical components under
various brand names. These brand names and the related products
include THOMAS & BETTS, T&B and CATAMOUNT electrical products and
electricians' supply products; TY-RAP, TY-FAST and CATAMOUNT
cable ties; STEEL CITY, BOWERS, COMMANDER and UNION switch and
outlet boxes, covers and conduit fittings; STA-KON terminals;
STEEL CITY floor boxes and wire management systems; BLACKBURN and
COLOR-KEYED power connectors and grounding devices; T&B
Electricians' Supplies, wire connectors, tools and accessories;
LIQUID TITE connectors, KINDORF and SUPERSTRUT metal framing
products; AMERICAN ELECTRIC LIGHTING and HAZLUX lighting
products; THOMAS & BETTS and ZINSCO circuit breakers, safety
switches and meter centers; T&B, CANSTRUT and ELECTROTRAY cable
tray; E-Z-CODE wire markers; ANCHOR and MICROLECTRIC meter
sockets; RUSSELLSTOLL, MAX-GARD and EVER-LOK interconnect
components and systems; AGASTAT electro-mechanical and solid-
state devices for timers and relays; BUCHANAN terminal blocks and
connectors; TAYLOR wiring duct; and VALON electrical maintenance
products.
In North America, the Corporation's components for
industrial, commercial and residential construction and
industrial MRO customers are sold through electrical distributors
and retail outlets such as home centers and mass merchants. The
Corporation has relationships with over 2,000 national, regional
and independent distributors and buying groups with locations
across North America. The Corporation believes that it has strong
relationships with its distributors as a result of the breadth
and quality of its product line, innovative service programs,
product innovation, competitive pricing and brand name
recognition among its customers. The Corporation has a network of
factory and independent sales representatives who work with
distributors, end users and retail outlets to increase demand for
its products. The Corporation has thousands of customers, and no
single end user, distributor or retailer accounted for more than
7% of the Corporation's Electrical Construction and Maintenance
Components' segment 1996 net sales.
The Corporation also manufactures and distributes its
components outside the United States. Certain of the
Corporation's standard components are sold in countries where
they conform to the applicable local electrical requirements,
while other components are specifically designed and manufactured
to conform to local standards. The Corporation also markets
electrical components through offshore sales agents and domestic
exporters.
Electronic/OEM Components ("Electronic")
The Corporation's electronic components are sold primarily
to OEMs in the automotive, information services, office
equipment, industrial electronics, test equipment, computer-aided
engineering and manufacturing systems, instrumentation, medical
electronics markets, and additional applications in aerospace,
telecommunications and broadband communications - including CATV
- - businesses. No single end user or distributor of the
Corporation's electronic components accounted for more than 14%
of the Corporation's Electronic/OEM Components segment 1996 net
sales. Total Electronic/OEM Components sales were $920.7, $832.7
and $786.3 million, or 46%, 48% and 50% of the Corporation's
total sales for 1996, 1995 and 1994, respectively, and reflect
the inclusion of Augat's sales in all years under pooling-of-
interests accounting.
The Corporation's electronic/OEM components include: (i)
printed circuit connectors; (ii) IDC connectors for mass
termination of flat cables; (iii) custom-engineered connectors
for automotive and professional electronics applications; (iv)
flexible interconnects, flat cables and assemblies for automotive
and other applications; (v) cable ties; (vi) terminals; (vii) D-
subminiature connectors, a broad group of industry standard
connectors; (viii) custom and standard switches, printed circuit
board sockets and terminal blocks; and (ix) modular voice and
data connectors, twinax and coax connectors, baluns, patch
panels, jack and wall plates and related components for use in
mainframe-to-terminal systems and personal computer-based local
area networks in commercial properties. These components are sold
under various brand names, including THOMAS & BETTS customer-
specific interconnects and components, and backplane,
input/output, fiber optic and printed circuit board connectors;
ANSLEY flat cable and connectors; FLEXSTRIP flexible
interconnects; TY-RAP, TY-FAST and CATAMOUNT cable ties; HOLMBERG
D-subminiature and card edge connectors; NEVADA WESTERN, ARMIGER
and EPITOME premises wiring brand names; RUSSELLSTOLL, MAX-GARD
and EVER-LOK interconnect components and systems; MIPCO power
connectors; FEEDRAIL trolley busway electrification systems;
AGASTAT electro-mechanical and solid-state devices for timers and
relays; ALL-LAN interconnection system; and BUCHANAN terminal
blocks and connectors. The merger with Augat added AUGAT
sockets; ALCOSWITCH switches; ASTER fiber couplers and
connectors; ELASTOMERIC TECHNOLOGIES connectors; LRC connectors,
adapters and accessories; PHOTON laser transmitters and optical
nodes; TELZON cross-connection devices; and RDI terminal blocks.
In North America, the Corporation sells its standard
components through electronic distributors and directly to end
users, and provides customer-specific components directly to
major OEMs. The Corporation sells through national, regional and
local distributors serving a large customer base.
The Corporation also manufactures and markets its
electronic/OEM components internationally, with design,
manufacturing and distribution capabilities in Europe and the Far
East. In Europe and the Far East, as in North America,
electronic/OEM components are sold primarily to automotive,
computer, office equipment, test equipment, instrumentation,
industrial automation and telecommunications markets, and certain
of the Corporation's electronic components are developed and
manufactured for specific customer applications.
There has been a trend on the part of OEM customers to reduce
the number of their preferred suppliers, focusing on companies
that can meet quality and delivery standards and that have a
global presence, a broad product package, strong design
capability and competitive prices. The Corporation has achieved a
preferred supplier designation from many of its most important
OEM customers for electronic components, and continues to seek
this preferred status from other accounts.
Other Products and Components ("Other")
The Corporation sells its other products and components,
comprised of heating products, utility poles and transmission
towers, telecommunication components and other components,
through distributors and directly to end users. No single end
user or distributor accounted for more than 3% of the
Corporation's Other Products and Components segment 1996 net
sales. Total Other Products and Components sales were $437.1,
$320.7 and $293.7 million, or 22%, 19% and 19% of the
Corporation's total sales for 1996, 1995 and 1994, respectively.
Heating Products
The Corporation designs, manufactures and markets heating and
ventilation products for commercial and industrial buildings.
Products include gas, oil and electric unit heaters, gas-fired
duct furnaces, indirect and direct gas-fired make-up air heaters,
infrared heaters, and evaporative cooling and heat recovery
products for the heating, ventilation and air conditioning
("HVAC") marketplace under the REZNOR and E.K. CAMPBELL brand
names. The Corporation's products are sold through HVAC,
mechanical and refrigeration distributors in over 2,000 locations
throughout North America and Europe.
Transmission Poles and Towers
The Corporation designs, manufactures and markets transmission
and distribution poles and towers for North American power and
telecommunications companies and for export. These products are
primarily sold to five types of end users: investor-owned
utilities; cooperatives, which purchase power from utilities and
manage its distribution to end users; municipal utilities; cable
television operating companies; and telephone companies. The
Corporation's products include tubular steel transmission and
distribution poles and lattice steel transmission towers. The
Corporation manufactures and sells its transmission towers and
its transmission and distribution poles under the LEHIGH, MEYER
and THOMAS & BETTS brand names.
Telecommunication Components
The Corporation designs, manufactures and markets T&B aerial,
pole, pedestal and buried splice enclosures; T&B connectors;
KOLD-N-KLOSE encapsulation and sheath repair systems; TY-RAP, TY-
FAST and CATAMOUNT cable ties; and DELTEC specialty devices for
cable television companies and telephone operating companies.
These components are sold both directly to end users and through
distributors.
Other Components
The Corporation designs, manufactures and markets flood,
roadway and security lighting fixtures; and connectors, grounding
systems, fastening and metal framing components for North
American power companies and heating, mechanical and
refrigeration ("HMR") product distributors. These products are
primarily sold to four markets: investor-owned utilities,
cooperatives, municipal utilities and HMR distributors. The
Corporation's other component products include BLACKBURN power
connectors and grounding systems; AMERICAN ELECTRIC LIGHTING
roadway, security and area lighting fixtures; SUPERSTRUT metal
framing; TY-RAP, TY-FAST and CATAMOUNT cable ties; ANCHOR meter
sockets; INTERNATIONAL ENERGY SAVER evaporative cooling and
energy recovery equipment; and ELASTIMOLD power connectors.
MANUFACTURING AND DISTRIBUTION
The Corporation employs advanced processes in order to
manufacture quality products. The Corporation's manufacturing
processes include high-speed stamping, precision molding,
machining, plating and automated assembly. The Corporation makes
extensive use of computer-aided design and computer-aided
manufacturing (CAD/CAM) software and equipment to link product
engineering with its factories.
The Corporation also utilizes other advanced equipment and
techniques in the manufacturing and distribution process,
including computer software for scheduling, material
requirements, shop floor control, capacity planning, and the
warehousing and shipment of products.
The Corporation believes that its products enjoy a reputation
for quality in the markets in which they are sold. The
Corporation has implemented quality control processes in its
design, manufacturing, delivery and other operations in order to
further improve product quality and the service level to
customers. These techniques include just-in-time manufacturing
programs for more efficient use of machine tools in manufacturing
different products, statistical process control, statistical
problem solving, and other processes related to the Corporation's
SIGNATURE SERVICE/DMI program.
From its origin as a delivery guarantee, the SIGNATURE
SERVICE/DMI program has evolved into a partnership for
profitability that encompasses purchasing incentives, extensive
marketing support, training and service discounts. The
Corporation believes its DMI process is now the benchmark in the
industry on how business through electronic commerce should be
conducted. In 1996, participation in the DMI program increased
54% over the previous year. The DMI advanced partnership
includes customer-cost-reduction processes such as automatic
stock replenishment, advanced distributor inventory modeling,
automatic receiving, price synchronization, invoice balancing and
summary billing. The program also provides rights to return
merchandise, which is prevalent in the electrical industry.
Combining these business process redefinitions with a leading
effort in electronic commerce such as extensive use of industry-
standard Electronic Data Interchange ("EDI") has made the DMI
partnership a success for the Corporation as well as its
participating distributors.
The Corporation manufactures its products on a worldwide
basis, with manufacturing operations throughout North America, in
Europe and in the Far East.
The Corporation purchases a wide variety of raw materials for
the manufacture of its products, including metals such as brass,
copper, aluminum, steel plate, steel strip and malleable iron
castings, and resins and rubber compounds. The Corporation's
sources of raw materials and component parts are well established
and are sufficiently numerous to avoid serious interruption of
production in the event that certain suppliers are unable to
provide raw materials and component parts.
RESEARCH AND DEVELOPMENT
The Corporation has research, development and engineering
capabilities in each of the three regions of the world in which
it operates in order to respond locally to its customers' needs
and technological requirements. The Corporation believes that it
has a reputation for innovation based upon its ability to develop
quality new and/or improved products that meet the specific
application needs of its customers.
The Corporation allocates significant resources to its
research and development activities. The Corporation's research,
development and engineering expenditures for the creation and
application of new and improved products and processes were
$47.2, $44.1 and $40.5 million for 1996, 1995 and 1994,
respectively.
The research and development activities of the Corporation are
focused on complementary product areas and specific high growth
markets. Certain of the Corporation's recent new products and
enhancements introduced in the marketplace or under design
include high-speed data communications systems; high-density
interconnect sockets; storage device interconnects; broadened
cable tray products for the communications market; expanded
automotive products offering; a mini hand-held label printer; new
hazardous-location lighting products; an improved electric switch
box design; a quick-lock conduit fitting; improved reflector
lenses for roadway lighting; improved wire nut design; and a new
light-duty pole design.
PATENTS AND TRADEMARKS
The Corporation owns approximately 1,780 active patent
registrations and applications worldwide. The Corporation has
over 230 trademarks, including THOMAS & BETTS, T&B, SIGNATURE
SERVICE, DMI, TY-RAP, TY-FAST, STA-KON, ANSLEY, FLEXSTRIP,
BLACKBURN, STEEL CITY, KINDORF, HAZLUX, AMERICAN ELECTRIC
LIGHTING, COLOR-KEYED, SUPERSTRUT, PERFECT-LINE, REZNOR, ANCHOR
METALS, LEHIGH, MEYER, NEVADA WESTERN, WESTLINE, HOLMBERG,
ZINSCO, E.K. CAMPBELL, BOWERS, AGASTAT, ALL-LAN, BUCHANAN,
FEEDRAIL, MIPCO, RUSSELLSTOLL, CATAMOUNT, and ELASTIMOLD.
Trademarks added with the Augat merger include AUGAT, SNAP-N-
SEAL, HOLTITE, FLIC, ALCO, and PHOTON. While the Corporation
considers its patents and trademarks (including trade dress) to
be valuable assets, it does not believe that its competitive
position is dependent solely on patent or trademark protection
or that its operations are dependent on any individual patent or
trademark. The Corporation does not consider any of its
licenses, franchises or concessions to be material to its
business.
COMPETITION
The Corporation encounters competition in all areas of its
business. The Corporation competes primarily on the basis of
product quality, technology, price, performance and customer
service. There are many companies which manufacture a number of
products which compete with those of the Corporation. All of the
Corporation's products are in competition with products of other
manufacturers, some of which have greater financial and other
resources than the Corporation.
EMPLOYEES
As of December 29, 1996, the Corporation had approximately
14,700 full-time employees worldwide.
SEASONALITY
The Corporation's businesses are not seasonal.
ENVIRONMENTAL
See Item 3, Legal Proceedings.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information regarding business segments is presented in Item 1
(a) and (c) above, Exhibit 13 hereto and in the Corporation's 1996
Annual Report to Shareholders on page 36, which is incorporated
herein by reference.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES
Information relating to operations in different geographic
areas is presented in both Exhibit 13 hereto and in the
Corporation's 1996 Annual Report to Shareholders on page 36,
which is incorporated herein by reference. The risks attendant
to these sales and profits are relatively small because the
operations are in foreign countries that have relatively stable
political systems. It is expected that the international markets
will continue to provide sales growth in the future. Export
sales originating in the U.S. were $26.7, $24.0 and $20.8 million
for 1996, 1995 and 1994, respectively.
ITEM 2. PROPERTIES
The Corporation has total plant, office and distribution
space of approximately 9,744,000 sq. ft. in 138 locations in 24
states, the Commonwealth of Puerto Rico and 16 other countries.
This space is composed of 6,297,000 sq. ft. of manufacturing
space, 2,503,000 sq. ft. of office and distribution space and
944,000 sq. ft. of idle space.
The following table lists the Corporation's manufacturing
locations by primary segment as of December 29, 1996:
Approximate Area
No. Of In Sq. Ft.
Segment Location Facilities Leased Owned
Electrical Construction
and Maintenance Components
Arkansas 1 246,000
California 2 249,000
Georgia 2 180,000 160,000
Massachusetts 1 116,000
Mississippi 1 237,000
Oklahoma 1 108,000
Pennsylvania 1 52,000
Puerto Rico 4 112,000 28,000
Tennessee 2 457,000
Texas 1 36,000
Canada 5 34,000 305,000
Mexico 5 320,000
Electronic/OEM Components
California 1 120,000
Florida 1 65,000
Maine 1 92,000
Massachusetts 3 22,000 52,000
Michigan 4 110,000 230,000
New York 2 113,000 75,000
Pennsylvania 2 30,000
South Carolina 3 89,000
Washington 1 106,000
Canada 1 20,000
England 4 37,000 69,000
Hungary 1 215,000
Japan 1 9,000 247,000
Luxembourg 1 27,000 43,000
Mexico 3 661,000
Singapore 3 24,000 63,000
Switzerland 1 188,000
Other Products and Components
Kansas 1 43,000
New Jersey 1 168,000
New Mexico 1 100,000
Pennsylvania 1 227,000
South Carolina 1 105,000
Texas 1 136,000
Wisconsin 1 171,000
The Corporation leases approximately 115,000 sq. ft. of
space in Memphis, Tennessee for its corporate and divisional
headquarters. Principal sales offices and distribution facilities
are located in 2,388,000 sq. ft. of property, approximately one-
half of which is leased.
The Corporation has 944,000 sq. ft. of idle manufacturing
and office space primarily in Alabama, Pennsylvania, New Jersey,
Massachusetts, Nevada and Texas, not included in the above table.
In 1996, the Corporation recorded a $6 million special charge
related to certain of these facilities to provide for losses on
leases and to reduce owned facilities to their net realizable
values.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is subject to federal, state and local
environmental laws and regulations which govern the discharge of
pollutants into the air, soil and water, as well as the handling
and disposal of solid and hazardous wastes. The Corporation
believes that it is currently in substantial compliance with all
applicable environmental laws and regulations and that the costs
of maintaining or coming into compliance with such environmental
laws and regulations will not be material to the Corporation's
financial statements.
Owners and operators of sites containing hazardous
substances, as well as generators of hazardous substances, are
subject to broad liability under various federal and state
environmental laws and regulations, including liability for
cleanup costs and damages arising out of past disposal activity.
Such liability in many cases may be imposed regardless of fault
or the legality of the original disposal activity. The
Corporation is the owner or operator or former owner of various
manufacturing facilities currently being evaluated for the
presence of contamination or remediated, including closed
facilities in Anniston, Alabama; Elizabeth, New Jersey;
Pittsburgh, Pennsylvania; and St. Louis, Missouri; and its
currently operated facilities in Hager City, Wisconsin; and
Lancaster, South Carolina. In addition, the Corporation is
evaluating two manufacturing plants which were sold by American
Electric prior to its acquisition by the Corporation, located in
Medora, Indiana; and Monroe, Louisiana that may require site
remediation.
All but two of the above facilities (Elizabeth and
Lancaster) were purchased by American Electric from other parties
between the years 1985 and 1988. With respect to all but one of
those former American Electric facilities (Pittsburgh), at the
time of those purchases by American Electric the sellers
committed to indemnify American Electric for environmental
liabilities that occurred prior to the purchase of the facilities
by American Electric. There can be no assurances that such
indemnities will be honored, but the Corporation believes that
the indemnities are reliable. Subsequent to the Corporation's
acquisition of American Electric, the Corporation entered into
agreements with the sellers to cooperate with each other in
resolving obligations in connection with the above-mentioned
environmental issues.
In October 1996, the Corporation donated its former facility
located in St. Louis, Missouri, to a charitable organization.
That organization has assumed full liability for the
environmental evaluation and remediation of the facility, and has
committed, both to the Corporation and to the State of Missouri,
to conduct and complete all legally required remediation. That
obligation has been co-assumed by a professional concern engaged
in environmental remediation, and which is working with the
charity to remediate and re-develop the facility. The charity
has also purchased an environmental insurance policy which limits
the extent of any liability associated with the assessment and
remediation of the facility, and has made the Corporation a
direct beneficiary of that insurance.
The Corporation has received notifications from the United
States Environmental Protection Agency ("EPA") or similar state
environmental regulatory agencies or private parties that the
Corporation, along with others, may currently be potentially
responsible for the remediation of twelve sites pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (the "Superfund" Act) or similar state environmental
statutes. Pursuant to the Asset Purchase Agreement dated June
28, 1985 between American Electric and ITT Corporation ("ITT"),
ITT has to date assumed responsibility for costs associated with
contamination prior to June 1985 at four of these sites. The
Corporation has assumed responsibility for its share of costs at
the remaining eight sites. The Corporation has resolved its
liabilities (largely through de minimis settlements) at
additional sites not identified herein.
In January 1996 the Corporation acquired Amerace
Corporation. Pursuant to the various environmental laws and
regulations described above, Amerace is evaluating or
remediating, or may have liability associated with contamination
at four facilities formerly owned or operated by Amerace (located
in Butler, New Jersey; Richland, Michigan; Tenafly, New Jersey;
and Union, New Jersey); and at one facility currently owned and
operated by Amerace located in Hackettstown, New Jersey. In
addition, Amerace has received notifications from the EPA or from
similar state environmental regulatory agencies or private
parties that Amerace, along with others, may currently be
potentially responsible for its share of the costs relating to
the remediation of nine sites pursuant to the Superfund Act, or
similar state environmental statutes.
In December 1996 the Corporation acquired Augat Inc.
Pursuant to the various environmental laws and regulations
described above, Augat is evaluating or remediating, or may have
liability associated with contamination at five facilities
currently owned or operated by Augat (located in Canton,
Massachusetts; Horseheads, New York; Mashpee, Massachusetts; and
at two facilities in Montgomery, Alabama). In addition, Augat
has received notifications from the EPA or from similar state
environmental regulatory agencies or private parties that Augat,
along with others, may currently be potentially responsible for
its share of the costs relating to the remediation of five sites
pursuant to the Superfund Act or similar state environmental
statutes.
The Corporation is not able to predict with certainty the
extent of its ultimate liability with respect to any pending or
future environmental matters. However, the Corporation does not
believe that any such liability with respect to the
aforementioned environmental matters will be material to its
financial statements.
The Corporation has been named as defendant in various
product liability and commercial legal actions arising from
normal business activities. Although the amount of any ultimate
liability with respect to such matters cannot be precisely
determined, the Corporation does not believe any such liability
will be material to its financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Shareholders of the Corporation was
held on December 11, 1996, pursuant to due notice, to vote upon
the Agreement and Plan of Merger (the "Merger Agreement"), among
Augat Inc., a Massachusetts corporation, the Corporation and EG
Acquisitions Corp., a Delaware corporation and a wholly owned
subsidiary of the Corporation, dated as of October 7, 1996, and
to approve the transactions contemplated by the Merger Agreement.
The result of the vote was 33,050,974 votes for and 44,610 votes
against, with 154,292 abstentions and no broker non-votes.
Executive Officers of the Registrant
Date Assumed
Name Position Age Present Position
T. Kevin Dunnigan Chairman of the Board 59 January 1992
and Chief Executive
Officer
Clyde R. Moore President and Chief 43 January 1994
Operating Officer
Fred R. Jones Vice President- 49 August 1995
Finance and Treasurer
(Chief Financial Officer)
T. Roy Burton President- 49 March 1994
Electronics/OEM Division
William A. Fredrick President-Special 50 March 1994
Markets Division
Gregory M. Langston President-Utility 41 April 1995
Division
Dick R. McCullough President-Mechanical 43 November 1995
Products Division
W. Neil Parker President-Electrical 54 February 1996
Components Division
Gary R. Stevenson Vice President- 44 January 1994
Operations
Mr. Dunnigan has been Chief Executive Officer since 1985.
Mr. Moore previously was President and Chief Operating
Officer of FL Industries, Inc. (1990 to 1992) and President
of its American Electric Division from 1985 until its
acquisition by Thomas & Betts Corporation in 1992. He was
President-Electrical Division of the Corporation (1992 to
1994).
Mr. Jones previously was President of ABB Financial
Services, Inc. (1990 to 1992) and Senior Vice President and
Chief Financial Officer of Joy Technologies, Inc. (1992 to
1995).
Mr. Burton previously was Vice President and General Manager
of Bendix Connector Operations (1989 to 1992), Vice
President-Information Technology Operations (1992 to 1993),
and Vice President-Aerospace Operations (1993 to 1994) of
Amphenol Corporation.
Mr. Fredrick previously was Vice President-Commercial and
Industrial Lighting Group of the American Electric Division
of FL Industries, Inc. (1988 to 1992) and Vice President and
General Manager-Commercial and Industrial Lighting Group of
Thomas & Betts Holdings, Inc. (1992 to 1994).
Mr. Langston previously was Managing Director of Square D
Australia (1989 to 1990), Managing Director of Square D Asia
Pacific (1991 to 1992), President of Square D de Mexico
(1992) and President of Groupe Schneider Mexico (1992 to
1995).
Mr. McCullough previously was Commercial Marketing Director
of Lennox Industries (1990 to 1991), Director of Marketing
(1991 to 1993) and Vice President and General Manager (1993
to 1995) of the Corporation's Mechanical Products Division.
Mr. Parker previously was Vice President of General Electric
Canada (1983 to 1992), President of Thomas & Betts Limited
(1992 to 1996), and President-Thomas & Betts Canada (1995 to
1996). He is also currently Chief Executive Officer of
Thomas & Betts Limited (1996 to present).
Mr. Stevenson previously was Vice President-Operations of
the American Electric Division of FL Industries, Inc. (1989
to 1992) and Vice President-Operations of Thomas & Betts
Holdings, Inc. (1992 to 1994).
The executive officers were elected by the Board of Directors for
a term which expires on May 7, 1997, the date of the next
organizational meeting of the Board of Directors. Normally,
officers are elected for one-year terms or until their successors
have been elected. There exists no special arrangement or
understanding regarding election to executive office other than
that described herein. See Item 11 for information relating to
Directors.
PART II
ITEMS 5 THROUGH 8.
Information required by Items 5 through 8 of Form 10-K is
included in both Exhibit 13 hereto and in the Corporation's 1996
Annual Report to Shareholders, portions of which are incorporated
herein by reference as indicated below:
Item No. Pages
5 23 & 38
6 39
7 19 - 23
8 24 - 38
Forward-Looking Statements
Certain statements in this Form 10-K and in written and oral
statements made by the Corporation ("T&B") may constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words "believe," "expect" and
"anticipate" and similar expressions identify forward-looking
statements. Although these statements reflect the Corporation's
current views with respect to future events and financial
performance, they are subject to many uncertainties and factors
relating to the Corporation's operations and business environment
which may cause the actual results of the Corporation to be
materially different from any future results expressed or implied
by such forward-looking statements.
Examples of such uncertainties include, but are not limited
to: changes in customer demand for various T&B products that
could affect its overall product mix, margins, plant utilization
levels and asset valuations; economic slowdown in the U.S.
(contrary to T&B's expectations of continued economic growth
throughout 1997) or economic slowdowns in T&B's major offshore
markets, including Canada, Western Europe (particularly Germany
and the U.K.), Japan and Taiwan; effects of significant changes
in monetary and fiscal policies in the U.S. and abroad which
could result in currency fluctuations, including fluctuations in
the Canadian dollar, German mark and Japanese yen; inflationary
pressures which could raise interest rates and consequently T&B's
cost of funds; unforeseen difficulties in completing identified
restructuring actions initiated in 1996 in connection with the
Augat merger, including disposal of idle facilities, geographic
shifts of production locations and closure of redundant
administrative facilities; availability and pricing of
commodities and materials needed for production of T&B's
products, including steel, copper, zinc, aluminum and plastic
resins; increased downward pressure on selling prices for T&B's
products; unforeseen difficulties arising from the integration of
acquired businesses with T&B's operations; changes in financial
results and consequently in equity income from T&B's equity
investments in Taiwan, Japan, Belgium and the U.S.; changes in
environmental regulations and policies that could impact
projections of remediation expenses; significant changes in
governmental policies domestically and abroad that could create
trade restrictions, patent enforcement issues, tax rate changes
and changes in tax treatment of such items as tax credits,
withholding taxes, transfer pricing and other income and expense
recognition for tax purposes, including changes in taxation on
income generated in Puerto Rico.
The Corporation does not, by making any forward-looking
statements, undertake any obligation to update them (whether as a
result of new information, future events or otherwise).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEMS 10, 11, 12 and 13.
Registrant, on March 20, 1997 filed with the Securities and
Exchange Commission a definitive Proxy Statement. Information
required by Items 10, 11, 12 and 13 of Form 10-K, but not
provided herein, is included in the Proxy Statement and is
incorporated herein by reference. Certain of the information
required with respect to executive officers is also set forth in
Part I of this report under the heading "Executive Officers of
the Registrant."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Financial statements.
All financial statements as set forth under Item 8.
(2) Financial statement schedules.
All schedules are omitted as the required information
is inapplicable, immaterial or the information is
presented in the financial statements or related notes.
(3) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
(10) Material Contracts
- Agreement with T. Kevin Dunnigan dated February 5, 1997.
(12) Statements regarding computation of ratios (ratio
of earnings to fixed charges)
(13) 1996 Annual Report to Shareholders
Excerpts from the 1996 Annual Report to
Shareholders are attached to the Form 10-K in
Exhibit 13. The Annual Report to Shareholders
may be obtained by writing to the Investor
Relations Department at Corporate Headquarters.
Excerpts are also available on the Corporation's
World Wide Web Site www.tnb.com.
(21) Subsidiaries of registrant
(23.1)Accountants' Consent
(23.2)Accountants' Consent
(24) Power of Attorney
(27) Financial Data Schedule (for SEC use only)
(99) Independent Auditors' Report on Augat Inc.
The following exhibits are omitted as they are
incorporated by reference as indicated.
(2) The Agreement and Plan of Merger, attached as
Exhibit A to the Articles of Merger referenced in
Exhibit 3(i) below - See Form 8-B filed May 2,
1996.
(3)(i)The Charter of the Registrant and Articles of
Merger of Thomas & Betts Corporation, a New
Jersey corporation, with and into Thomas & Betts
Tennessee, Inc., a Tennessee corporation,
amending the Charter effective May 2, 1996 to
change the name of Thomas & Betts Tennessee,
Inc., to Thomas & Betts Corporation - See Form
8-B filed May 2, 1996.
(3)(ii)The Bylaws of the Registrant - See Form 8-B
filed May 2, 1996.
(4) Instruments defining the rights of security
holders, including indentures.
- Supplemental Indenture, dated May 2, 1996,
relating to the Indenture dated January 15,
1992 - See Form 8-B filed May 2, 1996.
- Specimen of the Corporation's $150,000,000
aggregate principal amount of 6-1/2% Senior
Notes due January 15, 2006 - See Form S-4
filed February 13, 1996.
- Stock Purchase Agreement between Thomas &
Betts Corporation and Vishay Intertechnology,
Inc., dated July 12, 1994 - See Form 8-K
filed July 29, 1994.
- Form of Distribution Agreement for Medium-
Term Notes between the Corporation and
Merrill Lynch & Co., dated July 28, 1992 -
See Form 8-K dated July 28, 1992.
- First Supplemental Indenture, dated as of
July 28, 1992, between the Corporation and
First Trust of New York, National
Association, as Trustee, successor trustee
to Morgan Guaranty Trust Company of New York
- See Form 8-K dated July 28, 1992.
- Indenture, dated as of January 15, 1992,
between the Corporation and First Trust of
New York, National Association, as Trustee,
successor trustee to Morgan Guaranty Trust
Company of New York - See 1991 Form 10-K.
- Specimen of the Corporation's $125,000,000
aggregate principal amount of 8-1/4% Notes
due January 15, 2004 - See 1991 Form 10-K.
(10) Material Contracts
- Merger Agreement among Augat Inc., Thomas &
Betts Corporation and EG Acquisitions Corp.,
dated October 7, 1996 - See Form 8-K filed
October 7, 1996.
- Credit Agreement dated as of March 29, 1995
among the Corporation, the banks listed
therein and Morgan Guaranty Trust Company of
New York, as agent - See 1995 Form 10-K.
- Amendment No. 1 dated as of December 8, 1995
to edit Agreement among the Corporation, the
banks listed therein and Morgan Guaranty
Trust Company of New York, as agent - See
1995 Form 10-K.
- Amendment No. 2, dated May 2, 1996, to the
Credit Agreement dated as of March 29, 1995
- See Form 8-B filed May 2, 1996.
- 1990 Stock Option Plan - See 1995 Form 10-K.
- Stock Purchase Agreement between Eagle
Industrial Products Corporation and the
Corporation, dated November 1, 1995
regarding the purchase by the Corporation of
the stock of Amerace Corporation - See Form
8-K dated January 17, 1996 and Form 8-K/A
filed January 22, 1996.
- Thomas & Betts Corporation Executive
Incentive Plan -See 1994 Proxy Statement.
- 1993 Management Stock Ownership Plan - See
1993 Form 10-K.
- Executive Officer Employment Agreement Form
- See 1992 Form 10-K.
- 1985 Stock Option Plan - See 1992 Form 10-K.
- Agreement and Plan of Merger by and among FL
Industries Holdings, Inc. and the
shareholders thereof, the Corporation and
TBC Acquisition Corp., dated as of November
13, 1991, as amended and restated - See Form
8 filed November 19, 1991.
(b) The following reports were filed on Form 8-K during the last
quarter of 1996 and to date:
(1) Form 8-K, dated October 7, 1996, reporting the
Agreement and Plan of Merger between the Corporation
and Augat Inc.
(2) Form 8-K, dated December 20, 1996, reporting the
merger between the Corporation and Augat Inc.
(3) Form 8-K, dated February 25, 1997, setting forth
financial information on combined sales and net
income of the Corporation and Augat Inc. for 30
days of post-acquisition operations from December
30, 1996 through January 28, 1997.
SIGNATURES
PURSUANT TO THE REQUIREMENTS TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED
THIS FORM 10-K ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
THOMAS & BETTS CORPORATION
Signature Title Date
*/s/T. Kevin Dunnigan Chairman of the Board, March 21, 1997
(T. Kevin Dunnigan) Chief Executive Officer
and Director
/s/Clyde R. Moore President, Chief March 21, 1997
(Clyde R. Moore) Operating Officer and
Director
/s/Fred R. Jones Vice President-Finance March 21, 1997
(Fred R. Jones) and Treasurer
/s/Jerry Kronenberg Vice President-General March 21, 1997
(Jerry Kronenberg) Counsel
*/s/Raymond B. Carey, Jr. Director March 21, 1997
(Raymond B. Carey, Jr.)
*/s/Ernest H. Drew Director March 21, 1997
(Ernest H. Drew)
*/s/Jeananne K. Hauswald Director March 21, 1997
(Jeananne K. Hauswald)
*/s/Thomas W. Jones Director March 21, 1997
(Thomas W. Jones)
*/s/Robert A. Kenkel Director March 21, 1997
(Robert A. Kenkel)
*/s/John N. Lemasters Director March 21, 1997
(John N. Lemasters)
*/s/Kenneth R. Masterson Director March 21, 1997
(Kenneth R. Masterson)
*/s/Thomas C. McDermott Director March 21, 1997
(Thomas C. McDermott)
*/s/J. David Parkinson Director March 21, 1997
(J. David Parkinson)
*/s/Jean-Paul Richard Director March 21, 1997
(Jean-Paul Richard)
*/s/Ian M. Ross Director March 21, 1997
(Ian M. Ross)
*/s/William H. Waltrip Director March 21, 1997
(William H. Waltrip)
* By: /s/Jerry Kronenberg
Jerry Kronenberg, Attorney-in-fact