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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2000.

or

For the transition period from                to                

Commission File Number 1-4682

THOMAS & BETTS CORPORATION
(Exact name of registrant as specified in its charter)

(Registrant's telephone number, including area code) (901) 252-8000
Securities registered pursuant to Section 12(b) of the Act:

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 (Section 229.405 of this chapter) 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. / /

    As of March 12, 2001, 58,148,342 shares of the Registrant's Common Stock were outstanding and the aggregate market value of the voting stock held by non-affiliates of the Registrant (based on the average bid and asked prices of such stock on the New York Stock Exchange composite tape) was $1,061,411,636.

Documents Incorporated by Reference

    Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held May 2, 2001, are incorporated by reference into Part III.

Thomas & Betts Corporation and Subsidiaries

TABLE OF CONTENTS

NOTE:  Restated Consolidated Financial Statements

    Thomas & Betts Corporation (the "Corporation," the "Registrant" or "Thomas & Betts") recorded substantial charges in 2000. These charges were based upon the best information available to management and involved extensive use of estimates and assumptions. Management and the

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Corporation's independent auditors have agreed that certain of these charges should be attributed to prior reporting periods. After consultation with the Corporation's independent auditors and the Audit Committee of the Board of Directors, management has restated the Corporation's financial statements for the first and second quarters of 2000, the interim periods of 1999, and fiscal years 1996, 1997, 1998 and 1999. These restatements also include certain adjustments previously reflected in the Corporation's financial results for the third quarter of 1999 which were deemed immaterial to the previously reported results of those prior years. This report contains restated financial information for all of the above fiscal periods. The reasons for, and financial impact of, the adjustments are described in Note 3 of the Notes to Consolidated Financial Statements set forth herein and in the Management's Discussion and Analysis of Financial Condition and Results of Operations. Previously issued financial statements for such periods should not be relied upon.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    This Report includes various forward-looking statements regarding the Corporation which are subject to risks and uncertainties. Forward-looking statements include information concerning future results of operations and financial condition. Statements that contain words such as "believes," "expects," "anticipates," "intends," "estimates," "continue," "should," "could," "may," "plan," "project," "predict," "will" or similar expressions are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, and many factors could affect the future financial results of the Corporation. See "Item 1. Business—Business Risks." Accordingly, actual results may differ materially from those expressed or implied by the forward-looking statements contained in this Report. For those statements, the Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

    There are many factors that could cause actual results to differ materially from those in forward-looking statements, some of which are beyond the control of the Corporation. These factors include, but are not limited to:

•

Economic slowdown in the U.S. or economic slowdowns in the Corporation's other main markets, including Canada and Western Europe;



•

The ability of the management team to improve the operating performance of existing lines of business as the Corporation transitions to the new organizational design and eliminates the previous matrix management structure;



•

Unforeseen difficulties in the implementation, enhancement and maintenance of operating and accounting systems and internal controls;



•

Effects of significant changes in monetary or fiscal policies in the U.S. and abroad which could result in currency fluctuations, including fluctuations in the Canadian dollar, Euro and British pound;



•

Significant changes in any number of governmental policies domestically and abroad which could create trade restrictions, patent enforcement issues, adverse tax-rate changes and changes to tax treatment of items such as tax credits, withholding taxes, transfer pricing and other income and expense recognition for tax purposes, including changes in taxation of income generated in Puerto Rico;



•

Changes in environmental regulations, policies and projected remediation technology advances that could impact expectations of remediation expenses;



•

Unforeseen difficulties arising from past and future acquisitions and dispositions of businesses;



•

Inflationary pressures which could raise interest rates and consequently the Corporation's cost of funds;

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•

Changes in its relationships with its joint venture partners and changes in financial results from its joint ventures;



•

Undiscovered liabilities arising from acquired businesses;



•

Unexpected liabilities arising from divestitures, including specifically the sale of the Corporation's Electronics OEM business in the second quarter of 2000;



•

Future acquisitions which could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to goodwill and other intangible assets, which materially adversely affect operating results and financial condition;



•

Increased downward pressure on the selling prices for the Corporation's products;



•

Changes in customer demand for various products of Thomas & Betts that could affect its overall product mix margins, plant utilization levels and asset valuations;



•

Availability and pricing of commodities and raw materials needed for production of the Corporation's products including steel, aluminum, zinc, copper, resins and rubber compounds;



•

A downgrade or a negative implication credit watch by credit agencies of the Corporation's debt ratings;



•

Unexpected inability to satisfy conditions to borrowing under the Corporation's credit agreements;



•

Failure or disruption of computer programs and equipment within the Corporation or third parties with whom the Corporation does business which may disrupt business activities and operations;



•

Loss of major customers;



•

The ability to attract and retain key employees and executives; and



•

Other adjustments, if any, required after completion of management's continuing review of the Corporation's business practices, processes, controls and systems.

    The Corporation undertakes no obligation to revise the forward-looking statements included in this Report to reflect any future events or circumstances. The Corporation's actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements.

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PART I

Item 1.  BUSINESS

    Thomas & Betts Corporation is a leading manufacturer of connectors and components for worldwide electrical markets. It operates over 180 manufacturing, distribution and office facilities around the world in approximately 20 countries. 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. The Corporation was reincorporated in Tennessee in May 1996. Corporate offices are maintained at 8155 T&B Boulevard, Memphis, Tennessee 38125, and the telephone number at that address is 901-252-8000. The Corporation's website is www.tnb.com.

    The Corporation designs, manufactures and sells components used in assembling, maintaining and repairing electrical and communications systems. The Corporation's products include: 1) electrical components and accessories for industrial, commercial, utility and residential construction, renovation and maintenance applications and for applications within other companies' products primarily in North America, but also in Europe and other areas of the world; 2) electromechanical components, subsystems and accessories used to construct, maintain and repair cable television and telecommunications networks worldwide; 3) transmission poles and towers primarily for North American customers; and 4) heating units and accessories for North American and European markets.

    Thomas & Betts pursues growth through market penetration, new product development, joint ventures and acquisitions. The Corporation sells its products through electrical, telephone, cable and heating, ventilation and air-conditioning (HVAC) distributors, directly to original equipment manufacturers and end users, and through mass merchandisers, catalog merchandisers and home centers. A collective group of customers represented 10% of consolidated net sales from continuing operations in 1998.

    In May 2000, the Corporation completed the purchase of one product line (telecommunications enclosures) for total consideration of $1.8 million in cash. In addition to the divestiture of its Electronics Original Equipment Manufacturer (OEM) business, as discussed below under "Discontinued Operations," the Corporation sold its Telzon/HDDX product line (analog and digital connectors for telecommunications) in March 2000 for an amount which approximated net book value. This product line had sales of $1.0 million in 2000 prior to its divestiture. The Corporation also sold its Aster product line (data communications connectors) in November 2000 for an amount which approximated net book value. This product line had sales of $10 million in 2000 prior to its divestiture. In the first quarter of 2001, the Corporation closed the sale of its copper and zinc ground rods product line for an amount which approximated net book value.

    In 1999, the Corporation completed three acquisitions for total consideration of $70.7 million consisting of $17.0 million of cash and 869,722 shares of the Corporation's common stock ("Common Stock"). The largest was the acquisition of L.E. Mason Co., a market leader in weatherproof electrical boxes and covers. Also, in 1999 the Corporation divested itself of three cable television amplifier businesses, exiting the active components portion of the cable television business.

    In 1998, the Corporation completed eight acquisitions for total consideration of approximately $267.0 million cash and assumed debt. In November 1998, Thomas & Betts completed the cash acquisition of Kaufel Group Ltd. ("Kaufel"), more than doubling the lighting product line that Thomas & Betts offers. Canadian-based Kaufel manufactures emergency and other lighting products and sells in Canada, the U.S., Europe and Asia-Pacific. Other 1998 acquisitions added to the scope of products offered through electrical and communications market channels.

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Significant Developments

Discontinued Operations

    On July 2, 2000, the Corporation completed the sale of substantially all of its previous Electronics OEM business for $750.0 million, subject to certain adjustments. The Electronics OEM sale has been accounted for as a discontinued operation in accordance with Accounting Principles Board Opinion No. 30. Accordingly, results from continuing operations for the current and prior periods exclude the impact of the Electronics OEM business. The net results for the current and prior periods of the Electronics OEM business are reflected in earnings from, or gain on the sale of, discontinued operations. See Note 4 in the Notes to Consolidated Financial Statements.

Reclassification

    During 2000, the Corporation began reporting expenses for transportation of products to customers and between its facilities as a component of cost of sales as a result of the adoption of Emerging Issues Task Force ("EITF") Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." These transportation costs for continuing and discontinued operations had previously been reported as a reduction of net sales. The financial statements for prior years were reclassified to conform to the 2000 presentation. Those reclassifications had no effect on earnings or loss in any year.

Recent History

    Over the past few years, Thomas & Betts pursued various strategies and undertook a number of initiatives designed to drive growth. These strategies and activities delivered short-term results, but ultimately created serious performance issues. The Corporation is currently undergoing a major transition in the way it manages and operates its businesses in order to correct these issues and return its performance to acceptable levels on a sustainable basis.

    The Corporation's two key strategies were: broadening its product portfolio through acquisitions and improving margins by moving manufacturing to lower-cost areas. Over five years, the Corporation completed 29 acquisitions or mergers (some of which proved to be non-strategic) and moved a large number of product lines or facilities to alternative locations, with more than half going to low-cost areas such as Mexico and Hungary. Some of these acquisition and manufacturing activities led Thomas & Betts to record multiple restructuring charges over the past five years.

    The management structure of the Corporation also negatively impacted the results of its activities. Beginning in 1997 and continuing through August 2000, Thomas & Betts managed its businesses along three axes (market, product and geographic) with functional responsibilities, such as legal, operations, finance and human resources, centralized. This matrix structure was inherently complex with overlapping responsibilities between functional and operational managers. This situation greatly diminished accountability and adversely impacted the Corporation's ability to execute effectively.

    As part of a plan to use technology strategically to manage its businesses, Thomas & Betts began to convert its global financial and order processing information systems beginning in 1997. The Corporation also committed significant resources to position itself to be a leader in the then-emerging business-to-business (B2B) e-commerce market. The majority of these conversions were completed by December 1999, although certain systems continue to be refined.

    Thomas & Betts encountered problems with the implementation of certain of these systems. Notably, difficulties experienced in the start-up of the Corporation's new global order processing system (TOPS) in November 1999 resulted in severe disruption to the Corporation's business, including shipping errors and delays, invoicing errors, order cancellations, unusual freight expediting and the redirection of significant resources to solve the related technology and business issues.

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    The combination of the Corporation's acquisition, manufacturing and B2B e-commerce strategies, along with its matrix management structure and the magnitude, timing and execution of the systems conversions, significantly strained the Corporation's management resources, hampered effectiveness, and diverted attention away from the day-to-day operations of the business. This resulted in a serious deterioration in the quality of Thomas & Betts' market performance, customer relations, service, products, and research and development. In addition, Thomas & Betts' strategy in B2B e-commerce proved unachievable given the dynamics of the electrical industry. In August 2000, the senior management positions associated with this initiative were eliminated and other associated resources were redirected.

    To address the Corporation's poor performance, the Corporation's Board of Directors initiated several key management changes. In March 2000, Thomas & Betts hired John P. Murphy as chief financial officer and, in August 2000, T. Kevin Dunnigan was elected chairman and chief executive officer. Dunnigan was previously the Corporation's chairman and chief executive officer and had spent 35 years with Thomas & Betts before retiring from active management in 1997.

    A detailed study of the key components of working capital was undertaken by the new financial management team with the intent to improve performance in the areas of accounts receivable and inventory management. This effort led to the discovery of issues with the Corporation's accounting and operational practices and the conclusion that significant additional provisions and write-downs were required in the aforementioned, and in other areas. Further description of these management reviews is contained below under "Review of Processes, Controls and Systems."

    As a result of the reviews of processes, controls and systems, management recognized that deficiencies existed in a number of the Corporation's processes related to accounts receivable. Accordingly, in September 2000, Thomas & Betts retained a nationally recognized firm to assist in eliminating its excessive accounts receivable backlog and to manage its claims and collections function. Concurrently, management has been working to eliminate the underlying technical and business problems that contributed to a high number of customer payment deductions and hampered the effectiveness of the Corporation's accounts receivable collections effort.

    Thomas & Betts has made good progress in correcting technical systems issues that adversely impacted its pricing and invoicing systems in previous periods. As a result, the Corporation has experienced a decline in the number of deductions taken by its customers in recent months. Management believes that, overall, the accounts receivable situation has been stabilized and is showing improvement.

    The Corporation's review of processes also led to substantial charges to write-down inventory and revealed deficiencies in its inventory management and control processes. Using a combination of internal resources and third-party consultants, Thomas & Betts undertook a thorough review of global inventory management and control processes. This review is progressing on schedule and will be completed early in the second quarter of 2001. Management believes that it has made substantial progress toward the elimination of the Corporation's inventory control issues.

    In a similar manner, Thomas & Betts has now initiated a cross-functional, cross-divisional project to assess and further improve key processes that drive the Corporation's relationship with its customers. The processes being reviewed include pricing, quotations, order entry, ship-from-stock-and-debit, returned goods and claims processing. The lack of comprehensive policies and inadequate procedures in these areas led, over a period of time, to a high number of customer payment deductions. Thomas & Betts expects to further strengthen its core processes and controls in the areas listed above by late 2001. This effort is expected to further improve the Corporation's overall operational, accounts receivable and customer service performance.

    The new management team intends to operate Thomas & Betts as a tightly managed, decentralized organization with minimal corporate overhead. Accordingly, in August 2000, the

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Corporation eliminated the matrix organizational structure referenced above and replaced it with a fully integrated, market-driven, divisional structure. In the new structure, each business president is responsible, and accountable, for all manufacturing, engineering, marketing, business development and associated support activities for his or her business. Business unit managers are also responsible for managing working capital, with the support and guidance of corporate resources.

    To support the effectiveness of these changes, the Corporation's Management Incentive Program has been significantly revised for 2001. Further improving working capital is now a key performance metric for the incentive compensation program and accounts for approximately 50% of the target goal.

    Effectively implementing an organizational change of this magnitude involves many individuals and processes. Although the Corporation is well under way in this effort, it expects to continue to refine its management structure and strengthen the quality of its leadership team as business and financial processes are changed to improve operating efficiency. Enhancing the training, quality and succession planning of management at all levels of the Corporation will continue to be a key focus of Thomas & Betts.

    Thomas & Betts has also taken action to address the unsatisfactory management and performance of its largest business, electrical products sold through distributors. In October 2000, Dominic J. Pileggi, a former Thomas & Betts executive who had left the Corporation in 1995, was hired to lead the electrical business. Over the past three months, Mr. Pileggi has reorganized and strengthened the leadership and internal processes of this business.

    Specifically, the product management and sales organizations of the electrical business' commercial and industrial product groups have been fully combined, eliminating managerial redundancies and affording the opportunity to reduce the number of sales offices by over 50%. As a result, the sales and sales support staff has been significantly reduced.

    Management has also revised the electrical business' sales compensation program, effective January 2001, to include both revenue growth and product mix. Previously, the electrical business' sales compensation program was based entirely on sales volume. The business is also rationalizing its use of outside sales agencies to ensure an appropriate balance between direct sales and agency representatives in each geographic region, with a focus on "pull through" rather than "push-through" selling techniques.

    In addition to realigning the sales organization, the Corporation's electrical business is redirecting the product management function back to managing the full complement of brand management activities (i.e. pricing, sales, manufacturing and new product development). Thomas & Betts has many well-known, leading brands in its product portfolio. Over the past few years, however, product managers primarily focused on reducing product costs rather than strengthening these brands with the end-users of its products: electricians, contractors and MRO (maintenance, repair and operations) accounts. Late in the first quarter of 2001, new management—with significant industry and functional experience—joined Thomas & Betts to lead the electrical business' product management effort.

    The Corporation is also rebuilding its engineering capabilities and expanding its focus on developing new products that lower the cost of installation for its end-user customers. The electrical business expects to steadily increase research and development (R&D) spending to levels in line with industry standards and to increase the percent of sales generated by new products over the next few years. Savings achieved through improvements in operating efficiencies are expected to be partially offset by the increase in R&D spending.

    Thomas & Betts' electrical business operates in highly competitive markets. The Corporation stocks approximately 30,000 products and has relationships with more than 6,000 electrical and utility distributors, retail outlets and mass merchandisers. Like many of its industry peers, the Corporation uses a variety of promotional programs, including volume-incentive discount programs, to compete

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effectively. In addition to these broad-scale, price-based promotional programs, the electrical sales personnel had the authority to offer price concessions on a per-product, per-customer basis for the past several years. Ultimately, the combination of these factors lead to an unmanageable degree of pricing complexity, which inevitably gave rise to the many customer invoice disputes as discussed earlier.

    Thomas & Betts is now in the process of comprehensively revising and simplifying its policies and procedures related to pricing. The authority to set prices has been re-established as a fundamental responsibility of the product management function and sales personnel no longer have the authority to modify prices or give concessions. Customer incentive programs have been simplified and controls are being enhanced to ensure compliance with the Corporation's new pricing directives.

    Previously, the electrical business regularly used quarterly promotions based on deep price discounts and favorable terms as a key tactic. These tactics compromised the Corporation's ability to estimate market demand for key products. Thomas & Betts has discontinued its use of this type of promotional program. Marketing resources have now been redirected to enhance the electrical business' ability to accurately forecast demand for its products.

    Over time, the discounting programs discussed above led to an excessive amount of inventory in the Corporation's key distribution channel (electrical distributors), dampening demand and putting pressure on industry-wide pricing. Compounding the inventory problem for the Corporation was its matrix management structure, which did not efficiently match production with demand, creating excess inventory within the Corporation's facilities.

    In the third and fourth quarters of 2000, the Corporation took back a high level of physical product returns related to the Corporation's former quarterly promotional programs, further contributing to its high inventory levels. To compensate, Thomas & Betts has, and continues to, rationalize production at some of its manufacturing facilities. As a result, the Corporation is experiencing higher-than-normal unabsorbed fixed costs and unfavorable manufacturing variances, a situation that is expected to continue until appropriate inventory levels are restored.

    Across all of its businesses, Thomas & Betts is focused on reducing expenses, with a corporate goal of reducing selling, general and administrative expenses to less than 20% of sales by the end of 2002.

    Each of the Corporation's businesses has outlined, and begun implementing, initiatives to lower manufacturing costs. In certain cases, production is being consolidated. This effort, coupled with the Corporation's decision to discontinue several product lines that were not achieving acceptable returns, necessitated shutting down certain manufacturing lines.

    Unusually high freight and distribution costs have also adversely affected Thomas & Betts' performance. Management has taken significant initial steps to reduce freight costs, including consolidating customer shipments and revising freight policies incorporated in promotional programs such as its Signature Service^SM preferred customer program. Thomas & Betts expects to see gradual improvement in freight performance beginning in the second half of 2001.

    Thomas & Betts believes that it has identified, and made substantial progress in addressing, the majority of the issues that have adversely impacted its performance over the past several years. The Corporation's shift to a divisional management structure and its focus on strengthening the quality of the management team have contributed significantly to the development of a comprehensive long-term plan to restore Thomas & Betts to a profitable and strategically focused leadership position in its markets. The Corporation will continue to execute against this plan throughout the remainder of 2001 and into 2002.

New Management Team

    During 2000, the Corporation experienced significant management changes. In August 2000, T. Kevin Dunnigan was elected Chairman and Chief Executive Officer by the Board of Directors.

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Mr. Dunnigan had previously served as the Corporation's Chairman from 1992 to May 2000 and as the Corporation's Chief Executive Officer from 1985 to 1997. The Corporation elected John P. Murphy as Senior Vice President and Chief Financial Officer and Connie C. Muscarella as Vice President—Human Resources and Administration in March 2000, Kenneth W. Fluke as Vice President—Controller in September 2000 and Dominic J. Pileggi as Senior Vice President and Group President—Electrical in October 2000. The Corporation also appointed Mark A. Bender as Director of Audit Services in January 2001.

Review of Processes, Controls and Systems

    During 2000 the Corporation's new management team began a comprehensive review of processes, controls and systems in order to assure their adequacy and, when appropriate, began implementing improvements.

    Staffing improvements were identified as being required and the corporate accounting group was strengthened as was the divisional controllership group and internal audit. The process of strengthening the accounting staff throughout the organization will continue throughout the coming year.

    The Corporation has simplified its management reporting in conjunction with the elimination of its previous matrix management structure. The matrix structure involved extensive financial allocations to support desired management reporting and contributed to confusion as to certain business and accounting responsibilities. Management expects the new divisional-based structure to enhance visibility and accountability.

    Early in this review, the accounts receivable function was identified as being in need of significant improvement. Accordingly, the Corporation retained a nationally recognized firm to manage its claims and collections functions at least until such time as the backlog of claims is eliminated and management has established appropriate internal processes to ensure the Corporation can remain current in managing its collections efforts. The Corporation has also made progress in correcting technical systems issues that adversely impacted its pricing and invoicing systems during the fourth quarter of 1999 and the first half of 2000. These systems problems were responsible, in part, for the large number of payment deductions made by customers and associated problems that hampered the Corporation's accounts receivable collection efforts.

    The Corporation began a program to analyze and correct deficiencies in its inventory management and control processes. Using a combination of internal resources and third-party consultants, the Corporation completed a thorough review of inventory controls and processes. The Corporation is now refining and implementing new control procedures over inventory accounting. Management currently expects to have the new inventory procedures in place near the beginning of the second quarter of 2001.

    The Corporation began a program in the first quarter of 2001 to analyze its revenue cycle (pricing, quotations, order entry, ship-from-stock-and debit, returned goods, and claims processing) processes. Using a combination of internal resources and third-party consultants, the Corporation expects to complete its review and begin to implement any enhancements necessary by late 2001.

    The Corporation is reviewing its existing capital appropriations management processes to enhance controls associated with authorization and procurement. Management began implementing enhancements during the first quarter of 2001.

    The Corporation has eliminated previous promotional programs based on steep price discounting and is in the process of comprehensively revising and simplifying its pricing policies. As part of this change, field sales personnel no longer have the authority to set prices or offer price concessions. The Corporation also revised the incentives offered in its Signature Service preferred customer program to

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ensure that the program supports profitable sales, and established tighter guidelines and accounting controls for volume-related discount programs and other price rebates effective in 2001.

    To address the Corporation's high freight costs, primarily as a result of inefficiencies and overly generous shipping policies, the new management team is revising the Corporation's freight policies to make them comparable to, and competitive with, the Corporation's electrical components industry peers. As part of this effort, the Corporation began in the third quarter of 2000 to consolidate shipments to customers in several key regional markets. Consolidating customer shipments reduces costs and simplifies the customer's receipt of materials. Management believes that it will have revised freight policies and procedures in place in the second quarter of 2001, and expects to see gradual improvements in its freight performance throughout the second half of 2001.

    The Corporation is also exploring alternatives to make its distribution and warehouse operations more cost effective. Distribution costs are high due to inefficiencies and excess warehouse capacity.

    Improvements in all of the areas discussed above will require time to refine and fully implement, while other areas continue to undergo review. Until these reviews are completed, and improvements fully implemented and refined, the Corporation's results of operations and financial position may continue to be impacted by the Corporation's existing business practices, processes, systems and controls.

Restatement of Consolidated Financial Statements

    As a result of the reviews described above, management identified, primarily in the second quarter of 2000, certain prior-period adjustments which necessitated a restatement of the Corporation's consolidated financial statements for the first and second quarters of 2000, the interim periods of 1999, and for the years 1996, 1997, 1998 and 1999. Pretax amounts initially recorded in 2000 for continuing operations totaling approximately $86 million (approximately $53 million on an after-tax basis) have been eliminated from continuing operations in 2000 and have been reflected as a restatement of earlier periods. Additionally, pretax amounts totaling approximately $18 million initially reflected in the Corporation's financial results for 1999, and which were deemed immaterial to the previously reported results of those earlier periods, have been eliminated from continuing operations in that period and have been reflected as a restatement of earlier periods. Pretax amounts initially recorded in 2000 totaling approximately $7 million (approximately $5 million on an after-tax basis) have been eliminated from discontinued operations in 2000 and have been reflected as a restatement of earlier periods. Additionally, pretax amounts totaling approximately $11 million initially reflected in the Corporation's financial results for 1999, and which were deemed immaterial to the previously reported results of those earlier periods, have been eliminated from discontinued operations in that period and have been reflected as a restatement of earlier periods.

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    The following table shows the effects of the restatement, discontinued operations and reclassifications on the Corporation's net sales and net earnings (loss) from continuing operations:

(a)

During 2000, the Corporation began reporting expenses for transportation of products to customers and between its facilities as a component of cost of sales as a result of the adoption of Emerging Issues Task Force ("EITF") Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." These transportation costs for continuing and discontinued operations had previously been reported as a reduction of net sales. Prior periods have been reclassified to conform to the 2000 presentation. Those reclassifications had no effect on earnings or (loss) in any period.

    The reasons for, and the financial impact of, these net adjustments are described in Note 3 of the Notes to Consolidated Financial Statements set forth herein and in Management's Discussion and Analysis of Financial Condition and Results of Operations set forth herein.

Business Risks

    There are many factors that could pose a risk to the Corporation's ability to execute its business plan, some of which are beyond the control of Thomas & Betts. These factors include, but are not limited to:

•

Risks Related to Operations

Although the Corporation is not dependent on any one customer for more than 10% of its sales, any simultaneous disruptions with a group of large customers could have a material adverse effect on its results of operations and financial condition.

Management needs to improve operations in order to improve financial condition, but operations will not improve if they cannot effectively implement plans. The Corporation's operations during the fiscal year ended December 31, 2000 were adversely affected by a number of factors, including excess inventory, shareholder lawsuits and customer dissatisfaction. To improve operations, new management developed and has been implementing a business strategy to improve the pricing of products, eliminate problems with inventory, reduce costs such as freight and distribution, resolve issues with its customers, develop programs intended to enhance customer relationships and provide better service and continue to improve the product offerings. If the Corporation is not successful in its efforts to implement these plans, or if these plans are not effective, management may not be able to improve operations.

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•

Changes in Management

Several of our executive officers have joined Thomas & Betts very recently. Since March 2000, we have hired a new management team, including T. Kevin Dunnigan as chief executive officer, John P. Murphy as chief financial officer and Dominic J. Pileggi as president of the electrical business. Messrs. Dunnigan and Pileggi have considerable experience in the electrical industry. Nonetheless, the Corporation cannot assure you that management will be able to successfully manage the business or successfully implement its business plan.

Thomas & Betts is now depending on its new management team, and the loss of their services could have a material adverse effect on the business and the results of operations or financial condition. The success of the business is materially dependent upon the continued services of our chairman, president and chief executive officer, Mr. Dunnigan, our senior vice president and chief financial officer, Mr. Murphy, our senior vice president and group president—electrical, Mr. Pileggi, and the other members of our new management team. The loss of Messrs. Dunnigan, Murphy, Pileggi or other key personnel due to death, disability or termination of employment could have a material adverse effect on the results of operations or financial condition, or both. Additionally, management cannot assure you that it will be able to attract or retain other skilled personnel in the future.

•

Operational and Accounting Systems and Internal Controls

Following its review of the Corporation's business processes, management concluded that further steps were needed to enhance and maintain the adequacy of its operating and accounting systems and internal controls. Unforeseen difficulties in the implementation, enhancement and maintenance of operating and accounting systems and internal controls may have a negative impact on the ability of the Corporation to execute its business plan. See "Review of Processes, Controls and Systems" above.

•

SEC Investigation and Lawsuits

There is currently a formal investigation by the Securities and Exchange Commission Enforcement Division concerning the Corporation's financial reporting and other matters. The investigation is ongoing and management cannot predict its outcome.

Lawsuits have been filed against the Corporation, as well as certain of its former officers, in which the plaintiffs allege numerous violations of the securities laws. Management cannot predict the outcome of these cases. In addition, given the size and nature of the business, the Corporation is subject from time to time to various lawsuits which, depending on their outcome, may have a negative impact on its results of operations and financial condition.

•

Legal and Professional Expenses

The Corporation has incurred substantial costs in connection with the process of reviewing, reconciling and restating its books and records, the investigation of its accounting practices by the Securities and Exchange Commission and the preparation of its audited financial statements. Included in these expenses are the costs of the KPMG LLP audit, the legal fees of Davis Polk & Wardwell and the costs of retaining Arthur Andersen LLP to assist with its internal audit function. Thomas & Betts anticipates that it will continue to incur significant legal and other expenses in connection with the ongoing litigation and investigations to which it is subject.

•

Negative Economic Conditions Which May Affect Performance

Thomas & Betts does business in geographically diverse markets and pursues growth through global expansion. In fiscal year 2000, approximately 28% of Thomas & Betts' net sales were generated outside of the United States. The success of Thomas & Betts' business is directly linked to positive economic conditions in the countries where it sells its products. Material adverse

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changes in economic or industry conditions generally or in the specific markets served by Thomas & Betts could adversely affect the future results of the Corporation. Additionally, economic slowdown in the U.S. or economic slowdowns in Thomas & Betts' major foreign markets, including Western Europe and Canada, could reduce Thomas & Betts' overall revenues. Because these influences are not always foreseeable, there can be no assurance that the business will not be affected by these occurrences.

•

Adverse Regulatory, Environmental, Monetary or Other Governmental Policies Which May
  Affect Profitability

Because Thomas & Betts conducts business globally, it is subject to governmental policies throughout the world. Unforeseen changes in these governmental policies may reduce its 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 adversely affect Thomas & Betts' revenues and cost of goods. Furthermore, significant changes in any number of governmental policies domestically and abroad could create trade restrictions, patent enforcement issues, adverse tax rate changes and changes to tax treatment of items such 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. These changes might limit Thomas & Betts' ability to sell its products in certain markets, and could negatively affect its business, operating results and financial condition.

In addition, Thomas & Betts' operations are subject to international, federal, state and local laws and regulations governing environmental matters, including emissions to air, discharge to waters and the generation and handling of waste. Thomas & Betts is also subject to laws relating to occupation health and safety. The operation of manufacturing plants involves a high level of susceptibility in these areas, and there is no assurance that Thomas & Betts will not incur material costs or liabilities in the future. Moreover, expectations of remediation expenses could be affected by, and potentially significant expenditures could be required to comply with, evolving environmental regulations and policies and health and safety laws that may be adopted or imposed in the future. Projected remediation technology advances could adversely impact expectations of remediation expenses.

•

Rapid Expansion Through Acquisitions and Joint Ventures Which May Result in Integration
  Difficulties

During the past few years, Thomas & Betts' expansion has been primarily through acquisitions and joint venture arrangements. As a result of its joint venture activities, Thomas & Betts could experience disagreements and changes in its relationship with its joint venture partners and changes in financial results from its joint ventures and other equity investments, including ventures in Taiwan, Japan, Belgium, Egypt and the U.S.

Thomas & Betts has experienced rapid growth as a result of acquisitions, particularly in recent years. In the past three years, Thomas & Betts completed 12 acquisitions for consideration of approximately $340 million. These acquisitions enabled Thomas & Betts to increase its product offerings dramatically and to penetrate new markets. The rapid growth of the Corporation has placed a strain on its management and other resources. Although Thomas & Betts carefully analyzes and considers every acquisition decision, there can be no assurance that the Corporation will adequately anticipate all demands that growth will place on the Corporation or that Thomas & Betts will not experience unforeseen difficulties arising from the integration of acquired businesses with its operations. In addition, both past and future acquisitions raise the possibility of undiscovered liabilities arising from acquired businesses. Moreover, future acquisitions by Thomas & Betts could result in potentially dilutive issuances of equity securities, the incurrence of debt and

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contingent liabilities and amortization expenses related to goodwill and other intangible assets, which could materially adversely affect its operating results and financial condition.

•

Dispositions Which May Give Rise to Contingent Obligations

On November 1, 2000, pursuant to the Purchase Agreement between Tyco Group S.a.r.l. (Tyco) and the Corporation, dated May 7, 2000, as amended, Tyco delivered to the Corporation its proposed calculation of the Statement of Closing Working Capital and Statement of Closing Long-term Tangible Assets for the Electronics OEM business (collectively, the "Tyco Statement Calculation"). Under the terms of the Purchase Agreement, the purchase price to the Corporation on the closing date could be adjusted if the Closing Working Capital or the Closing Long-term Tangible Assets, which will be amounts agreed to by Tyco and the Corporation, or as determined by an agreed-upon third party, are less than the Base Working Capital or the Base Long-term Tangible Assets, as defined in the Purchase Agreement (Base Working Capital and Base Long-term Tangible Assets collectively referred to herein as "Agreed Amounts"). The Tyco Statement Calculation delivered to the Corporation is substantially below the Agreed Amounts. As of December 31, 2000, Tyco held back $35 million of proceeds.

Management has reviewed the Tyco Statement Calculation and by a submission to Tyco dated January 15, 2001 disputed substantially all of the differences between the Tyco Statement Calculation and the Corporation's records. The parties have not reached an agreement on the closing statements. Under the terms of the Purchase Agreement, the parties are to refer the dispute to binding arbitration before an accounting arbitrator of their mutual choosing. Tyco and the Corporation have discussed the procedural rules for the proceeding and agreed to seek information regarding a potential arbitrator. At this time, the Corporation is unable to predict whether the purchase price on the closing date will be adjusted and, if so, its ultimate effect, if any, on the financial position or results of operations of the Corporation. While management believes that the Tyco Statement Calculation is incorrect and intends to vigorously dispute it, the impact on the Corporation would be material in the event the Tyco Statement Calculation is determined to be correct or substantially correct.

•

Adequacy of Insurance

Certain risks are inherent in the manufacturing of electrical components and the Corporation's insurance may not be adequate to cover all claims against us. The Corporation is exposed to risks inherent in the packaging and distribution of products. Although we maintain liability and errors and omissions liability insurance, management cannot assure you that the coverage limits under these insurance programs will be adequate to protect Thomas & Betts against future claims, or that the Corporation will maintain this insurance on acceptable terms in the future. In addition, the Corporation's executive risk insurance may not cover all claims against the Corporation, Mr. Moore and Mr. Jones, if any, in connection with the shareholder litigation discussed in "Item 3. Business—Legal Proceedings."

General Segment Information

    The Corporation classifies its products into business segments that are organized around the market channels through which it sells those products: Electrical and Communications. Some products and sales cannot be classified into those segments and are included in "All Other." About one-half of Thomas & Betts' products meet global specifications and are sold worldwide. Other products, primarily those sold in the Electrical channel, have region-specific standards and are sold mostly in North America or in other regions sharing North American electrical codes. For financial information regarding net sales, earnings (loss) from continuing operations and total assets by segment for the three years ended December 31, 2000 refer to Note 15 in the Notes to Consolidated Financial Statements set

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forth herein and in Management's Discussion and Analysis of Financial Condition and Results of Operations set forth herein.

Electrical Segment

    The Electrical segment's markets include industrial construction, renovation, maintenance and repair; commercial and residential construction and renovation; project construction; and industrial OEM, primarily in North America. Consolidated sales of the segment were $1.35 billion, $1.39 billion and $1.29 billion, or 76.8%, 74.1% and 72.8% of the Corporation's consolidated sales for 2000, 1999 and 1998, respectively.

    Thomas & Betts designs, manufactures and markets thousands of different electrical connectors, components and other products for electrical applications. The Corporation has a leading position in the market for many of those products. Products include fittings and accessories for electrical raceways; fastening products, such as plastic and metallic ties for bundling wire, and flexible tubing; connectors, such as compression and mechanical connectors for high-current power and grounding applications; indoor and outdoor switch and outlet boxes, covers and accessories; floor boxes; metal framing used as structural supports for conduits, cable tray, electrical enclosures; hazardous location lighting; circuit breakers, safety switches and meter centers; and other products, including insulation products, wire markers, and application tooling products. Products are sold under a variety of the Corporation's well-known brand names.

    Electrical products are sold through electrical and utility distributors, as well as retail outlets such as home centers and mass merchandisers. The Corporation has relationships with over 6,000 national, regional and independent distributors, retailers and buying groups with locations across North America. Thomas & Betts 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 end users. Thomas & Betts' products are sold through 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 electrical customers.

    Because electrical standards vary by region, and historically the Corporation has emphasized North American standards, the majority of Electrical segment sales are currently realized in the U.S. and Canada. Thomas & Betts has the potential to increase its participation in markets outside of North America by developing or acquiring product lines that conform to other regional standards.

Communications Segment

    Thomas & Betts' Communications segment designs, manufactures and markets electromechanical components, subsystems and accessories used to construct, maintain and repair cable television (CATV) and telecommunications networks. Although the majority of the segment's sales are recorded in North America, the products are of an international standard and are also sold outside of North America. Total Communications segment sales were $178.4 million, $264.8 million and $260.9 million, or 10.2%, 14.1% and 14.7% of the Corporation's consolidated sales for 2000, 1999 and 1998, respectively.

    The Corporation's communications product offering includes: CATV drop hardware; radio frequency RF connectors; aerial, pole, pedestal and buried splice enclosures; connectors; encapsulation and sheath repair systems; and cable ties. Products are sold directly to CATV system operators and also through telecommunications and CATV distributors. Components are sold under a variety of the Corporation's brand names.

All Other

    The Corporation sells its other products and components, comprised of heating products and steel poles and towers, through distributors and directly to end users. All other sales were $228.8 million,

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$220.1 million and $220.3 million, or 13.0%, 11.8% and 12.5% of the Corporation's consolidated sales for 2000, 1999 and 1998, 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 HVAC marketplace. Those products are sold primarily under the Reznor® brand name through HVAC, mechanical and refrigeration distributors in approximately 2,000 locations throughout North America and Europe.

Steel 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. Those 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.

Manufacturing and Distribution

    Thomas & Betts 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 planning, shop floor control, capacity planning, and the warehousing and shipment of products.

    Thomas & Betts' products have historically enjoyed a reputation for quality in the markets in which they are sold. To ensure quality, all of Thomas & Betts' facilities embrace quality programs, and approximately 70% of all facilities owned as of December 31, 2000 meet ISO 9000, 9001, 9002 or QS 9000 standards. 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.

Raw Materials

    Thomas & Betts purchases a wide variety of raw materials for the manufacture of its products, including metals, commodities and materials such as steel, aluminum, zinc, copper, 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

    Thomas & Betts has research, development and engineering capabilities in each business unit and maintains regional facilities to respond to the specific needs of local markets. The Corporation has a

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reputation for innovation and value based upon its ability to develop products that meet the needs of the marketplace.

    The Corporation invests significant resources in its research and development activities. Research, development and engineering expenditures invested into new and improved products and processes were $23.0 million, $26.4 million and $29.3 million, or 1.3%, 1.4% and 1.7% of sales for 2000, 1999 and 1998, respectively. Management expects to increase investment for new product development in 2001. The Corporation plans to strengthen its research and development team by adding engineers and recreating a culture where engineers and product managers work together and partner with the end-user customers to develop high-quality products that lower the installed cost of Thomas & Betts products for the end user.

Patents and Trademarks

    Thomas & Betts owns approximately 1,500 active patent registrations and applications worldwide. The Corporation has over 1,400 active trademarks worldwide, including: Thomas & Betts, T&B, American Electric Lighting, Anchor, Blackburn, Bowers, Canstrut, Catamount, Center Lok, Color-Keyed, Commander, Diamond, E.K. Campbell, Eklips, Elastimold, Electroline, Emergi-Lite, Epitome, Ever-Lok, E-Z-Code, Furse, Hazlux, Holmberg, Kindorf, Klik-It, Kold-N-Klose, LRC, Marr, Marrette, Max-Gard, Meyer, Microlectric, Nevada Western, Ocal, Powerlite, Red Dot, Reznor, RussellStoll, Sachs, Shamrock, Signature Service, Site Light, Snap-N-Seal, Sta-Kon, Star Teck, Steel City, Superstrut, Taylor, Termaster, Ty-Fast, Ty-Rap, Union and Zinsco.

    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

    Thomas & Betts' continuing ability to meet customer needs by enhancing existing products and developing and manufacturing new products is critical to Thomas & Betts' prominence in the electrical and communications industries. Thomas & Betts encounters competition in all areas of its business, and the methods and levels of competition vary among its markets. While no single company competes with Thomas & Betts in all of its product lines, various companies compete with Thomas & Betts in one or more product lines. Some of these competitors have substantially greater sales and assets than Thomas & Betts. As Thomas & Betts works to improve its product offerings, these companies also will continue to improve their products and will likely develop new offerings with competitive price and performance characteristics. Although Thomas & Betts believes that it has specific technological and other advantages over its competitors, because of the intensity of the competition in the product areas and geographic markets that it serves, Thomas & Betts could experience increased downward pressure on the selling prices for Thomas & Betts' products. The activities of Thomas & Betts' competitors designed to enhance their own product offerings, coupled with any unforeseeable changes in customer demand for various products of Thomas & Betts, could affect Thomas & Betts' overall product mix, margins, plant utilization levels and asset valuations.

    We believe that continued consolidation of the industry will further increase competitive pressures in the industry. As competition increases in the markets in which we operate, a significant increase in general pricing pressures could occur which would require us to increase our sales volume and to sell higher margin products and services in order to remain competitive.

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Employees

    As of December 31, 2000, the Corporation and its subsidiaries had approximately 14,000 full-time employees worldwide. Employees of the Corporation's international subsidiaries in the aggregate comprise approximately 55% of all employees. Of the total number of employees, approximately 30% are represented by trade unions. The Corporation believes its relationships with its employees are excellent.

Compliance with Environmental Regulations

    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. Thomas & Betts 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 position or results of operations. See "Item 3—Legal Proceedings" and Note 17 in the Notes to Consolidated Financial Statements.

Financial Information About Foreign and U.S. Operations

    For information concerning financial results for foreign and U.S. operations for the three years ended December 31, 2000, refer to Note 16 of Notes to Consolidated Financial Statements contained herein. Export sales originating in the U.S. were $56.6 million, $55.2 million and $39.8 million for 2000, 1999 and 1998, respectively.

Item 2.  PROPERTIES

    The Corporation has approximately 180 plant, office, distribution, storage and warehouse facilities, occupying approximately 8,971,000 sq. ft. in 27 states, the Commonwealth of Puerto Rico and approximately 20 other countries. This space is composed of approximately 6,186,000 sq. ft. of manufacturing space, 2,363,000 sq. ft. of office, distribution, storage and warehouse space and 422,000 sq. ft. of idle space.

    The Corporation's manufacturing locations by segment as of December 31, 2000 were:

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    In addition to the aforementioned manufacturing facilities, the Corporation owns three central distribution centers which are located in Belgium (141,792 sq. ft.), Canada (260,000 sq. ft.) and Byhalia, Mississippi (960,000 sq. ft.) and leases a fourth central distribution center in Sparks, Nevada (283,037 sq. ft.). The Corporation also has principal sales offices, warehouses and storage facilities located in approximately 718,000 sq. ft. of space, most of which is leased. Included in this total is approximately 214,000 sq. ft. of space in Memphis, Tennessee, for the Corporation's corporate headquarters.

    The Corporation has approximately 422,000 sq. ft. of idle manufacturing and office space in Kansas, Pennsylvania, New Jersey, Florida, Minnesota, Missouri, Massachusetts, France and the U.K., not included in the above table.

    As of December 31, 2000, the following plants were operating at capacities significantly below historical levels. These plants are expected to continue operating at low capacities during the first half of 2001, adversely impacting the Corporation's results of operations for such period.

Item 3.  LEGAL PROCEEDINGS

Shareholder Litigation

    On February 16, 2000, certain shareholders of the Corporation filed a purported class-action suit in the United States District Court for the Western District of Tennessee against the Corporation,

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Clyde R. Moore and Fred R. Jones. The complaint alleges fraud and violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder. The plaintiffs allege that purchasers of the Corporation's common stock between April 28, 1999, and December 14, 1999, were damaged when the market value of the stock dropped by nearly 29 percent on December 15, 1999. The plaintiffs allege generally that the defendants artificially inflated the market value of the Corporation's common stock by a series of misleading statements or by failing to disclose certain adverse information. An unspecified amount of damages is sought. On July 12, 2000, the Corporation filed a Motion to Dismiss the suit, together with a memorandum of law in support of the motion to dismiss. After the motion was fully briefed, but before argument, plaintiffs requested and were granted leave to file an amended pleading adding claims based on the Corporation's announcement of additional accounting charges on August 21, 2000. A further amended complaint was subsequently filed expanding the alleged plaintiff class to include all purchasers of the Corporation's securities from April 28, 1999 to August 21, 2000.

    On August 28, 2000, a shareholder filed a purported class-action suit in the United States District Court for the Western District of Tennessee against the Corporation, Clyde R. Moore, T. Kevin Dunnigan, Fred R. Jones and John P. Murphy. The complaint alleges fraud and violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder. The plaintiffs allege that purchasers of the Corporation's common stock between February 15, 2000 and August 21, 2000 were damaged when the market value of the stock dropped by nearly 26% on June 20, 2000, and fell another 8% on August 22, 2000. The plaintiffs allege generally that the defendants artificially inflated the market value of the Corporation's common stock by a series of materially false and misleading statements or by failing to disclose certain adverse information. An unspecified amount of damages is sought. Three additional complaints alleging essentially identical claims were subsequently filed against the same defendants in the same court by plaintiffs represented by the same counsel who filed the August 28 action.

    On December 12, 2000, the Court issued an order consolidating all of the above actions into a single action, and appointing lead plaintiffs and lead counsel. The plaintiffs filed a consolidated complaint on January 25, 2001. The consolidated complaint essentially repeats the allegations in the earlier complaints described above but does not name T. Kevin Dunnigan or John P. Murphy; Clyde R. Moore and Fred R. Jones are now the only individual defendants.

    The Corporation intends to contest the litigation vigorously and filed a renewed motion to dismiss on March 12, 2001. At this early stage of litigation, the Corporation is unable to predict the outcome of this litigation and its ultimate effect, if any, on the financial condition of the Corporation. However, management believes that there are meritorious defenses to the claims. Mr. Moore and Mr. Jones may be entitled to indemnification by the Corporation.

Tyco Dispute

    On November 1, 2000, pursuant to the Purchase Agreement between Tyco Group S.a.r.l. (Tyco) and the Corporation, dated May 7, 2000, as amended, Tyco delivered to the Corporation its proposed calculation of the Statement of Closing Working Capital and Statement of Closing Long-term Tangible Assets for the Electronics OEM business (collectively, the "Tyco Statement Calculation"). Under the terms of the Purchase Agreement, the purchase price to the Corporation on the closing date could be adjusted if the Closing Working Capital or the Closing Long-term Tangible Assets, which will be amounts agreed to by Tyco and the Corporation, or as determined by an agreed upon third party, are less than the Base Working Capital or the Base Long-term Tangible Assets, as defined in the Purchase Agreement (Base Working Capital and Base Long-term Tangible Assets collectively referred to herein as "Agreed Amounts"). The Tyco Statement Calculation delivered to the Corporation is substantially below the Agreed Amounts. As of December 31, 2000, Tyco held back $35 million of proceeds.

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    Management has reviewed the Tyco Statement Calculation and by a submission to Tyco dated January 15, 2001 disputed substantially all of the differences between the Tyco Statement Calculation and the Corporation's records. The parties have not reached an agreement on the closing statements. Under the terms of the Purchase Agreement, the parties are to refer the dispute to binding arbitration before an accounting arbitrator of their mutual choosing. Tyco and the Corporation have discussed the procedural rules for the proceeding and agreed to seek information regarding a potential arbitrator. At this time, the Corporation is unable to predict whether the purchase price on the closing date will be adjusted and, if so, its ultimate effect, if any, on the financial position or results of operations of the Corporation. While management believes that the Tyco Statement Calculation is incorrect and intends to vigorously dispute it, the impact on the Corporation would be material in the event the Tyco Statement Calculation is determined to be correct or substantially correct.

SEC Investigation

    Soon after issuing the August 21, 2000 press release announcing substantial charges in the second fiscal quarter of 2000, the Corporation received an informal request for information regarding the basis of the charges from the staff of the Securities and Exchange Commission (the "Commission") Enforcement Division. In response, the Corporation collected and produced the bulk of the documents requested and various former and current employees were interviewed telephonically by the Commission's staff.

    On January 4, 2001, the Commission issued a Formal Order of Investigation and subsequently has required the production of additional documents, conducted interviews and taken the testimony of current and former employees. Management is unable to express any opinion regarding the future course of this investigation; however, the Corporation intends to fully cooperate with the Commission during this process.

Other Legal Matters

    The Corporation is also 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, and some matters may remain unresolved for several years. The Corporation has provided for losses to the extent probable and estimable, and additional losses, even though not anticipated, could be material with respect to financial position or results of operations in any given period.

Environmental

    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. 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, 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 (the "Superfund Act"), similar federal and state environmental statutes, or common law theories.

    The Corporation is the owner or operator, or former owner, of various manufacturing locations currently being evaluated by the Corporation for the presence of contamination that may require remediation. These sites include closed facilities in Alabama (Anniston); Georgia (Decatur County); Indiana (Medora); Massachusetts (Attleboro, Canton); New Hampshire (New Milford); New Jersey (Elizabeth, Hackettstown, Tenafly); New York (Horseheads); Ohio (Barnsville); Oklahoma (Tulsa); and Pennsylvania (Perkasie, Pittsburgh). The sites further include active manufacturing locations in New Mexico (Albuquerque); South Carolina (Lancaster); and Wisconsin (Hager City).

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    Five of these current and former manufacturing locations relate to activities of American Electric for the period prior to the acquisition of American Electric by the Corporation. These five sites include Decatur County, Georgia; Hager City, Wisconsin; Lancaster, South Carolina; Medora, Indiana; and Pittsburgh, Pennsylvania. Each of these sites except one (Pittsburgh) is subject to an Asset Purchase Agreement dated June 28, 1985 between American Electric and ITT Corporation ("ITT"). ITT and the Corporation have shared responsibilities and costs at the four outstanding sites subject to this agreement. For certain of the sites covered by this agreement, ITT agreed to indemnify American Electric for environmental liabilities, if any, that occurred prior to the purchase of the facilities by American Electric.

    With respect to the Anniston, Alabama, former facility, the Corporation transferred ownership and environmental liabilities to Marine Learning Institute ("MLI"). MLI indemnified the Corporation for environmental liabilities, if any, for this site.

    The Corporation believes that the indemnities of ITT and MLI are reliable; however, there can be no assurances that such indemnities will be honored.

    In addition to current or former manufacturing locations, the Corporation has received notifications from the EPA, similar state environmental regulatory agencies or private parties that the Corporation, along with others, may currently be potentially responsible for its share of the costs relating to investigation and remediation of seventeen sites pursuant to the Superfund Act or similar state environmental enactments.

    In December 1996, the Corporation acquired Augat Inc. Pursuant to the various environmental laws and regulations described above, Augat has evaluated or remediated, and may have liability associated with contamination at a number of sites. Pursuant to a Purchase Agreement between the Corporation and Tyco, the Corporation agreed to retain environmental liability, if any, for former Augat manufacturing locations in Alabama (Montgomery Plants 1 & 3); Massachusetts (Mashpee); and Texas (Lewisville); and for four offsite alleged disposal locations, in Massachusetts (The Ledge, Dartmouth and Re-Solve); and Texas (Chemical Recycling).

    In July 1997, the Corporation acquired Diamond Communications, Inc. Pursuant to the various environmental laws and regulations described above, Diamond has evaluated and remediated contamination associated with its Garwood, New Jersey, facility. The Corporation received a No Further Action letter from the responsible state agency and is required to monitor this site.

    In November 1998, the Corporation acquired Kaufel Group, Ltd. Pursuant to the various environmental laws and regulations described above, the Corporation is evaluating, and may have liability associated with contamination at two facilities owned and operated by Kaufel in Dorval, Quebec.

    In January 1999, the Corporation acquired Ocal, Inc. Pursuant to the various environmental laws and regulations described above, Ocal is evaluating, and may have liability associated with contamination at one facility currently operated by Ocal in Mobile, Alabama.

    In September 1999, the Corporation acquired L.E. Mason Co. Pursuant to the various environmental laws and regulations described above, L.E. Mason is evaluating, and may have liability associated with, contamination at one facility currently operated by L.E. Mason in Boston, Massachusetts.

    The Corporation has provided for liabilities to the extent probable and estimable, but the Corporation is not able to predict the extent of its ultimate liability with respect to all of its pending or future environmental matters. However, the Corporation does not believe that any additional liability with respect to the aforementioned environmental matters will be material to its financial position or results of operations.

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Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2000.

Executive Officers of the Registrant

    Information regarding executive officers of the Corporation is as follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K):

    Mr. Dunnigan was President (1974 to 1976) of The Thomas & Betts Co. Division of Thomas & Betts Corporation, Vice President—T&B/Thomas & Betts (1976 to 1978), Executive Vice President—Electrical (1978 to 1980), Chief Operating Officer (1980 to 1985), President (1980 to 1994), Chief Executive Officer (1985 to 1997), Chairman of the Board (1992 to May 2000) and Chairman and Chief Executive Officer (August to October 2000).

    Mr. Murphy was Vice President and Chief Financial Officer of Goulds Pumps, Inc. (1993 to 1997) and Senior Vice President and Chief Financial Officer of Johns Manville Corporation (1997 to 2000).

    Mr. Pileggi held various positions with the Corporation (1979 to 1983) before becoming elected Vice President—General Manager of the Electronics division (1983 to 1986), Vice President, Electronics Marketing Division (1986 to 1988), President—Electronics division (1988 to 1994) and President—Electrical Components Division (1994 to 1995) of the Corporation. Mr. Pileggi was President and Chief Executive Officer (1995 to 1996) of Casco Molded Plastics, Inc., President and Chief Executive Officer (1996 to 1998) of Jordan Telecommunications Products, Executive Vice President (1998 to 2000) and President—EMS Division (2000) of Viasystems Group, Inc.

    Mr. Fluke held various finance and managerial positions with The Goodyear Tire and Rubber Company beginning in 1982, including General Manager, Finance—South Pacific Tyres and Controller North American Tires Division.

    Mr. Kronenberg was Chairman of the Labor and Employee Relations Committee of the law firm of McBride, Baker & Coles (1990 to 1994) and Vice President—General Counsel of the Corporation (1994 to 1998).

    Ms. Muscarella was Vice President—Human Resources of SKW Bio-Systems, Inc. (1990 to 1998) and Vice President—Human Resources of the Corporation (1998 to 2000).

    Executive officers are elected by, and serve at the discretion of, the Board of Directors for a term of one year. The current terms expire May 2, 2001. There is no arrangement or understanding between any officer and any person, other than a director or executive officer of the Corporation acting in his or her official capacity, pursuant to which any officer was selected. There is no family relationship between any executive officer and any other officer or director of the Corporation. There has been no event involving any executive officer of the Corporation under any bankruptcy act, criminal proceeding, judgment or injunction during the past five years.

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PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

    The Corporation's Common Stock is traded on the New York Stock Exchange ("NYSE") under the symbol TNB. The following table sets forth by quarter for the last two years the high and low sales prices of the Corporation's Common Stock on the NYSE Composite tape as reported by the Dow Jones News Retrieval Service, and the dividends declared by the Board of Directors of the Corporation on its Common Stock.

    At March 12, 2001, the Corporation had 3,924 shareholders of record.

Item 6.  SELECTED FINANCIAL DATA

(a)

During 2000, the Corporation began reporting expenses for transportation of products to customers and between its facilities as a component of cost of sales as a result of the adoption of EITF Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." These transportation costs had previously been reported as a reduction of net sales. Prior periods have been reclassified to conform to the 2000 presentation. These reclassifications had no effect on earnings or (loss) in any period.

(b)

All prior years have been restated for the effects of the divestiture of the Electronics OEM business, which has been reported separately as discontinued operations, and for the effects of the restatement of the Consolidated Financial Statements described herein. See Note 3 in the Notes to Consolidated Financial Statements.

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Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The Management's Discussion and Analysis of Results of Operations for the years ended December 31, 2000 and January 2, 2000 presented below reflects certain restatements to the Corporation's previously reported results of operations for these periods. See "—Restatement of Consolidated Financial Statements" and Note 3 of the Notes to Consolidated Financial Statements for a discussion of these restatements.

Recent History

    Over the past few years, Thomas & Betts pursued various strategies and undertook a number of initiatives designed to drive growth. These strategies and activities delivered short-term results, but ultimately created serious performance issues. The Corporation is currently undergoing a major transition in the way it manages and operates its businesses in order to correct these issues and return its performance to acceptable levels on a sustainable basis.

    The Corporation's two key strategies were: broadening its product portfolio through acquisitions and improving margins by moving manufacturing to lower-cost areas. Over five years, the Corporation completed 29 acquisitions or mergers (some of which proved to be non-strategic) and moved a large number of product lines or facilities to alternative locations, with more than half going to low-cost areas such as Mexico and Hungary. Some of these acquisition and manufacturing activities led Thomas & Betts to record multiple restructuring charges over the past five years.

    The management structure of the Corporation also negatively impacted the results of its activities. Beginning in 1997 and continuing through August 2000, Thomas & Betts managed its businesses along three axes (market, product and geographic) with functional responsibilities, such as legal, operations, finance and human resources, centralized. This matrix structure was inherently complex with overlapping responsibilities between functional and operational managers. This situation greatly diminished accountability and adversely impacted the Corporation's ability to execute effectively.

    As part of a plan to use technology strategically to manage its businesses, Thomas & Betts began to convert its global financial and order processing information systems beginning in 1997. The Corporation also committed significant resources to position itself to be a leader in the then-emerging business-to-business (B2B) e-commerce market. The majority of these conversions were completed by December 1999, although certain systems continue to be refined.

    Thomas & Betts encountered problems with the implementation of certain of these systems. Notably, difficulties experienced in the start-up of the Corporation's new global order processing system (TOPS) in November 1999 resulted in severe disruption to the Corporation's business, including shipping errors and delays, invoicing errors, order cancellations, unusual freight expediting and the redirection of significant resources to solve the related technology and business issues.

    The combination of the Corporation's acquisition, manufacturing and B2B e-commerce strategies, along with its matrix management structure and the magnitude, timing and execution of the systems conversions, significantly strained the Corporation's management resources, hampered effectiveness, and diverted attention away from the day-to-day operations of the business. This resulted in a serious deterioration in the quality of Thomas & Betts' market performance, customer relations, service, products, and research and development. In addition, Thomas & Betts' strategy in B2B e-commerce proved unachievable given the dynamics of the electrical industry. In August 2000, the senior management positions associated with this initiative were eliminated and other associated resources were redirected.

    To address the Corporation's poor performance, the Corporation's Board of Directors initiated several key management changes. In March 2000, Thomas & Betts hired John P. Murphy as chief

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financial officer and, in August 2000, T. Kevin Dunnigan was elected chairman and chief executive officer. Dunnigan was previously the Corporation's chairman and chief executive officer and had spent 35 years with Thomas & Betts before retiring from active management in 1997.

    A detailed study of the key components of working capital was undertaken by the new financial management team with the intent to improve performance in the areas of accounts receivable and inventory management. This effort led to the discovery of issues with the Corporation's accounting and operational practices and the conclusion that significant additional provisions and write-downs were required in the aforementioned, and in other areas. Further description of these management reviews is contained below under "Review of Processes, Controls and Systems."

    As a result of the reviews of processes, controls and systems, management recognized that deficiencies existed in a number of the Corporation's processes related to accounts receivable. Accordingly, in September 2000, Thomas & Betts retained a nationally recognized firm to assist in eliminating its excessive accounts receivable backlog and to manage its claims and collections function. Concurrently, management has been working to eliminate the underlying technical and business problems that contributed to a high number of customer payment deductions and hampered the effectiveness of the Corporation's accounts receivable collections effort.

    Thomas & Betts has made good progress in correcting technical systems issues that adversely impacted its pricing and invoicing systems in previous periods. As a result, the Corporation has experienced a decline in the number of deductions taken by its customers in recent months. Management believes that, overall, the accounts receivable situation has been stabilized and is showing improvement.

    The Corporation's review of processes also led to substantial charges to write-down inventory and revealed deficiencies in its inventory management and control processes. Using a combination of internal resources and third-party consultants, Thomas & Betts undertook a thorough review of global inventory management and control processes. This review is progressing on schedule and will be completed early in the second quarter of 2001. Management believes that it has made substantial progress toward the elimination of the Corporation's inventory control issues.

    In a similar manner, Thomas & Betts has now initiated a cross-functional, cross-divisional project to assess and further improve key processes that drive the Corporation's relationship with its customers. The processes being reviewed include pricing, quotations, order entry, ship-from-stock-and-debit, returned goods and claims processing. The lack of comprehensive policies and inadequate procedures in these areas led, over a period of time, to a high number of customer payment deductions. Thomas & Betts expects to further strengthen its core processes and controls in the areas listed above by late 2001. This effort is expected to further improve the Corporation's overall operational, accounts receivable and customer service performance.

    The new management team intends to operate Thomas & Betts as a tightly managed, decentralized organization with minimal corporate overhead. Accordingly, in August 2000, the Corporation eliminated the matrix organizational structure referenced above and replaced it with a fully integrated, market-driven, divisional structure. In the new structure, each business president is responsible, and accountable, for all manufacturing, engineering, marketing, business development and associated support activities for his or her business. Business unit managers are also responsible for managing working capital, with the support and guidance of corporate resources.

    To support the effectiveness of these changes, the Corporation's Management Incentive Program has been significantly revised for 2001. Further improving working capital is now a key performance metric for the incentive compensation program and accounts for approximately 50% of the target goal.

    Effectively implementing an organizational change of this magnitude involves many individuals and processes. Although the Corporation is well under way in this effort, it expects to continue to refine its

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management structure and strengthen the quality of its leadership team as business and financial processes are changed to improve operating efficiency. Enhancing the training, quality and succession planning of management at all levels of the Corporation will continue to be a key focus of Thomas & Betts.

    Thomas & Betts has also taken action to address the unsatisfactory management and performance of its largest business, electrical products sold through distributors. In October 2000, Dominic J. Pileggi, a former Thomas & Betts executive who had left the Corporation in 1995, was hired to lead the electrical business. Over the past three months, Mr. Pileggi has reorganized and strengthened the leadership and internal processes of this business.

    Specifically, the product management and sales organizations of the electrical business' commercial and industrial product groups have been fully combined, eliminating managerial redundancies and affording the opportunity to reduce the number of sales offices by over 50%. As a result, the sales and sales support staff has been significantly reduced.

    Management has also revised the electrical business' sales compensation program, effective January 2001, to include both revenue growth and product mix. Previously, the electrical business' sales compensation program was based entirely on sales volume. The business is also rationalizing its use of outside sales agencies to ensure an appropriate balance between direct sales and agency representatives in each geographic region, with a focus on "pull through" rather than "push-through" selling techniques.

    In addition to realigning the sales organization, the Corporation's electrical business is redirecting the product management function back to managing the full complement of brand management activities (i.e. pricing, sales, manufacturing and new product development). Thomas & Betts has many well-known, leading brands in its product portfolio. Over the past few years, however, product managers primarily focused on reducing product costs rather than strengthening these brands with the end-users of its products: electricians, contractors and MRO (maintenance, repair and operations) accounts. Late in the first quarter of 2001, new management—with significant industry and functional experience—joined Thomas & Betts to lead the electrical business' product management effort.

    The Corporation is also rebuilding its engineering capabilities and expanding its focus on developing new products that lower the cost of installation for its end-user customers. The electrical business expects to steadily increase research and development (R&D) spending to levels in line with industry standards and to increase the percent of sales generated by new products over the next few years. Savings achieved through improvements in operating efficiencies are expected to be partially offset by the increase in R&D spending.

    Thomas & Betts' electrical business operates in highly competitive markets. The Corporation stocks approximately 30,000 products and has relationships with more than 6,000 electrical and utility distributors, retail outlets and mass merchandisers. Like many of its industry peers, the Corporation uses a variety of promotional programs, including volume-incentive discount programs, to compete effectively. In addition to these broad-scale, price-based promotional programs, the electrical sales personnel had the authority to offer price concessions on a per-product, per-customer basis for the past several years. Ultimately, the combination of these factors lead to an unmanageable degree of pricing complexity, which inevitably gave rise to the many customer invoice disputes as discussed earlier.

    Thomas & Betts is now in the process of comprehensively revising and simplifying its policies and procedures related to pricing. The authority to set prices has been re-established as a fundamental responsibility of the product management function and sales personnel no longer have the authority to modify prices or give concessions. Customer incentive programs have been simplified and controls are being enhanced to ensure compliance with the Corporation's new pricing directives.

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    Previously, the electrical business regularly used quarterly promotions based on deep price discounts and favorable terms as a key tactic. These tactics compromised the Corporation's ability to estimate market demand for key products. Thomas & Betts has discontinued its use of this type of promotional program. Marketing resources have now been redirected to enhance the electrical business' ability to accurately forecast demand for its products.

    Over time, the discounting programs discussed above led to an excessive amount of inventory in the Corporation's key distribution channel (electrical distributors), dampening demand and putting pressure on industry-wide pricing. Compounding the inventory problem for the Corporation, was its matrix management structure, which did not efficiently match production with demand, creating excess inventory within the Corporation's facilities.

    In the third and fourth quarters of 2000, the Corporation took back a high level of physical product returns related to the Corporation's former quarterly promotional programs, further contributing to its high inventory levels. To compensate, Thomas & Betts has, and continues to, rationalize production at some of its manufacturing facilities. As a result, the Corporation is experiencing higher-than-normal unabsorbed fixed costs and unfavorable manufacturing variances, a situation that is expected to continue until appropriate inventory levels are restored.

    Across all of its businesses, Thomas & Betts is focused on reducing expenses, with a corporate goal of reducing selling, general and administrative expenses to less than 20% of sales by the end of 2002.

    Each of the Corporation's businesses has outlined, and begun implementing, initiatives to lower manufacturing costs. In certain cases, production is being consolidated. This effort, coupled with the Corporation's decision to discontinue several product lines that were not achieving acceptable returns, necessitated shutting down certain manufacturing lines.

    Unusually high freight and distribution costs have also adversely affected Thomas & Betts' performance. Management has taken significant initial steps to reduce freight costs, including consolidating customer shipments and revising freight policies incorporated in promotional programs such as its Signature Service^SM preferred customer program. Thomas & Betts expects to see gradual improvement in freight performance beginning in the second half of 2001.

    Thomas & Betts believes that it has identified, and made substantial progress in addressing, the majority of the issues that have adversely impacted its performance over the past several years. The Corporation's shift to a divisional management structure and its focus on strengthening the quality of the management team have contributed significantly to the development of a comprehensive long-term plan to restore Thomas & Betts to a profitable and strategically focused leadership position in its markets. The Corporation will continue to execute against this plan throughout the remainder of 2001 and into 2002.

New Management Team

    During 2000, the Corporation experienced significant management changes. In August 2000, T. Kevin Dunnigan was elected Chairman and Chief Executive Officer by the Board of Directors. Mr. Dunnigan had previously served as the Corporation's Chairman from 1992 to May 2000 and as the Corporation's Chief Executive Officer from 1985 to 1997. The Corporation elected John P. Murphy as Senior Vice President and Chief Financial Officer and Connie C. Muscarella as Vice President—Human Resources and Administration in March 2000, Kenneth W. Fluke as Vice President—Controller in September 2000 and Dominic J. Pileggi as Senior Vice President and Group President—Electrical in October 2000. The Corporation also appointed Mark A. Bender as Director of Audit Services in January 2001.

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Review of Processes, Controls and Systems

    During 2000 the Corporation's new management team began a comprehensive review of processes, controls and systems in order to ensure their adequacy and, when appropriate, began implementing improvements.

    Staffing improvements were identified as being required and the corporate accounting group was strengthened as was the divisional controllership group and internal audit. The process of strengthening the accounting staff throughout the organization will continue throughout the coming year.

    The Corporation has simplified its management reporting in conjunction with the elimination of its previous matrix-based management structure. The matrix structure involved extensive financial allocations to support desired management reporting and contributed to confusion as to certain business and accounting responsibilities. Management expects the new divisional-based structure to enhance visibility and accountability.

    Early in this review, the accounts receivable function was identified as being in need of significant improvement. Accordingly, the Corporation retained a nationally recognized firm to manage its claims and collections functions at least until such time as the backlog of claims is eliminated and management has established appropriate internal processes to ensure the Corporation can remain current in managing its collections efforts. The Corporation has also made progress in correcting technical systems issues that adversely impacted its pricing and invoicing systems during the fourth quarter of 1999 and the first half of 2000. These systems problems were responsible, in part, for the large number of payment deductions made by customers and associated problems that hampered the Corporation's accounts receivable collection efforts.

    The Corporation began a program to analyze and correct deficiencies in its inventory management and control processes. Using a combination of internal resources and third-party consultants, the Corporation completed a thorough review of inventory controls and processes. The Corporation is now refining and implementing new control procedures over inventory accounting. Management currently expects to have the new inventory procedures in place near the beginning of the second quarter of 2001.

    The Corporation began a program in the first quarter of 2001 to analyze its revenue cycle (pricing quotations, order entry, ship-from-stock-and debit, returned goods, and claims processing) processes. Using a combination of internal resources and third-party consultants, the Corporation expects to complete its review and begin to implement any enhancements necessary by late 2001.

    The Corporation is reviewing its existing capital appropriations management processes to enhance controls associated with authorization and procurement. Management began implementing enhancements during the first quarter of 2001.

    The Corporation has eliminated previous promotional programs based on steep price discounting and is in the process of comprehensively revising and simplifying its pricing policies. As part of this change, field sales personnel no longer have the authority to set prices or offer price concessions. The Corporation also revised the incentives offered in its Signature Service preferred customer program to ensure that the program supports profitable sales, and established tighter guidelines and accounting controls for volume-related discount programs and other price rebates effective in 2001.

    To address the Corporation's high freight costs, primarily as a result of inefficiencies and overly generous shipping policies, the new management team is revising the Corporation's freight policies to make them comparable to, and competitive with, the Corporation's electrical components industry peers. As part of this effort, the Corporation began in the third quarter of 2000 to consolidate shipments to customers in several key regional markets. Consolidating customer shipments reduces costs and simplifies the customer's receipt of materials. Management believes that it will have revised

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freight policies and procedures in place in the second quarter of 2001, and expects to see gradual improvements in its freight performance for the second half of 2001.

    The Corporation is also exploring alternatives to make its distribution and warehouse operations more cost effective. Distribution costs are high due to inefficiencies and excess warehouse capacity.

    Improvements in all of the areas discussed above will require time to refine and fully implement, while other areas continue to undergo review. Until these reviews are completed, and improvements fully implemented and refined, the Corporation's results of operations and financial position may continue to be impacted by the Corporation's existing business practices, processes, systems and controls.

Restatement of Consolidated Financial Statements

    As a result of the reviews described above, management identified primarily in the second quarter of 2000, certain prior-period adjustments which necessitated a restatement of the Corporation's consolidated financial statements for the first and second quarters of 2000, the interim periods of 1999, and for the years 1996, 1997, 1998 and 1999. Pretax amounts initially recorded in 2000 for continuing operations totaling approximately $86 million (approximately $53 million on an after-tax basis) have been eliminated from continuing operations in 2000 and have been reflected as a restatement of earlier periods. Additionally, pretax amounts totaling approximately $18 million initially reflected in the Corporation's financial results for 1999, and which were deemed immaterial to the previously reported results of those earlier periods, have been eliminated from continuing operations in that period and have been reflected as a restatement of earlier periods. Pretax amounts initially recorded in 2000 totaling approximately $7 million (approximately $5 million on an after-tax basis) have been eliminated from discontinued operations in 2000 and have been reflected as a restatement of earlier periods. Additionally, pretax amounts totaling approximately $11 million initially reflected in the Corporation's financial results for 1999, and which were deemed immaterial to the previously reported results of those earlier periods, have been eliminated from discontinued operations in that period and have been reflected as a restatement of earlier periods. The principal adjustments, as well as the periods affected, are in the following categories:

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(a)

The attribution represents increases (decreases) in the applicable financial statement captions and includes (1) the restatement of certain items initially recorded in 2000 and (2) the restatement of charges initially reflected in the third quarter 1999, which were deemed immaterial at that time.

    The principal restatement adjustments to Thomas & Betts' consolidated financial statements are summarized as follows:

Revenue Recognition

    The restated consolidated financial statements reflect the reversal of incorrectly recorded revenue from special promotional programs targeted at a select group of the Corporation's largest volume accounts, the terms of which caused the transactions to fail to qualify for immediate recognition.

Other Revenue Adjustments

    The restated consolidated financial statements reflect adjustments to net sales to properly accrue for returns, allowances, shipping and pricing errors, and volume and price rebates.

Property, Plant and Equipment

    The restated consolidated financial statements reflect adjustments to depreciate assets misclassified as construction in progress and to recognize depreciation expense in the appropriate periods. Adjustments were also made to correctly reflect certain items as period expenses that were previously capitalized.

Other

    Other items reflected in the restated consolidated financial statements are primarily adjustments to properly attribute freight costs and restructuring charges.

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Income Tax Adjustments

    Income tax adjustments primarily reflect the tax impact of the pretax adjustments described above.

Discontinued Operations

    On July 2, 2000, the Corporation completed the sale of substantially all of its previous Electronics OEM business for $750.0 million, subject to certain adjustments. The Electronics OEM sale has been accounted for as a discontinued operation in accordance with Accounting Principles Board Opinion No. 30. Accordingly, results from continuing operations for the current and prior periods exclude the impact of the Electronics OEM business. The net results for the current and prior periods of the Electronics OEM business are reflected in earnings from, or gain on the sale of, discontinued operations. See Note 4 in the Notes to Consolidated Financial Statements.

Reclassifications

    During 2000, the Corporation began reporting expenses for transportation of products to customers and between its facilities as a component of cost of sales as a result of the adoption of Emerging Issues Task Force ("EITF") Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." These costs had previously been reported as a reduction of net sales. The financial statements for prior years were reclassified to conform to the 2000 presentation. Those reclassifications had no effect on earnings or (loss) in any year.

Year 2000 Compared with 1999

Consolidated Results

Net Sales

    The Corporation's 2000 net sales decreased $117.6 million from the prior year, reflecting reduced sales volume in its Electrical segment. The reduced Electrical sales volumes were due to a number of factors including:

•

Disruptions caused by the Corporation's implementation of a new pricing and order processing system in late 1999, including a decline in demand associated with customer discontent with the Corporation's impaired ability to accurately process orders and at times from disruptions in the Corporation's ability to fulfill orders on a timely basis.



•

A decrease in traditional Electrical quarter-end promotional sales incentives that in the prior year resulted in significantly larger sales volumes at discounted sales prices.



•

Certain excess inventories in the Electrical distribution channel as a result of prior promotional practices no longer utilized by the Corporation.

Sales for 2000 were also negatively impacted by the divestitures of product lines in the Communications segment. The Corporation sold the Photon and Broadband product lines in June 1999 and September 1999, respectively, which had combined sales in 1999 of approximately $65 million prior to their divestiture. In 2000, the Corporation sold the Telzon/HDDX and Aster product lines in March and November, respectively. The combined adverse net sales impact from the divested product lines when compared to 1999 is approximately $75 million.

    In 2000, net sales were negatively impacted by increased accounts receivable provisions which were necessitated largely by the confusion and disruption caused by the Corporation's implementation of new financial, pricing and order processing systems. After completion of the implementation of the new order processing computer systems in late 1999, the Corporation experienced significant disruptions,

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which led to the Corporation's inability to execute an effective collections process because of considerable uncertainty with customer billing. The latter led to many customer payment deductions and an increase in aged receivables.

Gross Margin

    The gross margin percent for the year 2000 was 15.2% of sales compared with 26.8% in 1999. The significantly lower gross margin in year 2000 reflects the following:

•

Lower sales volume primarily in the Electrical segment partially due to the decrease in use of traditional promotional sales incentive programs, and the distribution channel for the Corporation's products containing high levels of Thomas & Betts product. See "Net Sales" discussion above.



•

Increases in accounts receivable provisions. See "Net Sales" discussion above.



•

Lower net pricing primarily in the Electrical segment due to excessive use of discounting, price and volume rebates and customer concessions.



•

Higher manufacturing costs due to lower capacity utilization. The Corporation significantly cut back production in the second half of 2000, when it became apparent the distribution channel for its products was full and it already had sufficient inventory in its own facilities.



•

Increased freight costs (approximately $18 million) due partially to unusual freight expediting practices.



•

Increased write-downs for slow-moving, excess and obsolete inventory. The Corporation recorded a write-down of approximately $22 million for excess and obsolete inventory based on management's evaluation of current inventory aging and usage and its new strategy to reduce levels of slow-moving inventory. The Corporation also recorded an additional write-down of approximately $12 million for specifically identifiable slow-moving, excess and obsolete inventory primarily attributable to divested product lines.



•

Further inventory write-downs totaling approximately $24 million related to product lines considered to be non-strategic at year end 2000 and therefore expected to be sold or disposed of. See Note 5 in the Notes to Consolidated Financial Statements.

Selling, General and Administrative Expenses

    Selling, general and administrative (SG&A) expenses were 25.3% of sales in 2000, versus 19.1% in 1999. The significant increases were primarily in:

•

Legal, auditing and accounting fees and expenses (approximately $24 million).

The increase reflects expenses related to ongoing litigation and investigation of the Corporation's accounting practices by the Securities and Exchange Commission, efforts to improve our current business and accounting processes and controls, our enhanced collections process for outstanding accounts receivable, and audit fees relating to the restatement of the consolidated financial statements for 1996 through 1999.

•

Information technology expenses (approximately $14 million).

The increase reflects our efforts to stabilize and enhance our existing global order processing, finance, and human resources systems, as well as support our decision to abandon certain B2B e-commerce initiatives including writing off certain software.

•

Distribution expenses (approximately $14 million).

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The increase reflects inefficiencies in our warehousing operations as well as expenses for third party warehousing capacity.

•

Corporate severance expense (approximately $13 million).

    SG&A expense was also high due in part to overhead levels which remained following the sale of the Corporation's Electronics OEM business in the second quarter of 2000. Management has taken steps in 2000 to reduce these overhead levels substantially for 2001.

Research and Development

    Research and development expense represented 1.3% and 1.4% of sales for years 2000 and 1999, respectively. The Corporation expects research and development expense to increase in dollar terms during 2001.

Amortization of Intangibles

    Amortization of intangibles was 1% of sales for both years 2000 and 1999. A majority of the amortization is related to goodwill recorded as part of the Corporation's American Electric and Amerace acquisitions.

Impairment Charges on Long-Lived Assets

    Subsequent to its decision to sell the Electronics OEM business, the Corporation's management re-evaluated the strategic importance of a number of product lines and concluded that it will dispose of some of those product lines by sale or otherwise. The Corporation has considered net cash flows, including the expected proceeds from the sale of assets of those product lines, and as a result has recorded an impairment charge of approximately $33 million during 2000. Impairment charges totaled approximately $20 million for the Electrical segment (primarily die cast fittings, circuit protection, electrical enclosures product lines) and totaled approximately $13 million for the Communications segment (primarily premise wiring product line). See Note 5 in the Notes to Consolidated Financial Statements.

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Income from Unconsolidated Companies

    Income from unconsolidated companies includes equity income from the Corporation's joint ventures and other equity investments. Year 2000 reflects lower equity income from its investment in Leviton Manufacturing Co. as compared to 1999.

Interest Expense—Net

    Interest expense-net includes interest income of $8.2 million in 2000 and $7.0 million in 1999. The increase in interest income is due primarily to increased earnings on a portion of the proceeds from the sale of the Electronics OEM business. Gross interest expense attributable to continuing operations in 2000 increased 4.4% from the prior year in part due to higher interest rates on floating-rate debt experienced in the current year. Resulting net interest expense in 2000 remained relatively flat compared with the prior year.

Other Expense (Income)—Net

    Other expense (income)—net for 2000 reflects $15 million in income generated from the settlement of a trade secret and trade dress infringement lawsuit, which was partially offset by losses on sale of receivables pursuant to an asset securitization program that was terminated during 2000, and losses on sales of certain fixed assets. In 1999, the Corporation generated income of $16 million as a result of a termination fee related to a proposed acquisition that more than offset related transaction costs and losses on sale of receivables under the Corporation's asset securitization program.

Income Taxes

    The Corporation's 2000 effective tax rate for continuing operations is a benefit of (29.0)%. The 1999 effective tax rate for continuing operations is a benefit of (25.4)% and reflected a $30.7 million reduction in the tax provision from approval of tax refund claims and completion of prior year tax audits, which was not repeated in 2000.

Segment Results

    The Corporation evaluates its business segments on the basis of segment earnings (loss), with segment earnings (loss) defined as earnings (loss) from continuing operations before interest, taxes, impairments, restructure and certain other adjustments. Earnings (loss) for the Electrical segment decreased $269.1 million from the prior year. Communications segment earnings (loss) decreased $20.8 million from the prior year; and earnings (loss) related to All Other decreased $14.7 million from the prior year.

Electrical

    Sales for the Electrical segment decreased in 2000, to $1.35 billion. Sales during 2000 reflect the negative impact of an increase in the historical level of receivable provisions combined with the negative impact during the last half of the year of a decrease in traditional Electrical quarter-end promotional sales incentives that in the prior year resulted in significantly larger volumes at discounted sales prices. Additionally, these prior promotional sales incentives resulted in excessive inventory in the distributor channel during 2000. Sales for the Electrical segment were positively impacted by the acquisitions of Shamrock Conduit Products, Inc. and L. E. Mason Co. in late 1999.

Communications

    Sales for the Communications segment decreased in 2000, to $178.4 million. Sales were negatively impacted when the Corporation sold the Photon and Broadband product lines in June 1999 and September 1999, respectively, which had combined sales in 1999 of approximately $65 million prior to

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their divestiture. In the year 2000, the Corporation sold the Telzon/HDDX and Aster product lines in March and November, respectively. The combined adverse net sales impact from the divested product lines when compared to 1999 is approximately $75 million.

Other

    Sales from business activities that cannot be classified in the aforementioned two segments totaled $228.8 million in 2000, $8.7 million more than in 1999.

Year 1999 Compared with 1998

    The Corporation had net sales in 1999 of $1.9 billion, 5.9% higher than in 1998 which was primarily the result of acquisitions listed below in late 1998 and during 1999.

    Three significant factors affect the comparability of sales during the reporting period. In November 1998, the Corporation acquired Kaufel Group Ltd. (Kaufel), a manufacturer and marketer of emergency and other lighting products. In its first full year, Kaufel contributed $195.8 million to 1999 sales, an increase of $165.6 million over its 1998 contribution. In September 1999, the Corporation divested itself of three cable-television amplifier businesses with sales for nine months of 1999 totaling $64.5 million.

    Results for 1999 also include the contributions of three acquisitions. The Corporation acquired Ocal, Inc. (Ocal) in January 1999 and Shamrock Conduit Products, Inc. (Shamrock) in September 1999. Both of those acquisitions were accounted for using the purchase method of accounting and their results are included from the date that Thomas & Betts acquired each company. Additionally, Thomas & Betts acquired L. E. Mason Co. (Mason) in August 1999 and accounted for that transaction as an immaterial pooling of interests. The three 1999 acquisitions accounted for $76.8 million of 1999 sales.

    For 1999, non-U.S. sales accounted for 25.4% of the Corporation's total sales compared with 19.1% in 1998. Sales outside the U.S. have increased due to acquisitions of companies with non-U.S. sales and the Corporation's efforts to increase foreign sales.

    Sales of the Electrical segment grew 7.8% in 1999, to $1.39 billion. Sales from Kaufel were the largest driver of the segment's sales growth in 1999. Acquisitions contributed all of the segment's 1999 growth, more than offsetting slight volume declines in sales to industrial markets and commercial construction customers that were due, in part, to sales losses or deferrals resulting from installation of a new order management system.

    Communications segment sales of $264.8 million were 1.5% higher in 1999 compared with 1998. In 1999's third quarter, the Corporation completed sales of its cable amplifier product lines to sharpen its focus within the cable television business on its core hardware product lines. These product lines had 1999 sales of $64.5 million and generated a pretax loss of $11.9 million on those sales. Those same businesses had sales of $44.7 million in 1998.

    Sales from business activities that cannot be classified in the aforementioned two segments totaled $220.1 million in 1999, 0.1% lower than in 1998.

    Expenses for 1998 included charges related to a program to reduce costs through manufacturing relocations. The charges were recorded as $11.7 million of cost of sales, $15.0 million for impairment of long-lived assets and a $24.5 million provision for restructured operations. In many cases individual factories involved in the cost-reduction effort manufactured product lines for more than one of the Corporation's reportable segments, and these costs were therefore excluded from the measurement of segment results.

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    The 1999 consolidated gross margin percent was 26.8% of sales compared with 28.1% in 1998. The lower gross margin percent in 1999 compared with earlier years resulted from the loss of gross margin due to charges, primarily to write-down inventory and recognize promotional sales discounts, recorded following implementation of the new financial systems described elsewhere and to Thomas & Betts' Order Processing System (TOPS) implementation issues.

    SG&A expense was 19.1% of sales in 1999, versus 17.8% in 1998. SG&A rose as a percent of 1999 sales compared with earlier years due primarily to the charges recorded following implementation of the new financial systems and additional expense associated with the TOPS implementation.

    Thomas & Betts spent 1.4% of sales on research and development (R&D) in 1999, compared with 1.7% in 1998. Amortization expense rose in both 1999 and 1998 compared with the respective prior year due to additional amortization of goodwill related to acquisitions.

    Certain restructure and special-charge accruals established in 1998 were reduced in 1999, primarily because of decisions not to execute all of the originally planned phases of certain projects for economic reasons.

    Income from unconsolidated companies includes equity income from the Corporation's joint ventures and other equity investments, including investments in Leviton Manufacturing Co. and the Elastimold offshore joint ventures.

    Interest expense-net includes interest income of $7.0 million in 1999 and $5.4 million in 1998. Gross interest expense attributable to continuing operations in 1999 increased 19.1% from the prior year primarily due to higher outstanding debt and higher interest rates on floating-rate debt experienced in 1999. Resulting net interest expense in 1999 increased 17.7% compared with the prior year.

    Other (expense) income—net includes losses on sales of accounts receivable pursuant to a receivables securitization program and foreign-currency losses or gains partially offset by foreign-exchange contract gains and other income. The Corporation generated income of $16 million in 1999 as a result of a termination fee related to a proposed acquisition that more than offset related transaction costs and losses on sales of accounts receivable.

    The effective income tax rate for 1999 includes a $30.7 million reduction in the tax provision from approval of tax refund claims and completion of prior-year audits. That reduction resulted in a tax benefit of (25.4)% for 1999. The effective income tax rate for 1998 was 12.0%.

    The Corporation evaluates its business segments on the basis of segment earnings (loss), with segment earnings (loss) defined as earnings (loss) from continuing operations before interest, taxes, restructure and certain other expenses. The magnitude of charges and credits recorded following the financial systems conversion as well as the impact of the TOPS implementation heavily impacted the 1999 operating results of all segments and the comparability of those results to results of prior years. Earnings (loss) of the Electrical segment decreased 24.3% in 1999 from 1998's level. Communications segment earnings declined 158.9% in 1999 from 1998, with the majority of the decrease attributable to losses generated by amplifier product lines divested by the Corporation in 1999. Earnings (loss) related to All Other rose 7.7% in 1999 compared with 1998, as a result of enhancements made in the manufacturing processes for steel structures and heating units.

Liquidity and Capital Resources

Operating Activities

    Operating activities used cash of $248.3 million in 2000. This compares to cash provided by operating activities of $64.8 million in 1999 and $139.7 million in 1998. Working capital (excluding net assets of discontinued operations) as of December 31, 2000 was $549.3 million compared with

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$365.8 million as of January 2, 2000. The Corporation's receivables were impacted by the purchase during 2000 of $177.1 million of receivables previously sold under the Corporation's asset securitization program. The Corporation's inventory levels as of year-end 2000 were $98.8 million lower than at year-end 1999, due primarily to inventory write-downs and lower production levels.

Investing activities

    Capital expenditures for 2000 totaled $69.4 million, which was $11.0 million less than 1999, as expected, due to planned lower expenditures for 2000. Capital expenditures of approximately $70 million are planned for year 2001. The Corporation purchased one product line for $1.8 million in 2000, and received $22.1 million in 2000 from the sale of other product lines. The Corporation received $16.4 million in 1999 from the sale of product lines.

    On July 2, 2000, the Corporation completed the sale of substantially all of its previous Electronics OEM business for $750.0 million, subject to certain adjustments.

    Thomas & Betts completed three acquisitions during 1999 for approximately $17 million of cash, 869,722 shares of the Corporation's common stock and $16.7 million of assumed debt. Those acquisitions were: (1) in January, Ocal, a manufacturer of PVC-coated conduit bodies; (2) in August, Mason, a manufacturer of weatherproof electrical boxes and covers, conduit bodies, fittings and residential outdoor lighting; and (3) in September, Shamrock, a manufacturer of steel and aluminum conduit elbows, couplings and conduit nipples used by electrical contractors. The Ocal and Shamrock acquisitions were accounted for using the purchase method of accounting, and together gave rise to $12.5 million of goodwill. The Mason acquisition was accounted for as an immaterial pooling of interests.

    Thomas & Betts completed eight acquisitions during 1998 for approximately $169 million of cash and approximately $99 million of assumed debt. One of those acquisitions was of significant size: Kaufel, a manufacturer of emergency and other lighting products. All 1998 acquisitions were accounted for using the purchase method, and in aggregate, gave rise to $73.5 million of goodwill. Acquisitions accounted for as purchases in 1998 represented $58.8 million of that year's sales.

Financing activities

    The Electronics OEM sale in the second quarter of 2000 produced proceeds of $701.1 million. These proceeds were subsequently used to pay down domestic debt of approximately $440 million and international debt of approximately $80 million, including 7.15% senior debentures due 2008 issued by one of the Corporation's Canadian subsidiaries. The remainder of the proceeds was used for short-term investment and other operating purposes.

    During 2000, the Corporation purchased a total of $177.1 million of receivables sold under the Corporation's previous asset securitization program. Due to limitations imposed under this program, the Corporation (using its debt facilities) purchased $83.2 million of receivables prior to June 2000 which were sold under this program. Additionally, immediately prior to the Electronics OEM sale, the Corporation purchased (using its debt facilities) the remaining $93.9 million of receivables sold under this program.

    Total dividends paid to shareholders were $64.9 million, $64.9 million and $65.8 million in 2000, 1999 and 1998, respectively.

    Year-end debt decreased $263.6 million in 2000 compared with 1999, primarily reflecting the debt reduction resulting from the partial usage of the Electronics OEM sale proceeds. Total debt increased $82.9 million in 1999 compared to 1998, reflecting debt issued and assumed for acquisitions and to fund increases in working capital. The Corporation maintains a commercial paper program, which is backed by $420 million of revolving credit agreements. At year-end 2000, no commercial paper was

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outstanding. The revolving credit agreements include $400 million in commitments from two groups of banks, under which $200 million is available through June 2003 and $200 million is available through June 2001. Under the latter commitment, any borrowings outstanding as of June 2001 would mature on June 2002. Under such facilities, the Corporation has the option of selecting an interest rate, at the time of borrowing, based on a number of benchmarks including LIBOR, certificate of deposit rate or the prime lending rate of the agent bank. Management believes that its external financial resources and internally generated funds are sufficient to meet the Corporation's capital needs for the foreseeable future.

    During 2000, the Corporation reduced the aggregate commitment under the revolving credit agreements from $625 million to $420 million and amended certain covenant provisions, fees and rates contained in the credit agreements. There are two restrictive financial covenant provisions contained in these credit agreements. The Corporation must maintain a specified ratio of operating cash flow to consolidated debt and a specified ratio of consolidated debt to equity.

    If the Corporation fails to meet its agreed financial covenant provisions, cross-acceleration provisions in certain of the debt agreements could be invoked. The Corporation is in full compliance with all financial covenant provisions at year-end. At year-end 2000, there was no debt outstanding under the credit agreements. The Corporation is currently in discussions with the banks to reduce by $100 million the amount of the credit available and amend the term of the current credit agreements to June 2004.

    In the years prior to 2000, the Corporation made selective acquisitions to broaden its business worldwide. While the Corporation will continue to evaluate acquisitions, especially of companies serving the electrical components market place, it does not expect acquisitions will be its primary means of growth for the forseeable future. Future acquisitions by the Corporation might be financed through existing cash reserves, internally generated funds, the issuance of private or public debt or equity, or a combination of these sources.

    As a result of the current operating results, the Corporation may not be able to access the public capital markets on acceptable terms or rates or in a timely manner. Management expects any future borrowings may be at higher rates or on more stringent terms. Management believes that existing cash balances, cash generated from operations, and external financial resources will be sufficient to meet the Corporation's operating needs for the forseeable future.

Other

    At year-end, marketable securities and cash and equivalents increased $134.8 million from 1999, primarily due to investing a portion of the proceeds from the Electronics OEM sale.

    The Corporation maintains a portfolio of marketable securities, which at year-end 2000 was valued at $19.4 million; of this, $12.3 million is held within Puerto Rico. Although the investments in Puerto Rico represent currently available funds, they remain invested until the Corporation can repatriate the investments free of tollgate tax. The Corporation also holds in other assets $18.0 million of marketable securities in connection with its Supplemental Executive Investment Plan.

    In 2000, the Corporation received $15.0 million cash for settlement of a trade secret and trade dress infringement lawsuit. Included in 1999 is $16 million cash generated as a result of a termination fee related to a proposed acquisition.

    In March 2001, the Board of Directors of the Corporation approved the 2001 Stock Incentive Plan. Under the plan, 2,500,000 shares of Common Stock may be optioned. The options will be granted at a price not less than the fair market value on the date of grant with a term not to exceed 10 years.

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Forward-looking statements may prove inaccurate

    This Report includes various forward-looking statements regarding the Corporation which are subject to risks and uncertainties. Forward-looking statements include information concerning future results of operations and financial condition. Statements that contain words such as "believes," "expects," "anticipates," "intends," "estimates," "continue," "should," "could," "may," "plan," "project," "predict," "will" or similar expressions are forward-looking statements. These forward-looking statements are subject to risks and uncertainties and many factors could affect the future financial results of Thomas & Betts. See "Item 1— Business—Business Risks." Accordingly, actual results may differ materially from those expressed or implied by the forward-looking statements contained in this Report. For those statements, the Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Financial Instruments

    Thomas & Betts is exposed to market risk from changes in foreign exchange rates, raw material commodity prices and interest rates. The Corporation may enter into various hedging transactions to reduce those risks and allow management to focus on core business issues and challenges. The Corporation does not enter into foreign currency or interest rate transactions or commodity price contracts for speculative purposes.

Foreign Exchange Risk

    Thomas & Betts primarily enters into forward foreign exchange contracts to reduce the impact on earnings and cash flow from non-functional currency-denominated assets, liabilities and transactions, predominately intercompany and third-party receivables and payables. Gains and losses resulting from hedging instruments offset the losses or gains on the underlying assets, liabilities and transactions being hedged. The Corporation's forward foreign exchange contracts generally have maturity dates of less than 60 days, and the Corporation maintains a high correlation between the hedges and the underlying assets, liabilities or transactions to minimize currency risk. In most cases, both the exposed transactions and the hedging contracts are marked to market monthly with gains and losses included in earnings as other income or expense.

    Assuming a hypothetical 10% adverse change in all foreign currencies, with the resulting functional currency gains and losses translated into U.S. dollars at the spot rate, the loss in fair value of exchange contracts held on December 31, 2000, would have been $13.4 million. Those losses would be substantially offset by gains on the underlying assets, liabilities and transactions being hedged.

Interest Rate Risk

    As of December 31, 2000, the fair value of the Corporation's long-term debt (including current maturities), estimated using quoted market prices or discounted future cash flows based on the Corporation's current incremental borrowing rates for similar types of borrowing arrangements, was $658.7 million. That fair value was $17.3 million lower than the carrying value of debt at December 31, 2000. The potential change in fair value resulting from a hypothetical 10% decrease in interest rates amounted to $17.7 million at December 31, 2000.

Commodity Risk

    Thomas & Betts is exposed to risk from fluctuations in prices for commodities used to manufacture its products, primarily copper, zinc and aluminum. Some of that risk is hedged through the use of futures contracts that fix the price the Corporation will pay for the commodity. The use of such commodity contracts effectively protects Thomas & Betts against changes in the price of the commodity to the extent of the notional amount under the contract. Since the maturities of those

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contracts are highly correlated with the actual purchases of the commodities, the reported cost of sales amounts reflect the commodities' costs, including the effects of commodity hedges.

    As of December 31, 2000, the net unrealized loss on all commodity contracts held was $0.4 million. A hypothetical 10% decrease in all commodity market prices would increase that unrealized loss to $2.4 million. The Corporation would normally only record those losses at the time the commodity is actually purchased, and the loss would be reported as a part of cost of sales.

New Accounting Statements

    In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activity, an Amendment of SFAS 133." SFAS No. 133 and SFAS No. 138 require the recognition at fair value of all derivatives as either assets or liabilities in the Consolidated Balance Sheet. Under certain conditions, a derivative can be designated as a hedge allowing the deferral of fair value gains or losses until the offsetting gains or losses on the hedged item are recognized. At times Thomas & Betts enters into derivative instruments to hedge risks associated with foreign exchange and commodity fluctuations. The Corporation does not expect its existing derivative instruments as of December 31, 2000 to qualify for hedge accounting treatment under the new provisions of SFAS No. 133 and SFAS No. 138, and will therefore be required to apply mark-to- market accounting for these derivative instruments during 2001. SFAS No. 133 and SFAS No. 138 are effective for the first quarter of 2001. The effect upon initial adoption was immaterial and management does not believe that this pronouncement will have a material effect on future results of operations or financial position.

Year 2000

    During 1999, the Corporation completed a corporate-wide program to ensure its information technology systems and its products were compliant with the effects of the rollover to year 2000. The Corporation's year 2000 compliance efforts were successful. Its ability to manufacture and distribute its products was not impaired by Year 2000 issues and it did not incur liability for breach of contract or other harm arising out of failure of its information technology systems or processes to be Year 2000 compliant.

Financial Condition and Results of Operations Outlook

    Based on preliminary information to date for the first fiscal quarter of 2001, the Corporation's level of net sales and resulting profitability for that period will be below the comparable period in the prior year. In addition, the Corporation anticipates an increase in net debt (total debt net of all cash, cash equivalents and marketable securities) as compared with December 31, 2000 due in part to the payment of $10 million in executive severance that was accrued as of December 31, 2000.

    Barring any unforeseen change in the general economy, management expects to move toward its goal of achieving a revenue and earnings growth profile in line with the Corporation's industry peers in the second half of 2001 and into 2002. Cash flow from operations is targeted to be positive in 2001.

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Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

Consolidated Financial Statements

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Thomas & Betts Corporation:

    We have audited the accompanying consolidated balance sheets of Thomas & Betts Corporation and subsidiaries as of December 31, 2000 and January 2, 2000, and the related consolidated statements of operations, cash flows, and shareholders' equity and comprehensive income (loss) for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 at December 31, 2000 and January 2, 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.

    As discussed in Note 3 to the consolidated financial statements, the accompanying consolidated balance sheet as of January 2, 2000 and the related consolidated statements of operations, cash flows and shareholders' equity and comprehensive income (loss) for the years ended January 2, 2000 and January 3, 1999, have been restated.

    The supplementary quarterly financial information on pages 83 through 89 of the Corporation's Annual Report on Form 10-K contains information that we did not audit, and, accordingly, we do not express an opinion on that information. We did not have an adequate basis to complete reviews of the quarterly information in accordance with standards established by the American Institute of Certified Public Accountants due to the matters related to the restatement issues and the corollary review of processes, controls and systems as described in Note 3 to the consolidated financial statements.

/s/ KPMG LLP
KPMG LLP
Memphis, Tennessee
March 26, 2001

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Thomas & Betts Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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Thomas & Betts Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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Thomas & Betts Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)