THOMAS & BETTS CORP - 10-K Annual Report

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

FORM 10-K

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 30, 2001.

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO____________

COMMISSION FILE NUMBER 1-4682

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

TENNESSEE 22-1326940
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

8155 T&B BOULEVARD, MEMPHIS, TENNESSEE 38125
(Address of principal executive offices) (Zip Code)

(901) 252-8000
(Registrant's telephone number, including area code)

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 11, 2002, 58,283,951 shares of the Registrant's Common Stock
were outstanding and the aggregate market value of the voting common equity held
by non-affiliates of the Registrant (based on the average bid and asked prices
of such equity on the New York Stock Exchange composite tape) was
$1,180,832,847.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held May 1, 2002, are incorporated by reference into Part III hereof.
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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

Page 2 of 87

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 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations--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 weakness and recession in the U.S. or the Corporation's other
main markets, including Canada and Western Europe;

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

- Significant changes in 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 and projected remediation technology
advances that could impact expectations of remediation expenses;

- Undiscovered liabilities arising from past acquisitions and dispositions
of businesses;

- Unexpected liabilities resulting from pending or future legal matters and
risks associated with the coverage and cost of insurance;

- Changes in customer demand for various products of Thomas & Betts that
could affect its overall product mix, margins, plant utilization levels
and asset valuations or simultaneous disruptions with a group of large
customers;

- Realization of deferred tax assets, which is dependent upon generating
sufficient taxable income prior to their expiration and the Corporation's
tax planning strategies;

- The recoverability of long-lived assets, which could be impacted if the
estimated future operating cash flows are not achieved; and

- Failure to achieve estimated savings net of estimated costs in connection
with, and unforeseen difficulties or time delays implementing, the
Corporation's comprehensive program to streamline production, improve
productivity and reduce costs in its U.S., European and Mexican
electrical products manufacturing facilities.

Page 3 of 87

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.

Page 4 of 87

PART I

ITEM 1. BUSINESS

Thomas & Betts Corporation is a leading manufacturer of connectors and
components primarily for worldwide electrical markets. It operates over 150
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 sells its products through electrical, telephone, cable and
heating, ventilation and air-conditioning distributors, directly to original
equipment manufacturers and end users, and through mass merchandisers, catalog
merchandisers and home improvement centers. Thomas & Betts pursues growth
through market penetration, new product development, and, at times,
acquisitions. See Management's Discussion and Analysis of Financial Condition
and Results of Operations--Recent History for details regarding the general
development of the business. See Note 4 in the Notes to Consolidated Financial
Statements for information on acquisitions and divestitures during 2001, 2000
and 1999.

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, Steel Structures, Communications, and HVAC. The majority of the
Corporation's products, especially 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. Sales during 2001 to any
customer by one or more of such segments did not exceed 10% of the Corporation's
consolidated net sales for 2001. For financial information regarding net sales,
earnings (loss) from continuing operations and total assets by segment for the
three years ended December 30, 2001 refer to Note 15 in the Notes to
Consolidated Financial Statements and in Management's Discussion and Analysis of
Financial Condition and Results of Operations--Segment Results set forth herein.

Electrical Segment

The Electrical segment's markets include industrial, commercial, utility
and residential construction, renovation, maintenance and repair; project
construction; and industrial OEM, primarily in North America and Europe.
Consolidated sales of the segment were $1.15 billion, $1.35 billion and $1.39
billion, or 76.8%, 76.8% and 74.1% of the Corporation's consolidated sales for
2001, 2000 and 1999, 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 and electrical enclosures;
hazardous location lighting; safety switches; and other products,

Page 5 of 87

including insulation products, wire markers, and application tooling products.
Products are sold under a variety of well-known brand names.

Electrical products are sold through electrical and utility distributors,
as well as retail outlets such as home improvement 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 lines; its
market-leading service programs; its strong history of product innovation; and
the high degree of brand-name recognition for its products among end users.

Steel Structures Segment

The Corporation designs, manufactures and markets tubular steel
transmission and distribution poles and lattice steel transmission towers for
North American power and telecommunications companies and for export. These
products are primarily sold to five types of end users: investor-owned
utilities; cooperatives, which purchase power from utilities and manage its
distribution to end users; municipal utilities; cable television operating
companies; and telephone companies. They are marketed under the Lehigh(TM),
Meyer(TM) and Thomas & Betts(R) brand names. Steel Structures segment sales were
$140.6 million, $121.9 million and $116.0 million, or 9.4%, 6.9% and 6.2% of the
Corporation's consolidated sales for 2001, 2000 and 1999, respectively.

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 $108.1 million, $178.4 million
and $264.8 million, or 7.2%, 10.2% and 14.1% of the Corporation's consolidated
sales for 2001, 2000 and 1999, 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, most notably LRC(R), Diamond-Sachs(R) and
Kold-N-Klose(R).

HVAC Segment

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. These products are sold primarily under the Reznor(R) brand name
through HVAC, mechanical and refrigeration distributors in approximately 2,000
locations throughout North America and Europe. Total HVAC segment sales were
$98.5 million, $106.9 million and $104.1 million, or 6.6%, 6.1% and 5.6% of the
Corporation's consolidated sales for 2001, 2000 and 1999, respectively.

Page 6 of 87

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 as of December 30, 2001, approximately
80% 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 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 reputation for innovation and
value based upon its ability to develop products that meet the needs of the
marketplace.

Research, development and engineering expenditures invested into new and
improved products and processes were $20.7 million, $23.0 million and $26.4
million, or 1.4%, 1.3% and 1.4% of sales for 2001, 2000 and 1999, respectively.
For 2002, the Corporation expects research and development expense to remain
relatively constant as a percentage of sales.

PATENTS AND TRADEMARKS

Thomas & Betts owns approximately 1,300 active patent registrations and
applications worldwide. The Corporation has over 1,300 active trademarks and
domain names worldwide, including: Thomas & Betts, T&B, Amerace, Anchor,
Blackburn, Bowers, Canstrut, Catamount, Center Lok, Color-Keyed, Commander,
Deltec, Diamond, DuraGard, E.K. Campbell, Eklips, Elastimold, Electroline,
Emergi-Lite, Epitome, Ever-Lok, E-Z-Code, Furse, Hazlux, Kindorf, Klik-It,
Kold-N-Klose, Locktite, LRC, Marr, Marrette, Max-Gard, Meyer, Ocal, Red Dot,
Reznor, RussellStoll, Sachs, Shamrock, Shield-Kon, Shrink-Kon, Signature
Service, Site Light, Snap-N-Seal, Sta-Kon, Star Teck, Steel City, Superstrut,
Taylor, Termaster, Ty-Fast, Ty-Rap, Union and Zinsco.

Page 7 of 87

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 held to be material to
its business.

PRACTICES RELATING TO WORKING CAPITAL

The Corporation's practices relating to working capital are discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Working Capital Improvements.

COMPETITION

Thomas & Betts' continuing ability to meet customer needs by enhancing
existing products and developing and manufacturing new products is critical to
its prominence in the electrical industry. 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 the Corporation in all
of its product lines, various companies compete with it in one or more product
lines. Some of these competitors have substantially greater sales and assets
than the Corporation. As Thomas & Betts works to enhance its product offerings,
these companies will most likely 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 its products. The activities of the Corporation's competitors
designed to enhance their own product offerings, coupled with any unforeseeable
changes in customer demand for various products of Thomas & Betts, could affect
the Corporation's overall product mix, margins, plant utilization levels and
asset valuations. Management believes that continued consolidation of the
industry could further increase competitive pressures in the industry.

EMPLOYEES

As of December 30, 2001, the Corporation and its subsidiaries had
approximately 11,000 full-time employees worldwide. Employees of the
Corporation's foreign subsidiaries in the aggregate comprise approximately 30%
of all employees. Of the total number of employees, approximately 30% are
represented by trade unions. The Corporation believes its relationships with its
employees and trade unions are good.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

The Corporation is subject to federal, state, local and foreign
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.

Page 8 of 87

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 30, 2001, refer to Note 16 of
Notes to Consolidated Financial Statements contained herein. Export sales
originating in the U.S. were approximately $46 million, $57 million and $55
million for 2001, 2000 and 1999, respectively.

ITEM 2. PROPERTIES

As of December 30, 2001, the Corporation has over 150 plant, office,
distribution, storage and warehouse facilities, occupying approximately
8,389,000 sq. ft. in 26 states, the Commonwealth of Puerto Rico and
approximately 20 countries. This space is composed of approximately 5,470,000
sq. ft. of manufacturing space, 2,344,000 sq. ft. of office, distribution,
storage and warehouse space and 575,000 sq. ft. of idle space.

The Corporation's manufacturing locations by segment as of December 30,
2001 are as follows:

Page 9 of 87

In addition to the above mentioned 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 709,000 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 575,000 sq. ft. of idle manufacturing and
office space in Georgia, Kansas, Pennsylvania, New Jersey, Missouri,
Massachusetts, South Carolina and the U.K., not included in the above table.

As of December 30, 2001, the following plants, included in the above
manufacturing locations, were operating at capacities significantly below
historical levels and are not expected to have significant improvements stemming
from the Electrical segment's manufacturing efficiency and consolidation
initiatives discussed more fully in Management's Discussion and Analysis of
Financial Condition and Results of Operations. Management expects these
facilities to operate at less than optimal capacity, thus adversely impacting
the Corporation's results of operations, until the domestic economy fully
recovers from the recession and demand for the Corporation's products returns to
historical levels.

As of December 30, 2001, the following manufacturing plants are scheduled
to be closed during 2002.

Page 10 of 87

ITEM 3. LEGAL PROCEEDINGS

Shareholder Litigation

During 2000 certain shareholders of the Corporation filed five separate
class-action suits in the United States District Court for the Western District
of Tennessee against the Corporation, Clyde R. Moore and Fred R. Jones. The
complaints allege 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 August 21, 2000, were damaged when the market value of the
stock dropped by nearly 29% on December 15, 1999, dropped by nearly 26% on June
20, 2000 and fell another 8% on August 22, 2000. An unspecified amount of
damages is sought.

On December 12, 2000, the Court issued an order consolidating all five of
the actions into a single action. The consolidated complaint essentially repeats
the allegations in the earlier complaints.

The Corporation intends to contest the litigation vigorously and has filed
a motion to dismiss. At this stage, 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 in connection with this litigation.

A parallel federal securities law class action was filed by the same
plaintiffs against KPMG LLP, the Corporation's independent auditors, mirroring
the Rule 10b-5 allegations in the action discussed above against the
Corporation. This suit was consolidated with the action against the Corporation
on August 14, 2001.

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 are amounts to be agreed to by Tyco and
the Corporation, or 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 was substantially below the Agreed
Amounts. Management reviewed the Tyco Statement Calculation and disputed
substantially all of the differences between the Tyco Statement Calculation and
the Corporation's records. As of December 31, 2000, Tyco held back $35 million
of proceeds.

Subsequent to 2001, the Corporation settled this dispute with Tyco. Under
terms of the settlement agreement, Tyco will retain $35 million held for
post-closing adjustments on working capital and long-term tangible assets.
Thomas & Betts recorded an $8 million net-of-tax charge to gain on sale of
discontinued operations in the fourth quarter of 2001 to reflect this
settlement.

Page 11 of 87

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 or other types of relief and some matters may remain unresolved for
several years. Such matters may be subject to many uncertainties and outcomes
are not predictable with assurance. The Corporation has provided for losses to
the extent probable and estimable; however, additional losses, even though not
anticipated, could be material with respect to financial position, results of
operations or liquidity in any given period.

Environmental Matters

Owners and operators of sites containing hazardous substances, as well as
generators of hazardous substances, are subject to broad and retroactive
liability for investigatory and cleanup costs and damages arising out of past
disposal activities. Such liability in many cases may be imposed regardless of
fault or the legality of the original disposal activity. 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 Connecticut (Monroe); Georgia (Decatur County); Indiana
(Medora); Massachusetts (Attleboro, Canton); New Hampshire (New Milford); New
Jersey (Butler, Elizabeth); New York (Horseheads); and Pennsylvania (Perkasie,
Pittsburgh). The sites further include active manufacturing locations in New
Jersey (Hackettstown); New Mexico (Albuquerque); South Carolina (Lancaster);
Alabama (Mobile); Massachusetts (Boston); and Wisconsin (Hager City).

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

Page 12 of 87

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. The Corporation believes that
the indemnity of ITT is reliable; however, there can be no assurances that any
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 nineteen 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 certain environmental liabilities, if any, for
former Augat manufacturing locations in Alabama (Montgomery Plants 1 & 3);
Massachusetts (Mashpee); South Carolina (Inman); and Texas (Lewisville); and for
two offsite alleged disposal locations, in Massachusetts (The Ledge and
Re-Solve); and one location in 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.

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.

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 30, 2001.

Page 13 of 87

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 being 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.

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).

Mr. Raines was a partner of the law firm of Glankler Brown PLLC for more
than the past five years.

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 1, 2002.
There is no arrangement or understanding between any officer and any person,
other than a director or executive officer of

Page 14 of 87

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.

Page 15 of 87

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 11, 2002, the Corporation had 3,646 shareholders of record.

On July 24, 2001, the Corporation's Board of Directors approved a change in
the Corporation's dividend payment practices and elected to retain its future
earnings to fund the development and growth of its business. The Corporation
does not presently anticipate declaring any cash dividends on the Corporation's
common stock in the foreseeable future. Future decisions concerning the payment
of cash dividends on the Corporation's common stock will depend upon its results
of operations, financial condition, capital expenditure plans and other factors
that the Board of Directors may consider relevant.

The Corporation's revolving credit agreements contain provisions that could
restrict, as a practical matter, the Corporation's ability to pay dividends
during the term of those agreements. See Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources--Financing Activities for a discussion of the material provisions of
the Corporation's credit agreements.

Page 16 of 87

ITEM 6. SELECTED FINANCIAL DATA

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

- ------------------------------

(a) Net earnings (loss) from continuing operations for 2000 and prior periods
have been restated for the change in inventory costing method from LIFO to
FIFO during 2001 for all inventories not previously accounted for on the
FIFO method. This change reduced the net loss from continuing operations in
2000 by $14.7 million; reduced net earnings from continuing operations in
1999 by $6.5 million; increased net earnings from continuing operations in
1998 by $1.0 million; and reduced net earnings from continuing operations in
1997 by $1.0 million. See Note 3 of the Notes to Consolidated Financial
Statements.

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

RECENT HISTORY

The following narrative reviews the many strategic, procedural, operational
and resource issues addressed by Thomas & Betts since mid-2000 as part of its
effort to restore the Corporation to a position of financial and competitive
leadership in the electrical products industry.

SUMMARY OF PAST STRATEGIES

During the mid- to late-1990s, Thomas & Betts pursued certain strategies
and undertook a number of initiatives designed to drive profitable growth. These
strategies included:

- Enhancing the Corporation's participation in higher-growth electronics
markets by acquiring Augat, Inc.;

- Reducing manufacturing costs by moving many production lines to regions
with historically low labor costs and redirecting engineering resources
away from new product development;

- Expanding the Corporation's core electrical products portfolio and market
presence through acquisitions;

- Structuring the organization as a matrix with overlapping managerial
responsibilities for product and geographic management;

Page 17 of 87

- Implementing new global financial and enterprise resource planning
systems; and

- Re-positioning the Corporation to capitalize on business-to-business
(B2B) e-commerce opportunities.

These strategies and related activities initially delivered positive
results. Over time, however, the diverse and broad nature of the various
strategies put unanticipated strain on the Corporation's resources and adversely
affected its focus on its core competencies and underlying processes and
controls.

These underlying process, control and organizational issues were
exacerbated by problems associated with the implementation of a new global order
processing system in November 1999. The launch of the new system severely
disrupted the Corporation's global operations, causing significant delays in
product shipments, serious problems with pricing and invoicing, and a
deterioration in relations with its core distributor network.

NEW MANAGEMENT TEAM

As the Corporation worked to recover from the disruption caused by the
order processing system implementation, initial changes were made to the senior
management team. In March 2000, Thomas & Betts hired John P. Murphy as chief
financial officer.

Recognizing that the Corporation's use of working capital significantly
exceeded that of peer companies in the electrical industry and that improving
its cash position was fundamental to laying a foundation for improved
performance, the new financial management began a detailed study of accounts
receivable and inventory policies, controls and procedures beginning early in
the second quarter 2000.

This review of accounts receivable and inventory management led to the
discovery of issues with many of the Corporation's processes, controls and
systems and the conclusion that significant charges were required in a number of
areas.

The Corporation reported its second quarter 2000 results in August 2000.
These results included $224 million in special charges to continuing operations.
Subsequently, Thomas & Betts restated its financial statements for the years
1996, 1997, 1998, 1999, and 2000 to reflect the effect of certain of these
charges in the appropriate reporting period.

In August 2000, the Corporation's Board of Directors appointed a new chief
executive officer, T. Kevin Dunnigan. Dunnigan was previously the Corporation's
chairman and chief executive officer and spent 35 years with Thomas & Betts
before retiring from active management in 1997.

The scope of the underlying issues that required attention before Thomas &
Betts could achieve a sustainable improvement in earnings was extensive.
Strengthening the Corporation's leadership team was considered critical to
effectively manage the anticipated changes.

In October 2000, Thomas & Betts hired Dominic J. Pileggi as president of
the electrical products business. Pileggi formerly led the Corporation's
electrical business before leaving the Corporation in 1995.

In addition to changes made at the senior management level, Thomas & Betts
has enhanced the quality of its management team in all areas and at all levels
of its operations over the past 18 months. Early in the turnaround effort, as
the Corporation intensified its effort to reinforce controls and improve
processes, the corporate and divisional accounting leadership was

Page 18 of 87

strengthened. In June 2000, the Corporation hired a new corporate controller
and, in December 2000, hired a new controller for its largest division,
electrical products. In January 2001, Thomas & Betts restructured management of
the internal audit services and significantly strengthened the leadership and
staff of this function.

The new management team has pursued a focused and disciplined program to
comprehensively change the way Thomas & Betts manages and operates its
businesses.

WORKING CAPITAL IMPROVEMENTS

During the mid- to late-1990s, management of working capital was impeded
primarily because of the magnitude of Thomas & Betts' strategic initiatives, and
the lack of clear lines of responsibility inherent in the matrix management
structure. The Corporation also was disadvantaged by an overly complex pricing
structure in its largest business (electrical products sold in the U.S.) and
technical systems issues that adversely affected pricing and invoicing during
the fourth quarter 1999 and the beginning of 2000. These factors led to an
extensive backlog of outstanding customer payment deductions and credits that
required resolution before the Corporation could show significant improvement in
accounts receivable. Lacking sufficient internal resources to resolve this
backlog in a timely manner, in September 2000, Thomas & Betts retained a leading
consulting firm experienced in managing claims and collections to supplement its
accounts receivable staff.

In order to eliminate the cause of the accounts receivable backlog, Thomas
& Betts also initiated a multi-faceted project to analyze and revise processes
associated with its revenue cycle (pricing, quotations, order entry, ship from
stock and debit, returned goods and claims processing) in the first quarter
2001. By the time the project was completed in the fourth quarter 2001,
significant changes had been made to all of the business processes.

As a result of all of the initiatives related to accounts receivable,
Thomas & Betts has achieved a strong improvement in collections, a significant
decline in the number and rate of payment deductions taken by its customers, and
a significant reduction of its investment in accounts receivable. Since the end
of the second quarter 2000, the Corporation has reduced overall Days Sales
Outstanding by 43%.

Using a combination of internal resources and third-party consultants,
Thomas & Betts also undertook a thorough review of, and has comprehensively
revised, all facets of its global inventory management and control processes.
This initiative was completed in the second quarter 2001 and the Corporation
believes that inventory control has been substantially strengthened.

At year-end 2001, Thomas & Betts had reduced its investment in inventory by
approximately 42% compared to levels at the end of second quarter 2000, due
primarily to the Corporation's efforts to tightly manage its inventory in weak
market conditions and from divestitures and impairments.

The Corporation will continue to refine inventory management and believes
that it may achieve additional efficiencies as a result of the manufacturing
restructuring initiative currently underway. See "Manufacturing Strategy
Redirected."

MANAGEMENT STRUCTURE REVISED

Beginning in 1997, Thomas & Betts employed a complex matrix management
structure with business operations managed along three axes (market, product and
geographic) and functional responsibilities, such as legal, operations, finance
and human resources were centralized. The

Page 19 of 87

structure raised issues concerning lines of responsibility for profitability and
weakened the Corporation's ability to execute effectively. To support this
matrix structure, the Corporation utilized a complex allocation methodology for
financial budgeting, forecasting and reporting.

In August 2000, Thomas & Betts eliminated the matrix organizational
structure and replaced it with a fully integrated, market-driven, divisional
structure. Under this model, each business leader is responsible, and
accountable, for all manufacturing, engineering, marketing, business
development, and associated support activities for their business. They 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 was significantly revised to better align individual goals
with corporate strategies. Managing working capital is now a key performance
metric for the incentive compensation program.

Management believes that simplifying the management structure, and
eliminating the complex financial allocation system required to support it, has
also enhanced the Corporation's focus on financial and business performance.
Thomas & Betts continues to refine its financial budgeting, forecasting and
reporting processes to further improve such performance.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES REDUCED

The Corporation's focus on operating as a tightly managed, decentralized
organization with minimal corporate overhead has led to significant reductions
in operating expenses. Since initiating the turnaround program, Thomas & Betts
has reduced selling, general and administrative expenses (SG&A) as a percent of
sales from the mid-twenties to 21.7% for 2001. The Corporation's targeted goal
is to achieve SG&A expense as a percentage of annual sales at approximately 20%
or lower.

B2B E-COMMERCE STRATEGY REDIRECTED

In the mid- to late-1990s, Thomas & Betts also committed significant
resources to position itself as a leader in the then-emerging
business-to-business (B2B) e-commerce market. Given the dynamics of the
electrical industry, where distribution is the primary channel to market, this
strategy adversely affected the relationship of the Corporation with its
electrical distributor network. It also diverted valuable resources from the
day-to-day operations of the Corporation.

In August 2000, senior management positions associated with the B2B
strategy were eliminated and associated resources were redirected to complement
and more directly support the e-business needs of the Corporation's
distributors. An example of this support is T&B Access(R), a web-based service
that allows distributors to track order status and place emergency orders
outside normal business hours. T&B Access helps reduce transaction costs for
both the Corporation and its distributor customer base.

During 2001, Thomas & Betts continued to refine and enhance its information
systems to support changes in its business policies and procedures. The
Corporation believes that it has effective information management systems that
fully support its turnaround initiatives and overall management of its
businesses.

ACQUISITION ACTIVITY

During the mid- and late-1990s, the Corporation broadened its product
portfolio through acquisitions. Over five years, Thomas & Betts completed
approximately 30 acquisitions or

Page 20 of 87

mergers. The Corporation now believes that many product lines and facilities
acquired during this time period were not optimally integrated and others proved
to be non-strategic. Together with the transfer of many manufacturing operations
to low-cost areas, these activities led Thomas & Betts to record multiple
restructuring charges during the mid- and late-1990s.

The largest of these acquisitions, Augat Inc. in 1996, greatly expanded
Thomas & Betts' presence in the higher-growth electronics market. Over time, it
became evident that the significantly different competitive dynamics in the
electronics industry (where products are made to order for original equipment
manufacturers) did not leverage the Corporation's core manufacturing
competencies. In addition, consolidation in the electronics industry favored
larger and more established competitors than Thomas & Betts.

In July 2000, the Corporation sold its Electronics OEM business, which
included virtually all of the products acquired from Augat. This divestiture
effectively removed Thomas & Betts from the electronics industry and reduced
corporate revenues by approximately 30%.

Over the past 18 months or so, Thomas & Betts has divested or exited
several other smaller product lines that were not performing at an acceptable
level or did not complement the Corporation's core product portfolio. The
largest divestiture in 2001 was the sale of commercial lighting product lines
marketed under the American Electric(R) and Dark-to-Light(R) brand names. In
2001, the Corporation also divested its ground rod business and began to exit
the low-voltage circuit protection market.

For the foreseeable future, management expects to continue to focus on
achieving organic growth through enhanced marketing and research and development
in its electrical products business.

MANUFACTURING STRATEGY REDIRECTED

Thomas & Betts pursued a manufacturing strategy aimed at reducing costs by
moving production to areas with historically low labor costs. During the mid- to
late-1990s, the Corporation moved approximately 30 product lines or facilities
to new locations. In some cases, these manufacturing transfers affected the
Corporation's ability to service its distributors in a timely and cost-effective
manner. In 2000, despite these transfers, Thomas & Betts' manufacturing base
remained widely dispersed and structural costs remained high. A weakening global
economy contributed to high inventory levels during this period and into 2001.

Thomas & Betts addressed the issue of excess inventory by substantially
reducing production at virtually all of its electrical products facilities and
closing several smaller plants in the second half of 2000 and first half of
2001. Reducing production led to higher-than-normal unabsorbed fixed costs and
unfavorable manufacturing variances, which has adversely affected the
Corporation's performance since the second quarter of 2000.

In December 2001, Thomas & Betts announced a more comprehensive program to
streamline and consolidate electrical products manufacturing in the United
States, Europe and Mexico. The Corporation believes that restructuring these
manufacturing operations is critical to completing its return to profitability
within a reasonable time frame.

The manufacturing initiatives have three components: revising manufacturing
processes to improve equipment and labor productivity; consolidating
manufacturing capacity; and investing in tooling, equipment and training to
achieve superior levels of productivity. Thomas & Betts has retained an
internationally prominent manufacturing-consulting firm to assist with this
project.

Page 21 of 87

In 2001, Thomas & Betts began the process of closing 12 facilities and
implementing efficiency improvements in the remaining facilities affected by the
manufacturing project. Teams comprised of Thomas & Betts personnel and
consultants are comprehensively reviewing all manufacturing processes on a
plant-by-plant basis for opportunities to improve productivity and efficiency.
Examples of areas being addressed include operating standards, production
planning and reporting, operator and supervisor training, preventive maintenance
processes, and inventory forecasting and planning.

Thomas & Betts expects on-going pre-tax savings of approximately $45 to $50
million annually from the manufacturing restructuring program, which should be
substantially completed by the end of the third quarter 2002.

Pre-tax charges associated with the project will total approximately $80 to
$90 million. $49 million in charges were recorded in the fourth quarter 2001 and
the remaining $30 to $40 million in pre-tax charges are expected to be recorded
in 2002, primarily in the first half of the year.

Total cost of the project is expected to be $100 to $110 million, including
approximately $20 million for capitalized equipment and tooling. Approximately
1,600 jobs, or 15% of the Corporation's global workforce, are expected to be
eliminated.

Charges associated with the program include approximately $60 million in
cash costs with the remainder in non-cash costs. Cash costs are primarily for
severance, consulting fees, equipment moves and other exit costs. Non-cash costs
are largely for asset write-offs associated with the closing of facilities.

Thomas & Betts expects the net effect of the project to negatively impact
2002 pre-tax earnings by approximately $10 to $20 million, and to negatively
impact 2002 cash flow by $40 to $45 million. See "Business Risks" for the risks
related to the manufacturing project described above.

ELECTRICAL PRODUCTS BUSINESS REORGANIZED

Thomas & Betts has also taken action to address the performance of its
largest business, electrical products sold through distributors.

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

In the mid- to late-1990s, product management in the electrical business
focused on reducing product costs rather than on traditional product/brand
management activities such as pricing, competitive positioning, sales support,
and new product development. As a result, the Corporation did not fully leverage
the substantial brand equity of many of its leading products to help gain market
share and improve profits.

Late in the first quarter 2001, Thomas & Betts hired an experienced
executive to lead product management for the electrical business. The department
is now focused on the full complement of brand management activities.

In 2002, the electrical business strategically realigned many of its
marketing activities and shifted from promotions based on price to promotions
focused on strengthening the Corporation's

Page 22 of 87

relationships with the end users of its products: electricians, contractors and
MRO (maintenance, repair and operations) engineers.

PRODUCT ENGINEERING AND DEVELOPMENT ENHANCED

Throughout its 100+ year history, product engineering has consistently been
a strength of Thomas & Betts. However, during the late 1990s, the Corporation
largely redirected its engineering expertise toward other strategies, as
discussed above, rather than developing new products.

In 2001, Thomas & Betts began to rebuild its engineering capabilities with
a goal of increasing the percent of sales generated by new products over the
next few years. In the first quarter 2002, the electrical business hired a
former Thomas & Betts executive to lead its engineering and new product
development efforts.

During 2001, Thomas & Betts introduced innovative new product designs in
more than 30 product categories, expanding its presence in its core market
sectors and strengthening its market leadership position. A key goal of the
Corporation's R&D program is to develop new products that lower the cost of
installation for its end-user customers, particularly through the use of
automation.

ELECTRICAL PRODUCTS PRICING RE-ALIGNED

Thomas & Betts' electrical business operates in highly competitive markets.
The Corporation stocks thousands of products and has relationships with more
than 6,000 electrical and utility distributors, retail outlets and mass
merchandisers. Thomas & Betts uses a variety of promotional programs, including
volume-incentive discount programs and ship from stock and debit, to compete
effectively.

Over the past several years, however, Thomas & Betts moved away from highly
structured incentive or discount programs and increasingly allowed electrical
field sales personnel in the U.S. to offer price concessions on a per-product,
per-customer basis. This trend led to significant pricing complexity, which
inevitably gave rise to many of the customer invoice disputes discussed earlier
under "Working Capital Improvements."

In the third quarter of 2000, the authority to set prices was
re-established as a fundamental responsibility of the product management
function. In late 2000 and 2001, the Corporation simplified the volume-incentive
discount provision of its Signature Service(SM) preferred customer program to
enhance compliance and eliminate the practice of customer-specific pricing.

During 2001, Thomas & Betts took additional steps to manage pricing for its
electrical business in the United States more strategically. A task team was
created to analyze pricing and comprehensively revise and simplify the
Corporation's policies and procedures related to pricing. A new pricing schedule
was introduced to U.S.-based electrical distributors in the fourth quarter 2001
and the new prices took effect January 2, 2002. In addition, distributor
incentives continue to be revised to support a more profitable product mix.
Controls have been further enhanced to ensure compliance with the revised
incentive and pricing programs.

FREIGHT COSTS UNDER REVISION

Unusually high freight and distribution costs have also adversely affected
Thomas & Betts' performance over the past several years. The Corporation has
taken significant initial steps to reduce freight costs, including consolidating
customer shipments and revising freight policies

Page 23 of 87

incorporated in its Signature Service preferred customer program. Thomas & Betts
experienced a modest improvement in freight performance beginning in the second
half of 2001. The Corporation continues to examine ways to cost-effectively meet
distributors' expectations of more frequent and smaller quantity shipments.

SUMMARY OF RECENT HISTORY

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 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 2002.

2002 OUTLOOK

Since the new management team initiated the turnaround program
approximately 18 months ago, the Corporation has made extensive changes to the
way it manages and operates its businesses including significantly reducing
selling, general and administrative expenses, divesting or exiting product lines
not achieving acceptable returns, closing excess warehousing facilities,
consolidating certain manufacturing operations, revising U.S. electrical
products pricing structure, reorganizing its selling structure and promotional
strategies to improve product mix, and comprehensively overhauling working
capital.

These actions have significantly strengthened the Corporation's balance
sheet and have begun to positively affect its segment and net results.
Management expects to continue to realize the benefit of these changes on
earnings throughout 2002 and in subsequent years.

Assuming a reasonable recovery in general economic conditions in the second
half of the year, the Corporation's targeted goal is to achieve low double-digit
segment earnings in the fourth quarter of 2002. The Corporation expects first
quarter 2002 sales to be down 10% to 15% compared to the year-ago period,
excluding sales from previously divested product lines. First quarter 2002 net
results are expected to be approximately flat with the first quarter 2001,
excluding the costs associated with implementing the manufacturing initiatives.

Page 24 of 87

YEAR 2001 COMPARED WITH 2000

CONSOLIDATED RESULTS

- ---------------

(a) Results for 2000 have been restated for the change in inventory costing
method from LIFO to FIFO during 2001 for domestic and certain foreign
inventories.

NET SALES

The Corporation's net sales decreased approximately 15% to $1.5 billion in
2001 from $1.8 billion in 2000. The decrease is primarily due to lower sales
volume in its Electrical and Communications segments resulting from weak market
conditions. In addition, net sales for 2001 were also negatively impacted by
previous divestitures of product lines in both the Electrical and Communications
segments. Excluding revenues from previously divested product lines,
consolidated sales were down approximately 12% as compared to the prior year.

GROSS MARGIN

The gross margin percent for the year 2001 was 22.6% of net sales compared
with 16.5% in 2000. Gross margins in both periods have been negatively impacted
by unabsorbed manufacturing fixed costs associated with relatively low capacity
utilization. Gross margin for 2001 was also adversely impacted by $4 million in
fees for project consultants associated with the manufacturing efficiency and
consolidation initiatives. The 2001 to 2000 gross margin comparison is impacted
by the following:

- Year 2000 reflected increased provisions for accounts receivable.

- Year 2000 included elevated freight costs due to more expensive freight
expediting practices in place during part of 2000.

- Year 2000 included higher charges than 2001 for write-downs for
slow-moving, excess and obsolete inventory. The Corporation also recorded
an additional write-down in 2000 for specifically identifiable
slow-moving, excess and obsolete inventory primarily attributable to
divested product lines.

Page 25 of 87

- Year 2000 included further inventory write-downs totaling approximately
$24 million related to product lines considered to be non-strategic at
year end 2000 versus $3 million in 2001.

EXPENSES

Selling, general and administrative (SG&A) expenses were 21.7% of sales in
2001, versus 25.3% in 2000. The significant decreases were primarily in legal,
auditing and accounting fees and expenses; consulting and temporary service
costs; corporate severance expense; information technology expenses;
distribution expenses; and employee compensation from the employee headcount
reductions.

Research and development expense represented 1.4% and 1.3% of sales for
years 2001 and 2000, respectively. For 2002, the Corporation expects research
and development expense to remain relatively constant as a percentage of sales.

The Corporation recorded fourth quarter pre-tax charges of $49.1 million to
continuing operations for the manufacturing initiatives previously discussed. Of
the $49.1 million recorded, impairment charges totaled $30.0 million and
restructure charges totaled $11.7 million. The remaining charges were included
in cost of sales. The Corporation has begun the process of closing certain
facilities, primarily in the U.S., and implementing improvements in the
remaining facilities affected by the program. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Recent History."

The 2001 results also include $39.8 million in pre-tax charges on the sale
of the Corporation's American Electric and Dark-to-Light lighting product lines,
which closed in October 2001. These charges include $36.6 million for impairment
on long-lived assets, primarily goodwill, associated with these product lines.
Net proceeds of $24.5 million were received during 2001 from this sale.

During December 2001, management determined that certain product lines in
the Communication segment were non-strategic for the Corporation. Accordingly,
the inventories and long-lived assets for these product lines were reflected as
assets held for sale at their approximate net realizable value of $49.4 million
as of December 30, 2001. The 2001 results include pre-tax charges of $16.7
million in association with the impairment of long-lived assets of these product
lines.

During 2000, the Corporation recorded impairment charges of approximately
$33 million. 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).

INCOME FROM UNCONSOLIDATED COMPANIES

Income from unconsolidated companies includes equity income from the
Corporation's joint ventures and other equity investments. The reduction in 2001
reflects primarily lower domestic operating results related to these entities
due to weak market conditions. See also Note 14 in the Notes to the Consolidated
Financial Statements.

Page 26 of 87

INTEREST EXPENSE--NET

Interest expense-net includes interest income of $7.1 million in 2001 and
$8.2 million in 2000. The decrease in interest expense is due primarily to lower
debt levels during the current year as compared to the prior year.

OTHER EXPENSES (INCOME)--NET

Other expense (income)--net for 2001 includes expense of $27 million for
the settlement of a patent infringement lawsuit. Year 2000 includes $15 million
received from the favorable settlement of a trade secret and trade dress
infringement lawsuit, which was partially offset by losses of $3.3 million on
sale of receivables pursuant to an asset securitization program that was
terminated during 2000.

INCOME TAXES

The Corporation's 2001 and 2000 effective tax rates for continuing
operations are a benefit of (25.8)% and (28.4)%, respectively.

DISCONTINUED OPERATIONS

On July 2, 2000, the Corporation completed the sale of substantially all of
its Electronics OEM business for $750 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 sale of, discontinued operations. Subsequent to 2001, the Corporation reached
a settlement agreement which stipulates that Tyco Group S.A.R.L., the purchaser,
will retain $35 million held for post-closing adjustments on working capital and
long-term tangible assets. In the fourth quarter 2001, the Corporation recorded
an $8 million net-of-tax charge to gain on sale of discontinued operations to
reflect this settlement. See Note 4 in Notes to Consolidated Financial
Statements.

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, asset impairments, restructuring
charges and certain other adjustments. Beginning in the first quarter 2001, the
Corporation began reporting its Steel Structures and HVAC businesses as separate
segments. These businesses were previously included in Other results.
Information for the prior period has been restated to conform to the new basis
of presentation.

Continuing operations losses for the Electrical and Communications segments
decreased by $110 million and $15 million, respectively, from the prior year.
Earnings for the Steel Structures segment increased $8 million while earnings
for the HVAC segment remained relatively flat.

ELECTRICAL

Sales for the Electrical segment decreased to $1.15 billion in 2001 from
$1.35 billion in 2000 due primarily to lower sales volumes resulting from weak
market conditions. Results for 2001 were adversely impacted by the continued
slow down in industrial and construction markets. In addition, the aggregate
adverse net sales impact on 2001 from divested product lines

Page 27 of 87

when compared to 2000 was approximately $47 million. Year 2001 segment loss was
$27.3 million as compared to segment loss of $137.4 million for 2000. The 2000
segment results were significantly impacted by charges taken in 2000 while 2001
segment results were positively impacted as the result of actions taken by
management to reduce manufacturing and SG&A expenses. Results in 2001 and 2000
were negatively impacted by unabsorbed manufacturing fixed costs associated with
relatively low capacity utilization previously mentioned plus deterioration in
its unconsolidated subsidiaries' performance.

STEEL STRUCTURES

Sales for the Steel Structures segment increased to $140.6 million in 2001
from $121.9 million in 2000. Earnings for the Steel Structures segment increased
from $10.2 million in 2000 to $18.2 million in 2001. Higher sales volumes for
2001 are due to added capacity and strong demand for infrastructure to support
power grids. The 2000 earnings were significantly impacted by charges taken in
that year while favorable product mix in 2001 boosted segment earnings.

COMMUNICATIONS

Sales for the Communications segment decreased to $108.1 million in 2001
from $178.4 million in 2000 largely as a result of the depressed domestic market
conditions in the cable TV (CATV) and telecom markets. Segment loss for 2001 was
$10.2 million as compared to $25.6 million for 2000. The 2000 results were
significantly impacted by charges taken in that year while 2001 segment results
were positively affected by efforts made to reduce manufacturing and SG&A
expenses to better match current demand levels.

HVAC

Sales for HVAC decreased to $98.5 million in 2001 from $106.9 million in
2000. Sales were adversely affected by reduced demand for made-to order products
due to soft construction markets. Segment earnings remained relatively flat at
$1.2 million and $1.5 million for 2001 and 2000, respectively.

YEAR 2000 COMPARED WITH 1999

Page 28 of 87

- ---------------

(a) Results for 2000 and 1999 have been restated for the change in inventory
costing method from LIFO to FIFO made during 2001 for domestic and certain
foreign inventories.

NET SALES

The Corporation's 2000 net sales decreased $117.6 million from 1999,
reflecting reduced sales volumes 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 1999 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 a new order processing
system. After completion of the implementation of the new order processing
computer system in late 1999, the Corporation experienced significant
disruptions, 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 16.5% of sales compared with
26.2% 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.

- 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 low capacity utilization. The
Corporation significantly cut back production in the second half of 2000,
when it became apparent the distribution

Page 29 of 87

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 more
expensive 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.

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 current business and
accounting processes and controls, 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 efforts to stabilize and enhance existing global
order processing, finance, and human resources systems, as well as
support the decision to abandon certain B2B e-commerce initiatives
including writing off certain software.

- Distribution expenses (approximately $14 million).

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.

Research and development expense remained relatively unchanged at 1.3% and
1.4% of sales for years 2000 and 1999, respectively.

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 would dispose of certain product lines by
sale or otherwise. The Corporation considered net cash flows, including the
expected proceeds from the sale of assets of those product lines, and as a
result, 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).

Page 30 of 87

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 domestic operating results related to those entities.

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 2000. Resulting net interest expense in 2000
remained relatively flat compared with 1999.

OTHER EXPENSE (INCOME)--NET

Other expense (income)--net for 2000 includes $15 million received 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 received $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 (28.4)%. The 1999 effective tax rate for continuing operations is a
benefit of (35.5)% 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.

DISCONTINUED OPERATIONS

On July 2, 2000, the Corporation completed the sale of substantially all of
its previous Electronics OEM business for $750 million, subject to certain
adjustments. The Electronics OEM sale was accounted for as a discontinued
operation in accordance with Accounting Principles Board Opinion No. 30.
Accordingly, results from continuing operations for 2000 and 1999 exclude the
impact of the Electronics OEM business. The net results for 2000 and 1999 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.

SEGMENT RESULTS

The Electrical segment loss from continuing operations was $137.4 million
for 2000 as compared to segment earnings of $107.0 million for 1999. Segment
earnings for Steel Structures for 2000 were $10.2 million as compared to $15.0
million for 1999. Communications segment loss from continuing operations for
2000 was $25.6 million as compared to $9.3 million for 1999. The HVAC segment
earnings for 2000 were $1.5 million as compared to $7.0 million for 1999.

Page 31 of 87

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.

STEEL STRUCTURES

Sales for the Steel Structures segment increased to $121.9 million in 2000
from $116.0 million in 1999 due in part to the Corporation becoming an exclusive
supplier to certain Steel Structure customers in 2000.

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 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.

HVAC

Sales for the HVAC segment remained relatively unchanged at $106.9 million
for 2000 as compared to $104.1 million for 1999.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements contained in this Report requires
the use of estimates and assumptions to determine certain amounts reported as
net sales, costs, expenses, assets or liabilities and certain amounts disclosed
as contingent assets or liabilities. There can be no assurance that actual
results will not differ from those estimates or assumptions. The Corporation's
significant accounting policies are described in Note 1 of the Notes to
Consolidated Financial Statements. Management believes the Corporation's most
critical accounting policies include: Revenue Recognition; Inventory Valuation;
Impairment of Long-Lived Assets; Income Taxes; and Environmental Costs.

- Revenue Recognition: The Corporation recognizes revenue in accordance
with the Securities and Exchange Commission's Staff Accounting Bulletin
No. 101. The Corporation recognizes revenue when finished products are
shipped to unaffiliated customers and both title and risks of ownership
are transferred. Sales discounts, quantity and price rebates, allowances
and warranty costs are estimated based on contractual commitments and
experience and recorded in the period in which the sale is recognized.
Certain customers have the right to return goods under certain
circumstances and those returns, which are reasonably estimable, are
accrued at the time of shipment. Management analyzes historical returns
and allowances, current economic trends and

Page 32 of 87

specific customer circumstances when evaluating the adequacy of accounts
receivable related reserves and accruals.

- Inventory Valuation: The Corporation periodically evaluates the carrying
value of its inventories to ensure they are carried at the lower of cost
or market. Such evaluation is based on management's judgement and use of
estimates. Such estimates incorporate inventory quantities on-hand, sales
forecasts for particular product groupings, planned dispositions of
product lines and overall industry trends.

- Impairment of Long-Lived Assets: The Corporation follows the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." SFAS No. 121 establishes accounting standards
for the impairment of long-lived assets such as property, plant and
equipment, certain identifiable intangibles and goodwill. For purposes of
recognizing and measuring impairment of long-lived assets, the
Corporation evaluates assets for associated product groups. The
Corporation reviews long-lived assets to be held and used for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable. If the sum of the
undiscounted expected future cash flows is less than the carrying amount
of the assets, the assets are considered to be impaired. Impairment
losses are measured as the amount by which the carrying amount of the
assets exceeds the fair value of the assets. When fair values are not
available, the Corporation estimates fair value using the expected future
cash flows discounted at a rate commensurate with the risks associated
with the recovery of the assets. Assets to be disposed of are reported at
the lower of carrying amount or fair value less costs to sell. See
"Recently Issued Accounting Statements" for a description of SFAS No.
142, "Goodwill and Other Intangible Assets" and SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets." The Corporation
will be required to implement these new accounting standards during 2002.
The Corporation has not determined the impact from the adoption of these
standards.

- Income Taxes: The Corporation uses the asset and liability method of
accounting for income taxes. That method recognizes the expected future
tax consequences of temporary differences between book and tax bases of
assets and liabilities and provides a valuation allowance based on a
more-likely-than-not criteria. The Corporation has valuation allowances
for deferred tax assets primarily associated with operating loss
carryforwards, tax credit carryforwards and deferred state income tax
assets. Realization of the deferred tax assets is dependent upon the
Corporation's ability to generate sufficient future taxable income and,
if necessary, execution of its tax planning strategies. Management
believes that it is more-likely-than-not that future taxable income,
based on enacted tax law in effect as of December 30, 2001, will be
sufficient to realize the recorded deferred tax assets net of existing
valuation allowances. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax
planning strategies, which involve estimates and uncertainties, in making
this assessment. Tax planning strategies include primarily sales of
non-core assets. Projected future taxable income is based on management's
forecast of the operating results of the Corporation. Management
periodically reviews such forecasts in comparison with actual results and
expected trends. In the event management determines that sufficient
future taxable income, in light of tax planning strategies, may not be
generated to fully realize net deferred tax assets, the Corporation will
increase valuation allowances by a charge to income tax expense in the
period of such determination.

Page 33 of 87

During March 2002, the U.S. Congress enacted and the President signed The
Job Creation and Worker Assistance Act of 2002 ("2002 Act"). The 2002 Act
increased the two year carryback period to five years for net operating
losses arising in tax years ending in 2001 and 2002. Management is
currently assessing the impact the 2002 Act will have on the realization
of deferred tax assets, the income tax provision and potential refund
claims.

- Environmental Costs: Environmental expenditures that relate to current
operations are expensed or capitalized, as appropriate. Remediation costs
that relate to an existing condition caused by past operations are
accrued when it is probable that those costs will be incurred and can be
reasonably estimated based on evaluations of current available facts
related to each site.

LIQUIDITY AND CAPITAL RESOURCES

The Corporation's cash and cash equivalents increased to $234.8 million at
December 30, 2001, from $207.3 million at December 31, 2000. The increase
resulted primarily from $105.9 million provided by operating activities which
was reduced by $4.2 million used in investing activities, $71.2 million used in
financing activities and $3 million related to the effect of exchange rate
changes on cash.

OPERATING ACTIVITIES

Operating activities provided cash of $105.9 million in 2001. This compares
to cash used by operating activities of $248.3 million in 2000 and cash provided
by operating activities of $64.8 million in 1999.

Working capital as of December 30, 2001 was $414.6 million compared with
$547.2 million as of December 31, 2000. Net receivables were lower at December
30, 2001 than the previous year by $137.5 million due primarily to improved cash
collections and lower sales volume. The Corporation's inventory levels as of
year-end 2001 were $104.7 million lower than at year-end 2000, due primarily to
the Corporation's efforts to tightly manage its inventory in weak market
conditions and from divestitures and impairments.

INVESTING ACTIVITIES

Capital expenditures for 2001 totaled $39.0 million, down significantly
from $69.4 million for 2000, due to planned lower expenditures for 2001. During
2001, the Corporation reviewed and revised its capital appropriations processes
and enhanced controls associated with authorization and procurement. The
Corporation intends to continue to tightly manage capital expenditures. For the
year 2002, capital expenditures, including expenditures associated with the
Electrical segment's manufacturing efficiency and consolidation initiatives, are
projected to be approximately $55 million. The Corporation expects the net
effect of the manufacturing and consolidation initiatives to negatively impact
2002 cash flows by $40 to $45 million, including approximately $20 million in
capitalized equipment and tooling.

The Corporation received net proceeds of $30.5 million during 2001 from
divestitures of product lines. During the third quarter of 2001, the Corporation
sold its American Electric and Dark-to-Light lighting product lines. The
Corporation received $24.5 million in net proceeds and retained accounts
receivable related to these product lines. The remaining proceeds from product

Page 34 of 87

line divestitures relate to the February 2001 sale of the Corporation's copper
and zinc ground rods product line.

During 2000, the Corporation completed the sale of substantially all of its
previous Electronics OEM business for $750 million in cash, subject to
adjustment, with $50 million of the proceeds deferred. The cash purchase price
was reduced by approximately $14 million for debt assumed by Tyco. During the
third quarter of 2000, $15 million of withheld proceeds were released to the
Corporation. Subsequent to 2001, the Corporation reached a settlement agreement
which stipulates that Tyco will retain the remaining $35 million of proceeds
held for post closing adjustments on working capital and long-term assets. In
the fourth quarter 2001, the Corporation recorded an $8 million net-of-tax
charge to gain on sale of discontinued operations to reflect the settlement.

Also, during 2000, the Corporation purchased one product line for $1.8
million and received $22.1 million from the sale of other product lines.

In 1999, the Corporation received $16.4 million from the sale of product
lines and 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.

FINANCING ACTIVITIES

Net debt (total debt net of all cash, cash equivalents and marketable
securities) decreased approximately $44 million in 2001.

Year-end debt decreased $263.6 million in 2000, primarily reflecting the
use of a portion of the Electronics OEM sale proceeds to reduce debt. During
2000, the Corporation used its debt facilities to purchase a total of $177.1
million of receivables sold under the Corporation's previous asset
securitization program.

Credit Facilities

In the normal course of its business activities, the Corporation is
required under certain contracts to provide letters of credit that may be drawn
upon in the event the Corporation fails to perform under the contracts. The
availability under the credit agreements is reduced by the amount of outstanding
letters of credit. Outstanding letters of credit amounted to $38.7 million at
December 30, 2001 and $40.1 million at December 31, 2000.

The Corporation has a $100 million committed revolving credit facility with
a bank group which is secured by, among other things, inventory and equipment
located in the United States. Availability under the facility as of December 30,
2001 was $61 million before considering outstanding letters of credit. This
credit facility is subject to, among other things, limitations on equipment
disposals, additional debt, liens and movement of equipment, and minimum
liquidity requirements. There were no borrowings outstanding under this facility
as of December 30, 2001. Any committed borrowings outstanding as of November
2003, would mature on that date.

The Corporation has a committed revolving credit facility with a Canadian
bank which had availability as of December 30, 2001 of approximately C$30
million (approximately US$19 million as of December 30, 2001). This facility is
secured by inventory and accounts receivable located in Canada. This facility
matures in March 2004. There were no borrowings outstanding as of December 30,
2001.

Page 35 of 87

The Corporation has the option, at the time of drawing funds under either
of the facilities discussed above, of selecting an interest rate based on a
number of benchmarks including LIBOR, the federal funds rate, or the prime rate
of the agent bank.

The credit facilities contain standard covenants restricting the payment of
dividends, investments, liens, debt and dispositions of collateral. Also
included are financial covenants regarding minimum liquidity and capital
expenditures. The credit facilities contain standard events of default such as
covenant default and cross-default. The Corporation is in compliance with all
covenants or other requirements set forth in its credit agreements. Further, the
Corporation does not have any rating downgrade triggers that would accelerate
the maturity dates of its debt. However, a downgrade in the Corporation's credit
rating could adversely affect the Corporation's ability to renew existing, or
obtain access to new, credit facilities in the future and could increase the
cost of such facilities.

Off-Balance Sheet Program

In September 2001, the Corporation established an asset-securitization
program. The program permits the Corporation to continually sell accounts
receivable through September 21, 2002, to a maximum of $120 million as needed as
a source of liquidity. As of December 30, 2001, availability under this facility
was approximately $56 million. The amount of accounts receivable sold from time
to time depends on the level of eligible accounts receivable and restrictions on
concentrations of receivables. At December 30, 2001, no receivables have been
sold under this program.

During 2000, the Corporation had an asset securitization program which
permitted the Corporation to continually sell accounts receivable to a maximum
of $200 million. As of January 2, 2000, sold accounts receivable totaling $177.1
million were reflected as reductions of the receivables balance in the
accompanying consolidated balance sheet. All such sold receivables were
subsequently purchased by the Corporation during 2000 and this program was
terminated.

Except for the asset securitization programs described in the preceding
paragraphs, at December 30, 2001 and December 31, 2000, the Corporation did not
have any other relationships with unconsolidated entities or financial
partnerships (often referred to as structured finance or special purpose
entities) which were established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes. As such,
the Corporation is not materially exposed to any financing, liquidity, market or
credit risk that could arise if the Corporation had engaged in such
relationships.

Debt Securities

The Corporation had the following senior debt securities outstanding as of
December 30, 2001:

Page 36 of 87

The Corporation has a medium-term note program for issuance of debt
securities due nine months or more from date of issue. The Corporation had the
following debt securities outstanding under its medium-term note program as of
December 30, 2001:

The indentures underlying the debt securities contain standard covenants
such as restrictions on mergers, liens on certain property, sale-leaseback of
certain property and funded debt for certain subsidiaries. The indentures also
include standard events of default such as covenant default and
cross-acceleration. The Corporation is in compliance with all covenants and
other requirements set forth in the indentures.

The net proceeds from the sale of these senior unsecured debt securities
were used for general corporate purposes including capital expenditures and
repayment of outstanding indebtedness (including commercial paper issued for
working capital purposes).

The Corporation maintains a commercial paper program. The commercial paper
market is not currently available to the Corporation on acceptable terms or
rates. There was no commercial paper outstanding as of December 30, 2001.

Contractual Obligations

The following table reflects the Corporation's total contractual cash
obligations as of December 30, 2001.

Other

Total dividends paid to shareholders were $48.8 million, $64.9 million and
$64.9 million in 2001, 2000 and 1999, respectively. On July 24, 2001, the
Corporation's Board of Directors approved a change in the Corporation's current
dividend payment practices and elected to retain its future earnings to fund the
development and growth of its business. The Corporation does not presently
anticipate declaring any cash dividends on the Corporation's common stock in the
foreseeable future. Future decisions concerning the payment of cash dividends on
the Corporation's common stock will depend upon its results of operations,
financial condition, capital expenditure plans and other factors that the Board
of Directors may consider relevant. The Corporation's revolving credit
agreements contain provisions that could restrict, as a practical matter, the
Corporation's ability to pay dividends during the term of those agreements.

In the years prior to 2000, the Corporation made numerous acquisitions to
broaden its business worldwide. While the Corporation will continue to evaluate
acquisitions, it does not expect acquisitions to be its primary means of growth
for the foreseeable future. Future acquisitions by the Corporation might be
financed through existing cash reserves, internally

Page 37 of 87

generated funds, the issuance of private or public debt or equity, or a
combination of these sources.

The Corporation maintains a portfolio of marketable securities, which at
year-end 2001 was valued at $7 million of which $3.5 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 has $11.9 million of
marketable securities in connection with its Supplemental Executive Investment
Plan. Such securities are reflected in other assets.

During the fourth quarter 2001, the Corporation recorded an expense of $27
million for settlement of a patent infringement lawsuit. ADC Communications,
Inc. (ADC) alleged that Augat Communications, acquired by Thomas & Betts in
1996, infringed on certain bay and jack patents beginning in 1994. During trial
preparation in the fourth quarter of 2001, the Corporation engaged new counsel
and reassessed the strength of its defenses. Subsequent to year end, the parties
entered into a mediation that resulted in a settlement. The Corporation paid $20
million related to this settlement in the first quarter of 2002 and the
remaining $7 million will be paid in the fourth quarter of 2002. In 2000, the
Corporation received $15 million for settlement of a trade secret and trade
dress infringement lawsuit. Included in 1999 is $16 million received 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.

Including the asset-securitization facility discussed above, the
Corporation's aggregate availability of funds as of December 30, 2001 is in
excess of $136 million before considering outstanding letters of credit.
Availability under the revolving credit facilities and the asset-securitization
facility increases or decreases with fluctuations in the value of the underlying
collateral and is subject to the satisfaction of various covenants. The
Corporation currently does not expect to utilize these back-up credit facilities
in the foreseeable future.

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 and future borrowings could be at higher rates or on more
stringent terms. The Corporation currently expects to fund expenditures for
capital requirements as well as other liquidity needs from a combination of
existing cash balances, cash generated from operations, and external financial
resources. These sources should be sufficient to meet the Corporation's
operating needs for the foreseeable future.

VALUE OF PENSION ASSETS

At December 30, 2001, the fair market value of the Corporation's domestic
and foreign pension assets was $210 million, and the pension benefit obligation
was $288 million. At December 30, 2001, the Corporation had a minimum pension
liability of $31 million which was recorded in accumulated other comprehensive
income in the Consolidated Balance Sheets. The 2001 pension plan expense was $7
million. For 2002, the anticipated pension funding amount is $9 million, and the
expected pension plan expense is $13 million. The material assumptions for 2002
are a long-term rate of return of 8.8% for the domestic plans and 7.9% for the
foreign plans and a discount rate of 7.3% for the domestic plans and 5.9% for
the foreign plans. The value of the pension assets was significantly lower in
2001 than in 2000 because of negative market changes.

Page 38 of 87

CREDIT RISK

The Corporation continues to evaluate the credit risk associated with its
customers particularly in light of current market conditions. Credit risk with
respect to trade receivables is limited due to large number of customers
comprising the Corporation's customer base and their dispersion across many
different industries and geographic areas. Management does not expect that
impacts from credit risk in 2002 will be material to its financial position or
results of operations.

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. Accordingly, actual results may differ materially
from those expressed or implied by the forward-looking statements contained in
this Report. We describe these risks and uncertainties under "Business Risks"
and also in the section "Cautionary Statements Regarding Forward-Looking
Statements." 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.

ACCOUNTING FOR INVESTMENT IN LEVITON MANUFACTURING CO.

Leviton Manufacturing Co.: In August 1994, the Corporation completed the
purchase of a minority interest (29.1% of the outstanding common stock
representing 23.55% of the voting common stock) in Leviton Manufacturing Co.,
Inc., a leading U.S. manufacturer of wiring devices, for approximately $51
million consisting of cash and common stock. Leviton's chief executive officer
opposed the Corporation's acquisition. The chief executive officer, with his
wife, owns approximately 50.5% of Leviton's outstanding common stock (76.45% of
Leviton's voting common stock) through a voting trust (a majority sufficient for
the approval of all corporate actions that Leviton might undertake; however, the
majority is not sufficient to permit either federal income tax consolidation or
pooling of interests accounting treatment in a merger). The remainder of the
outstanding common stock, all of which is non-voting, is owned by approximately
19 other Leviton family members. The opposition of the chief executive officer
to the Corporation's investment has resulted in litigation between Leviton and
the Corporation, consisting of the Corporation's proceeding in Delaware in
February 1995 to compel Leviton to make additional financial and other
information available to the Corporation, and of Leviton's subsequent action
against the Corporation and other parties in New York seeking damages and other
relief in connection with the transaction in which the Corporation acquired its
Leviton investment. The Corporation does not have and has not sought
representation on Leviton's board of directors, which would be opposed by
Leviton's chief executive officer, and does not receive copies of Leviton's
board minutes.

Notwithstanding the existence of an adversarial relationship with the
controlling shareholder of Leviton, the Corporation developed relationships with
certain key members of Leviton management and believed that those relationships
and other factors support management's conclusion that the Corporation has the
ability to exercise significant influence over Leviton's financial and operating
policies. The Corporation owns more than 20% of Leviton's voting stock,

Page 39 of 87

and there are no restrictions to the Corporation's ability to exercise the
attributes of ownership; however, situations have not arisen to date in which
the Corporation has had an opportunity to vote its Leviton shares in a matter
that would demonstrate significant influence over Leviton's financial and
operating policies. In addition, because the Corporation is a non-family
shareholder, the Corporation believes that it has a greater ability than other
shareholders to challenge actions by Leviton management that the Corporation
considers adverse to shareholders' interests. Since inception, senior management
responsible for Leviton's day-to-day operations and operating and financial
policies have engaged in an ongoing dialogue with the Corporation, and they have
acknowledged that the Corporation's presence as a Leviton shareholder has
influenced the manner in which Leviton conducts business. Further, Leviton has
taken certain actions following discussions with the Corporation that have been
consistent with the Corporation's requests and suggestions. The Corporation's
equity in earnings of Leviton was not material in 2001.

The Corporation's ability to exercise significant influence effectively
ended in January 2002 with the retirement of the Corporation's primary liaison
between Leviton's management and the Corporation. In addition, the Corporation's
current management does not have a relationship with Leviton's management at
this time from which it could exercise such influence were it so inclined. In
light of these developments, the Corporation has determined that it no longer
has the ability to influence the operating and financial policies of Leviton.
Therefore, GAAP requires that the Corporation adopt the cost method of
accounting for this investment on a prospective basis. The Corporation adopted
the cost method of accounting for its investment in Leviton beginning in the
first quarter of 2002.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. SFAS No. 142 establishes new guidelines
for accounting for goodwill and other intangible assets. In accordance with SFAS
No. 142, goodwill associated with acquisitions consummated after June 30, 2001
and intangible assets with indefinite lives are not amortized, but must be
tested for impairment at least annually. The Corporation has not yet determined
the impact, if any, of adopting these statements.

As of December 30, 2001, the Corporation had unamortized goodwill in the
amount of approximately $465 million, net of $109 million of accumulated
amortization, and unamortized identifiable intangible assets in the amount of
approximately $10 million, all of which will be subject to the transition
provisions of SFAS 141 and 142. Amortization expense related to goodwill was
approximately $15 million for the year ended December 30, 2001.

In July 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS 143 requires entities to record the fair value of a liability
for an asset retirement obligation in the period in which it is incurred and a
corresponding increase in the carrying amount of the related long-lived asset.
SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The
Corporation has not yet determined the impact, if any, of adopting SFAS 143.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 broadens the
presentation of discontinued operations to include more transactions and
eliminates the need to accrue for future operating losses. Additionally, SFAS
No. 144 prohibits the retroactive classification of assets as held for

Page 40 of 87

sale and requires revisions to the depreciable lives of long-lived assets to be
abandoned. SFAS No. 144 will be effective January 1, 2002 for the Corporation.
The Corporation has not yet determined the impact, if any, of adopting SFAS 144.

BUSINESS RISKS

There are many factors that could pose a risk to the Corporation's business
and its 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 AND RESTRUCTURING

Although the Corporation is not dependent on any one customer for more than
10% of its sales, deterioration in the credit quality of a large number of
the Corporation's customers could have a material adverse effect on its
results of operations and financial condition.

In connection with implementing the Corporation's new strategic direction
and its restructuring program, in December 2001, the Corporation began a
comprehensive program to streamline production, improve productivity and
reduce costs at its United States, European, and Mexican electrical
products manufacturing facilities. The ability of management to timely and
efficiently carry out the manufacturing initiatives and the accuracy of
management's estimate of savings, charges and costs could have an adverse
effect on the Corporation's results of operation and financial position.
See "Recent History."

- - 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.

- - NEGATIVE ECONOMIC CONDITIONS MAY ADVERSELY AFFECT PERFORMANCE

The success of Thomas & Betts' business is directly linked to positive
economic conditions in the countries where it sells its products. Material
adverse changes in economic or industry conditions generally or in the
specific markets served by Thomas & Betts will 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, will reduce the Corporation's overall revenues.
Thomas & Betts does business in geographically diverse markets. In fiscal
year 2001, approximately 25% of Thomas & Betts' net sales were generated
outside of the United States. Because these influences are not always
foreseeable, there can be no assurance that the business will not be
affected by these occurrences.

Page 41 of 87

- - ADVERSE REGULATORY, ENVIRONMENTAL, MONETARY OR OTHER GOVERNMENTAL POLICIES
WHICH MAY AFFECT PROFITABILITY

Thomas & Betts conducts business globally, and is, therefore, subject to
governmental regulations throughout the world. Unforeseen changes in these
governmental regulations 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 regulations 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 health and safety laws
that may be adopted or imposed in the future. Projected remediation
technology advances could adversely impact expectations of remediation
expenses.

- - 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 insurance,
management cannot assure 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."

The Corporation changed its insurance broker in 2001. Management and the
new brokers have thoroughly reviewed the Corporation's insurance needs and
management has decided to purchase additional liability coverage in 2002.
Availability of insurance has not been a concern; however, the cost of
insurance has increased from prior years. Management expects insurance
costs to continue to rise but does not expect such increased cost to be
material.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK AND FINANCIAL INSTRUMENTS

The Corporation is exposed to market risk from changes in interest rates,
raw material commodity prices and foreign exchange rates. At times, the
Corporation may enter into various

Page 42 of 87

derivative instruments to reduce certain of these risks. The Corporation does
not enter into derivative instruments for speculative purposes. The direction
and order of magnitude of market risk has not significantly changed since
December 31, 2000 and management does not expect such to change in the
foreseeable future. See Note 2 in the Notes to Consolidated Financial Statements
for a description of the Corporation's accounting policies regarding derivative
instruments.

Interest Rate Risk

As of December 30, 2001, 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 $573.6 million.
That fair value was $98.4 million lower than the carrying value of debt at
December 30, 2001. The potential change in fair value resulting from a
hypothetical 10% decrease in interest rates amounted to $18.4 million at
December 30, 2001.

Commodity Risk

The Corporation is exposed to risk from fluctuations in prices for
commodity metals (primarily copper, zinc and aluminum) which are used to
manufacture its products. Some of that risk is mitigated through the use of
futures contracts that fix the price the Corporation will pay for the commodity.
As of December 30, 2001 the Corporation had futures contracts at fixed prices
for approximately 70% of its forecasted 2002 usage of copper, zinc and aluminum.
The use of such commodity contracts effectively protects the Corporation against
changes in price of the commodity to the extent of the notional amount under the
contract. Outstanding contracts as of December 30, 2001, have a notional amount
of $12 million. As of December 30, 2001, the Corporation had recorded an accrued
liability of $0.6 million which represented unrealized losses associated with
open commodity contracts. A hypothetical 10% decrease in all commodity market
prices would increase that unrealized loss to $1.8 million.

Foreign Exchange Risk

At times, the Corporation utilizes forward foreign exchange contracts for
the sale or purchase of principally Canadian, Japanese and European currencies.
As of December 30, 2001, the Corporation had no outstanding forward foreign
exchange contracts.

Page 43 of 87

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Public Accountants.................. 45
Consolidated Statements of Operations for 2001, 2000 and
1999................................................... 46
Consolidated Balance Sheets as of December 30, 2001 and
December 31, 2000...................................... 47
Consolidated Statements of Cash Flows for 2001, 2000 and
1999................................................... 48
Consolidated Statements of Shareholders' Equity and
Comprehensive Income (Loss) for 2001, 2000 and 1999.... 49
Notes to Consolidated Financial Statements................ 50

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED).................... 82

Page 44 of 87

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 30, 2001 and December 31,
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 30, 2001. 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 30, 2001 and December 31, 2000,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 30, 2001, 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 December 31, 2000 and the related
consolidated statements of operations, cash flows and shareholders' equity and
comprehensive income (loss) for the years ended December 31, 2000 and January 2,
2000 have been restated for the change in inventory costing method from
last-in-first-out (LIFO) to first-in-first-out (FIFO) during 2001.

The supplementary financial data on page 82 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. Additionally, we
did not have an adequate basis to complete reviews of the 2000 quarterly
information in accordance with standards established by the American Institute
of Certified Public Accountants due to matters related to the restatement of
such periods as previously disclosed, and the corollary review of processes,
controls and systems.

/s/ KPMG LLP
KPMG LLP
Memphis, Tennessee
February 22, 2002

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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.

Page 46 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

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

Page 47 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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

Page 48 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

(In thousands)

Preferred Stock: Authorized 1,000,000 shares, par value $0.10 per share. None
issued; 300,000 shares reserved for the Corporation's Shareholder Rights Plan
(See Note 6).

Common Stock: Authorized 250,000,000 shares, par value $0.10 per share.

Note: The restatement of the opening balance of retained earnings reflects
change in inventory costing method from LIFO to FIFO, as more fully discussed in
Note 3.

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

Page 49 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

Thomas & Betts Corporation is a leading manufacturer of connectors and
components primarily for worldwide electrical markets. With international
headquarters in Memphis, Tennessee, Thomas & Betts operates over 150
manufacturing, distribution and office facilities around the globe in
approximately 20 countries. Thomas & Betts designs, manufactures and sells
components used in assembling, maintaining or repairing electrical and
communications systems. The Corporation's products include: (1) electrical
connectors, 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 maintain, construct 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The consolidated financial statements include the
accounts of the Corporation and its domestic and foreign subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation. The Corporation uses the equity method of accounting for its
investments in 20-to-50-percent-owned companies. Under accounting principles
generally accepted in the United States of America (GAAP), there is a
presumption that the equity method should be used to account for those
investments. If the Corporation were to determine that it no longer had the
ability to exercise significant influence over the operating and financial
policies of those companies, GAAP would require the Corporation to use the cost
method rather than the equity method to account for those investments. The
Corporation regularly monitors its relationships with those companies. See Note
14 for a discussion of the Corporation's 2002 change in accounting method for
its investment in Leviton Manufacturing Co., Inc.

Certain reclassifications have been made to prior periods to conform to the
current year presentation.

Use of Estimates: The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

Fiscal Year: The Corporation's fiscal year ends on the Sunday closest to
the end of the calendar year. Results for 2001, 2000 and 1999 are for 52-week
periods.

Cash and Cash Equivalents: Cash equivalents consist of investments with
maturities at date of purchase of less than 90 days that have a low risk of
change in value due to interest rate fluctuations. Foreign currency cash flows
have been converted to U.S. dollars at appropriately weighted-average exchange
rates or the exchange rates in effect at the time of the cash flows, where
determinable.

Page 50 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Marketable Securities: Investments in marketable securities are stated at
fair value. Fair value is determined using quoted market prices and, when
appropriate, exchange rates at the end of the applicable reporting period.
Unrealized gains and losses on marketable securities classified as
available-for-sale are recorded in accumulated other comprehensive income, net
of tax. Unrealized gains and losses from trading securities are recognized in
the accompanying statements of operations.

Revenue Recognition: The Corporation recognizes revenue when finished
products are shipped to unaffiliated customers and both title and the risks of
ownership are transferred. Sales discounts, quantity and price rebates,
allowances and warranty costs are estimated based on experience and recorded in
the period in which the sale is recognized. Certain customers have a right to
return goods under certain circumstances and those returns, which are reasonably
estimable, are accrued for at the time of shipment.

Foreign Currency Translation: Financial statements of international
subsidiaries are translated into U.S. dollars using the exchange rate at each
balance sheet date for assets and liabilities and a weighted-average exchange
rate for each period for revenues, expenses, gains and losses. Where the local
currency is the functional currency, translation adjustments are recorded as
Accumulated Other Comprehensive Income. Where the U.S. dollar is the functional
currency, translation adjustments are recorded in income.

Credit Risk: Credit risk with respect to trade receivables is limited due
to the large number of customers comprising the Corporation's customer base and
their dispersion across many different industries and geographic areas.

Asset Securitization: In September 2001, the Corporation entered into an
asset-securitization program. The program permits the Corporation to continually
sell accounts receivable through September 21, 2002, to a maximum of $120
million. Availability under this facility as of December 30, 2001 was
approximately $56 million. Any sales under the program would be accounted for as
sales of assets under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." The amount of accounts receivable
that may be sold from time to time depends on the level of eligible accounts
receivable and restrictions on concentrations of receivables. As of December 30,
2001, no receivables have been sold under this program.

During 2000, the Corporation had an asset securitization program which
permitted the Corporation to continuously sell accounts receivable to a maximum
of $200 million. Sales under the program were accounted for as sales of assets
under the provisions of SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." As of January 2, 2000,
sold accounts receivable totaling $177.1 million were reflected as reductions of
the receivables balance in the accompanying consolidated balance sheet. All such
sold receivables were subsequently purchased by the Corporation during 2000.

Inventories: Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method. During the fourth
quarter 2001, the Corporation changed

Page 51 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

its inventory costing method from last-in-first-out (LIFO) to FIFO for its
domestic and certain foreign inventories. See Note 3.

Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Expenditures for maintenance and repair are charged to expense as
incurred. Significant renewals and betterments that extend the lives of assets
are capitalized. Depreciation is computed principally on the straight-line
method over the estimated useful lives of the assets, which range principally
from five to 45 years for buildings, three to 10 years for machinery and
equipment, and 10 years for land improvements.

Intangible Assets: Intangible assets consist principally of the excess of
cost over the fair value of net assets (goodwill) acquired in business
combinations accounted for as purchases. Those assets are being amortized on a
straight-line basis over various periods not exceeding 40 years.

Impairment of Long-Lived Assets: The Corporation follows the provisions of
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets. For purposes of recognizing
and measuring impairment of long-lived assets, the Corporation evaluates assets
for associated product groups because this is the lowest level of independent
cash flows ascertainable to evaluate impairment. The Corporation reviews
long-lived assets to be held and used for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be
recoverable. If the sum of the undiscounted expected future cash flows is less
than the carrying amount of the assets, the assets are considered to be
impaired. Impairment losses are measured as the amount by which the carrying
amount of the assets exceeds the fair value of the assets. When fair values are
not available, the Corporation estimates fair value using the expected future
cash flows discounted at a rate commensurate with the risks associated with the
recovery of the assets. Assets to be disposed of are reported at the lower of
carrying amount or fair value less costs to sell. See Note 5 contained herein.

Income Taxes: The Corporation uses the asset and liability method of
accounting for income taxes. That method recognizes the expected future tax
consequences of temporary differences between the book and tax bases of assets
and liabilities and provides a valuation allowance based on more-likely-than-not
criteria.

Earnings Per Share: Basic earnings per share are computed by dividing net
earnings (loss) by the weighted-average number of shares of common stock
outstanding during the year. Diluted earnings per share are computed by dividing
net earnings by the sum of (1) the weighted-average number of shares of common
stock outstanding during the period and (2) the dilutive effect of the assumed
exercise of stock options using the treasury stock method.

Environmental Costs: Environmental expenditures that relate to current
operations are expensed or capitalized, as appropriate. Remediation costs that
relate to an existing condition caused by past operations are accrued when it is
probable that those costs will be incurred and can be reasonably estimated based
on evaluations of currently available facts related to each site.

Page 52 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Derivative Instruments: In June 1998 the Financial Accounting Standards
Board (FASB) issued 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 Activities -- an Amendment of
SFAS 133." SFAS No. 133 and SFAS No. 138 require that all derivative instruments
be recorded on the balance sheet at their respective fair values
(mark-to-market) unless certain conditions are met. SFAS No. 133 and SFAS No.
138 are effective for fiscal years beginning after June 15, 2000. The
Corporation adopted SFAS No. 133 and SFAS No. 138 on January 1, 2001. The
Corporation uses derivative financial instruments for purposes other than
trading to reduce the exposure to fluctuations in foreign currencies and
commodity metals prices. The Corporation's derivative instruments as of January
1, 2001, effective date of adoption, and December 30, 2001 have not been
designated as hedging instruments and do not qualify for hedge accounting
treatment under the provisions of SFAS No. 133 and SFAS No. 138 and are
therefore marked to market each period.

Recently Issued Accounting Standards: In June 2001, the FASB issued SFAS
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 requires all business combinations initiated
after June 30, 2001 to be accounted for using the purchase method. SFAS No. 142
establishes new guidelines for accounting for goodwill and other intangible
assets. In accordance with SFAS No. 142, goodwill associated with acquisitions
consummated after June 30, 2001 and intangible assets with indefinite lives are
not amortized, but must be tested for impairment at least annually. The
Corporation has not yet determined the impact, if any, of adopting these
statements.

As of December 30, 2001, the Corporation had unamortized goodwill in the
amount of approximately $465 million, net of $109 million of accumulated
amortization, and unamortized identifiable intangible assets in the amount of
approximately $10 million, all of which will be subject to the transition
provisions of SFAS Nos. 141 and 142. Amortization expense related to goodwill
was approximately $15 million for the year ended December 30, 2001.

In July 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred and a corresponding increase in the carrying amount of the related
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. The Corporation has not yet determined the impact, if any, of
adopting SFAS No. 143.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 broadens the
presentation of discontinued operations to include more transactions and
eliminates the need to accrue for future operating losses. Additionally, SFAS
No. 144 prohibits the retroactive classification of assets as held for sale and
requires revisions to the depreciable lives of long-lived assets to be
abandoned. SFAS No. 144 will be effective January 1, 2002 for the Corporation.
The Corporation has not yet determined the impact, if any, of adopting SFAS No.
144.

Page 53 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. CHANGE IN ACCOUNTING PRINCIPLE

During the fourth quarter of 2001, the Corporation changed its method of
inventory costing from last-in first-out (LIFO) to first-in first-out (FIFO) for
all inventories not previously accounted for on the FIFO method. Prior periods
for continuing operations and discontinued operations have been restated to
reflect this change. The new method was adopted to provide a better measure of
the current value of inventory, a more accurate reflection of the Corporation's
financial position and liquidity, and a better matching of manufacturing costs
with revenues. The balances of retained earnings for 2000, 1999 and 1998 have
been adjusted for the effect of applying retroactively the new method of
accounting. This change in inventory costing method decreased retained earnings
as of January 1999 by $13.0 million. The following table presents the effect of
the change on previously reported earnings (loss) for 2000 and 1999.

4. ACQUISITIONS AND DIVESTITURES

2001--Divestitures: The Corporation sold its copper and zinc ground rod
product line in February 2001 for $6 million, which approximated net book value.
This product line had sales of approximately $3 million in 2001 prior to the
divestiture.

Page 54 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. ACQUISITIONS AND DIVESTITURES (CONTINUED)

The 2001 results include $39.8 million in pre-tax charges related to the
impairment and subsequent sale of the Corporation's American Electric and
Dark-to-Light lighting product lines, which closed in October 2001. These
charges include $36.6 million for impairment charges on long-lived assets,
primarily goodwill, associated with these product lines. The Corporation
received $24.5 million in net proceeds and retained accounts receivable related
to these product lines. These product lines had sales of approximately $50
million in 2001 prior to the divestiture.

2000--Acquisitions and Divestitures: On July 2, 2000, the Corporation
completed the sale of substantially all of its global Electronics OEM business
to Tyco Group S.A.R.L. ("Tyco") for $750 million in cash, subject to adjustment,
with a portion of the proceeds deferred. The cash purchase price was reduced by
approximately $14 million for debt assumed by Tyco. At closing, Tyco wire
transferred funds of approximately $686 million and retained $50 million of the
purchase price. During the third quarter of 2000, $15 million of withheld
proceeds were released to the Corporation. Subsequent to 2001, the Corporation
reached a settlement agreement which stipulates that Tyco will retain $35
million held for post closing adjustments on working capital and long-term
assets. In the fourth quarter 2001, the Corporation recorded an $8 million
net-of-tax charge to gain on sale of discontinued operations to reflect the
settlement. The results of the Electronics OEM business have been reported
separately as discontinued operations in the accompanying consolidated financial
statements. The results of discontinued operations do not reflect any allocated
corporate overhead expenses for centralized administration, finance and
information technology departments.

The sale resulted in a pretax gain of approximately $226 million, which,
reduced by approximately $95 million of income taxes, produced a gain on sale of
discontinued operations of approximately $131 million. The gain includes
approximately $15 million of losses, net of $3 million of tax benefit, resulting
from the operations of the Electronics OEM business from the April 3, 2000
measurement date to the closing date.

Net sales and earnings from discontinued operations prior to April 3, 2000
are as follows:

Included in earnings from discontinued operations is interest expense of
$4.3 million for the three-month period prior to April 3, 2000 and $16.4 million
for 1999, all of which was allocated to discontinued operations based upon the
ratio of invested capital of discontinued operations to consolidated invested
capital.

The Corporation sold its Telzon/HDDX product line in March 2000 for an
amount which approximated net book value. This product line had sales of $1
million in 2000 prior to its divestiture.

Page 55 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. ACQUISITIONS AND DIVESTITURES (CONTINUED)

The Corporation sold its Aster product line 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.

The Corporation completed the purchase of one product line
(telecommunications enclosures) in May 2000 for total consideration of $1.8
million. The acquisition was accounted for using the purchase method of
accounting.

1999--Acquisitions and Divestitures: The Corporation completed three
acquisitions during 1999 for a total consideration of $70.7 million, consisting
of $17 million of cash, $16.7 million of debt assumed, and 869,722 of shares of
the Corporation's Common Stock. Two of those acquisitions were accounted for
using the purchase method of accounting. Accordingly, results of those
operations have been included in the consolidated statements of operations since
the date of the acquisition. The aggregate purchase price was allocated to the
acquired assets based on their respective fair values with the excess of $12.5
million allocated to goodwill to be amortized over 40 years. Those two
acquisitions added $28.9 million to sales in 1999. The third acquisition was
accounted for as an immaterial pooling of interests with the results of that
acquisition included in the Corporation's results as of the beginning of 1999
without restating prior-year results. This acquisition contributed $47.9 million
to sales in 1999.

The Corporation sold its Megaflex, Photon and broadband RF amplifier
product lines for a pretax loss of $2.2 million. Those three lines produced 1999
sales of $64.5 million through the third quarter of 1999 prior to divestiture.

5. RESTRUCTURING AND ASSET IMPAIRMENTS

RESTRUCTURING

Late in 2001, the Corporation began planning and implementing comprehensive
initiatives to streamline production, improve productivity and reduce costs at
its United States, European, and Mexican electrical products manufacturing
facilities.

The manufacturing initiatives have three major components:

- Revising manufacturing processes to improve equipment and labor
productivity;

- Consolidating manufacturing capacity; and

- Investing in tooling and training to achieve superior levels of
productivity.

The Corporation recorded pre-tax charges in the fourth quarter of 2001 of
$49.1 million to continuing operations for the initiatives. The Corporation
expects to record additional charges associated with the initiatives during
2002.

The 2001 results also include approximately $39.8 million in pre-tax
charges relating to the impairment and subsequent sale of the Corporation's
American Electric and Dark-to-Light lighting product lines in October 2001.
These charges include $36.6 million for impairment on long-lived assets,
primarily goodwill, associated with these product lines. Net proceeds of

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5. RESTRUCTURING AND ASSET IMPAIRMENTS (CONTINUED)

approximately $24.5 million were received during 2001 for this sale. Electrical
segment sales during 2001 for these product lines were approximately $50 million
prior to the divestiture.

During December 2001, management determined that certain product lines in
the communication segment were non-strategic for the Corporation. Accordingly,
the inventories and long-lived assets for these product lines were reclassified
to assets held for sale at their approximated net realizable value of $49.4
million as of December 30, 2001. The 2001 results include pre-tax impairment
charges of approximately $16.7 million in association with the long-lived assets
of these product lines.

The following table indicates, by segment, the Corporation's charges in
2001 and the related financial statement captions impacted by these charges in
the accompanying Consolidated Statements of Operations and Consolidated Balance
Sheets.

- ------------------------------

(a) Costs reflected in segment results (Note 15).

(b) Costs excluded from segment results (Note 15).

(c) The restructuring charge reflects $4.9 million of severance and
employee-related costs and $6.8 million of other exit costs. Severance and
other employee-related costs involve actions that are expected to ultimately
result in a net reduction of approximately 1,600 jobs including direct,
indirect and administrative positions at plants associated with the
Corporation's Electrical segment. Prior to year-end, the Corporation
completed communications to employees of its intent to close certain plant
facilities that required the accrual as of December 30, 2001 of severance
and employee-related costs associated with approximately 900 jobs. Other
exit costs included costs primarily for site preparation and reconditioning,
lease termination, asset disposal and future idle facility maintenance.
There

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5. RESTRUCTURING AND ASSET IMPAIRMENTS (CONTINUED)

were no payments during 2001 for severance or other exit costs associated
with these initiatives.

(d) Reflects $4.8 million of severance costs related to the third quarter 2001
work force reduction.

(e) Reflects project consulting fees.

2000 Impairment Charges for 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
smaller product lines and concluded that the Corporation would dispose of some
of those product lines by sale or otherwise. The Corporation considered net cash
flows, including the expected proceeds from the sale of assets of those product
lines, and as a result recorded impairment losses for long-lived assets of
approximately $33.4 million during 2000. Impairment losses totaled approximately
$20.7 million for the Electrical segment (primarily die cast fittings, circuit
protection and electrical enclosures product lines) and totaled approximately
$12.7 million for the Communications segment (primarily premise wiring product
line). Other related charges, primarily inventory write-downs, totaled
approximately $27 million. Electrical and Communications segment sales during
2000 for the above-mentioned product lines were approximately $50 million and
$10 million, respectively.

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5. RESTRUCTURING AND ASSET IMPAIRMENTS (CONTINUED)

The following table indicates, by segment and by primary product line, the
Corporation's charges in 2000 and the related financial statement captions
impacted by these charges in the accompanying Consolidated Statements of
Operations and Consolidated Balance Sheets.

- ------------------------------

(a) Costs excluded from segment results (Note 15).

1998 Restructuring

During 2000 and 1999 the Corporation recorded payments and adjustments
against the 1998 restructuring accrual totaling $4.4 million and $13.0 million,
respectively. As of December 31, 2000, there were no remaining accruals related
to this restructure plan.

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6. BASIC AND FULLY DILUTED EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations:

Due to the net losses in 2001 and 2000, the assumed net exercise of stock
options in those years was excluded, as the effect would have been
anti-dilutive. Options for 3,369,000, 2,949,000 and 866,000 shares of common
stock in 2001, 2000, and 1999, respectively, were excluded because their effect
was anti-dilutive.

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7. INCOME TAXES

The total pretax earnings (loss) and tax expense (benefit) recorded by the
Corporation in 2001, 2000 and 1999 was as follows:

The relationship of domestic and foreign components of earnings (loss) from
continuing operations before income taxes is as follows:

The components of income tax expense (benefit) on continuing operations are
as follows:

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7. INCOME TAXES (CONTINUED)

The reconciliation between the federal statutory tax rate and the
Corporation's effective tax rate on continuing operations is as follows:

The components of the Corporation's net deferred tax assets were:

Undistributed earnings of foreign subsidiaries amounted to $128 million at
December 30, 2001. Those earnings are considered to be indefinitely reinvested,
and, accordingly, no provision for U.S. federal or state income taxes has been
provided thereon.

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7. INCOME TAXES (CONTINUED)

The valuation allowance for deferred tax assets increased by $16 million in
2001 due primarily to net operating loss carryforwards. The valuation allowance
at December 30, 2001 related to net operating loss carryforwards, tax credit
carryforwards, deferred state income tax assets, and minimum pension
liabilities. At December 30, 2001, the Corporation had approximately $12 million
of foreign tax credits which, if unused, would expire by 2005; $10 million of
state income tax credits which, if unused, would expire by 2012; and $1.06
billion of loss carryforwards. The loss carryforwards are composed of $768
million of U.S. state net operating loss carryforwards which, if unused, expire
by 2016; $252 million of U.S. federal net operating loss carryforwards which, if
unused, will expire by 2021; $36 million of foreign net operating loss
carryforwards which, if unused, $19 million will expire by 2010; and $17 million
do not have expiration dates.

Realization of the deferred tax assets is dependent upon the Corporation's
ability to generate sufficient future taxable income and, if necessary,
execution of its tax planning strategies. Management believes that it is
more-likely-than-not that future taxable income and tax planning strategies,
based on tax laws in effect as of December 30, 2001, will be sufficient to
realize the recorded deferred tax assets, net of the existing valuation
allowance at December 30, 2001. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. Projected future taxable income is based
on management's forecast of the operating results of the Corporation, and there
can be no assurance that such results will be achieved. Management periodically
reviews such forecasts in comparison with actual results and expected trends.
Management has identified certain tax planning strategies that it could utilize
to avoid the loss carryforwards expiring prior to their realization. These tax
planning strategies include primarily sales of non-core assets. In the event
management determines that sufficient future taxable income, in light of tax
planning strategies, may not be generated to fully realize the net deferred tax
assets, the Corporation will increase the valuation allowance by a charge to
income tax expense in the period of such determination. Additionally, if events
change in subsequent periods which indicate that a previously recorded valuation
allowance is no longer needed, the Corporation will decrease the valuation
allowance by providing an income tax benefit in the period of such
determination.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Corporation's financial instruments include cash and cash equivalents,
marketable securities, short-term borrowings, long-term debt, commodity
contracts and, at certain times, foreign currency contracts. The carrying
amounts of those financial instruments generally approximated their fair values
at December 30, 2001 and December 31, 2000, except that, based on the borrowing
rates available to the Corporation under current market conditions, the fair
value of long-term debt (including current maturities) was approximately $573.6
million and $658.7 million at December 30, 2001 and December 31, 2000,
respectively.

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8. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The cost bases and fair market values of available-for-sale financial
instruments at December 30, 2001 and December 31, 2000 were:

The mortgage-backed securities held at December 30, 2001 had expected
maturities ranging from two to 21 years.

9. DERIVATIVE INSTRUMENTS

At times, the Corporation utilizes forward foreign exchange contracts for
the sale or purchase of principally Canadian, Japanese and European currencies.
In addition, the Corporation is exposed to risk from fluctuating prices for
certain commodities used to manufacture its products, primarily: copper, zinc
and aluminum. At times, some of that risk is hedged through the use of futures
contracts that fix the price the Corporation will pay for the commodity. As of
December 30, 2001, the Corporation had futures contracts at fixed prices for
approximately 70% of its forecasted 2002 usage of copper, zinc and aluminum.
These derivative instruments have not been designated as hedging instruments and
do not qualify for hedge accounting treatment under the provisions of SFAS No.
133 and SFAS No. 138.

In conjunction with the implementation of SFAS No. 133 and SFAS No. 138,
the Corporation recorded an asset and a liability as of January 1, 2001 for $1.0
million and $0.6 million, respectively. The prepaid asset recorded as of January
1, 2001 was composed of $0.9 million and $0.1 million that related to forward
foreign exchange contracts and commodities futures, respectively. Accrued
liabilities as of January 1, 2001 included $0.1 million and $0.5 million that
related to forward foreign exchange contracts and commodities futures,
respectively. Accrued liabilities as of December 30, 2001 include $0.6 million
related to commodities futures. As of December 30, 2001 and December 31, 2000,
the Corporation had outstanding commodities futures contracts of $11.5 million
and $20.1 million, respectively. As of December 31, 2000, the Corporation had
outstanding forward foreign exchange contracts of $122.2 million, for the sale
or purchase of principally Canadian, Australian and European currencies. The
Corporation had no outstanding forward foreign exchange contracts as of December
30, 2001.

Mark-to-market gains and losses for commodities futures are recorded in
cost of sales. Mark-to-market gains and losses for forward foreign exchange
contracts are recorded in other (expense) income-net. The impact of these items
in the statement of operations for the year ended December 30, 2001 was a loss
of $1.1 million ($0.2 million for commodities futures and $0.9 million for
foreign exchange contracts).

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10. DEBT

The Corporation's long-term debt at December 30, 2001 and December 31, 2000
was:

Principal payments due on long-term debt including capital leases in each
of the five years subsequent to December 30, 2001 are $54.0 million, $61.2
million, $128.1 million, $8.2 million and $150.3 million, respectively.

In the normal course of its business activities, the Corporation is
required under certain contracts to provide letters of credit that may be drawn
in the event the Corporation fails to perform under the contracts. Outstanding
letters of credit reduce the amount of availability under the credit facilities
described below. Outstanding letters of credit, or similar financial
instruments, amounted to $38.7 million at December 30, 2001.

The Corporation has a $100 million committed revolving credit facility with
a bank group which is secured by, among other things, inventory and equipment
located in the United States. Availability under the facility as of December 30,
2001 was $61 million before considering outstanding letters of credit. This
credit facility contains, among other things, limitations on equipment
disposals, additional debt, liens and movement of equipment and minimum
liquidity requirements. The Corporation pays an unused commitment fee of 62.5
basis points to maintain this facility. There were no borrowings outstanding
under this facility as of December 30, 2001. Any committed borrowings
outstanding as of November 2003 would mature on that date.

The Corporation has a revolving credit facility with a Canadian bank which
has availability as of December 30, 2001 of approximately C$30 million
(approximately US$19 million as of December 30, 2001). This facility is secured
by inventory and accounts receivable located in Canada. This facility matures in
March 2004 and there were no borrowings outstanding as of December 30, 2001.

The Corporation has the option, at the time of drawing funds under either
of the facilities discussed above, of selecting an interest rate based on a
number of benchmarks including LIBOR, the federal funds rate, or the prime rate
of the agent bank.

As of December 31, 2000, short-term debt included $0.5 million of
short-term notes payable and $16.0 million representing outstanding checks in
excess of cash on deposit.

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10. DEBT (CONTINUED)

Interest expense-net in the accompanying statements of operations includes
interest income of $7.1 million, $8.2 million and $7.0 million in 2001, 2000 and
1999, respectively.

11. STOCK OPTION AND INCENTIVE PLANS

The Corporation has stock option plans that provide for the purchase of the
Corporation's common stock by its key employees and directors. At December 30,
2001, a total of 5,411,410 shares was reserved for issuance under stock options
or restricted stock awards already granted or available for future grants.

A summary of the options outstanding at December 30, 2001 follows:

The following is a summary of the option transactions for the years 2001,
2000 and 1999:

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11. STOCK OPTION AND INCENTIVE PLANS (CONTINUED)

The 1993 Management Stock Ownership Plan provides that, for each calendar
year, up to 1.25% of the outstanding common stock of the Corporation will be
available for issuance as grants or awards. That plan provides for granting
stock options at a price not less than the fair market value on the date of
grant with a term not to exceed 10 years. The plan also provides for the
issuance of restricted stock awards as incentive compensation to key employees.
The awards are subject to certain restrictions, including full vesting if the
restricted stock recipient remains in the employ of the Corporation three years
after receiving the award. The value of the awards is recorded as compensation
expense over the vesting period. Restricted shares awarded under that plan were
158,340 in 2001; 177,005 in 2000; and 75,372 in 1999.

The 2001 Stock Incentive Plan provides that 2,500,000 shares of common
stock of the Corporation will be available for issuance as option grants at a
price not less than the fair market value on the date of grant with a term not
to exceed 10 years. As of December 30, 2001, options were granted under this
plan for 1,380,025 shares of common stock. This plan was not submitted to the
Corporation's shareholders for approval.

The Corporation has a Restricted Stock Plan for Nonemployee Directors under
which each director receives 200 restricted shares of common stock annually for
a full year of service. Those shares remain restricted during the directors'
terms. Shares issued under that plan were 1,800 shares in 2001; 2,000 shares in
2000; and 1,883 shares in 1999.

The Corporation has a stock option plan under which each nonemployee
director received a nonqualified stock option grant for 5,000, 800 and 800
shares of common stock for 2001, 2000 and 1999, respectively. The exercise price
is the fair market value on the date of grant. Each option is fully vested and
exercisable on the date of grant with a term of 10 years. The Corporation also
has a deferred fee plan under which each nonemployee director can defer all or a
portion of compensation for earned services as a director. Any amount deferred
is valued in accordance with the director's election in a hypothetical
investment in common stock (stock credits) or in one or more of seven mutual
funds. In addition, nonemployee directors receive an annual grant of stock
credits having a value of $7,500. Stock credits are distributed in cash upon a
director's termination of service.

The Corporation continues to account for its stock-based employee
compensation plans in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees." Accordingly, no compensation
cost has been recognized for fixed stock option plans. In accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation," a valuation using the
fair-value-based accounting method has been made for stock options issued in
2001, 2000 and 1999. That valuation was performed using the Black-Scholes
option-pricing model.

The Corporation's 10-year term options were valued assuming:

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11. STOCK OPTION AND INCENTIVE PLANS (CONTINUED)

The valuation determined a per-share weighted-average fair value for
options granted during 2001, 2000 and 1999 of $7.89, $6.68 and $8.49,
respectively. Had those options been accounted for using the fair-value method,
they would have resulted in additional compensation cost of $4.6 million, $4.0
million and $3.1 million, net of taxes, for 2001, 2000 and 1999, respectively.

Had the Corporation adopted the fair-value-based accounting method for
stock options, net (loss) would have been $(151.0) million ($(2.60) basic and
diluted loss per share) in 2001; $(29.9) million ($(0.52) basic and diluted loss
per share) in 2000; and net earnings would have been $109.1 million ($1.88 basic
and diluted earnings per share) in 1999.

12. POSTRETIREMENT BENEFITS

Pension Plans

The Corporation and its subsidiaries have several noncontributory pension
plans covering substantially all employees. Those plans generally provide
pension benefits that are based on compensation levels and years of service.
Annual contributions to the plans are made according to the established laws and
regulations of the applicable countries. Plan assets are primarily invested in
equity securities, fixed income securities and cash equivalents.

The Corporation maintains non-qualified supplemental pension plans covering
certain key executives, which provide for benefit payments that exceed the limit
for deductibility imposed by income tax regulations. The benefit obligation
related to these unfunded plans was $10.7 million at December 30, 2001, $12.2
million at December 31, 2000, and $11.4 million at January 2, 2000.

In 2001, additional plan benefits were granted under the Corporation's
Bargaining Unit Plan which resulted in an increase to the Corporation's benefit
obligation of $2.1 million. In addition, certain executive officers entering the
Corporation's non-qualified retirement plan during 2000 were granted previous
years of service credit which resulted in an increase to the Corporation's
benefit obligation of $4 million. During 2001, the Corporation had a curtailment
loss of $0.5 million in this non-qualified retirement plan. The conversion of
the Canadian pension plan to a defined contribution plan was also completed
during 2001.

During 2000, the Corporation had a domestic curtailment gain of
approximately $6 million and an international curtailment loss of approximately
$1 million, both resulting from the sale of the Electronics OEM business. In
conjunction with the Electronics OEM sale, the Corporation retained liabilities
as of the closing date for (1) any under-funding of foreign plans associated
with locations qualifying as legal entity sales and (2) fully-vested and
"frozen" benefits for all domestic employees and substantially all other foreign
employees. Pursuant to the indemnification provisions in the purchase agreement,
the Corporation paid to Tyco Group S.A.R.L. approximately $4 million in early
2002 as a final payment for all under-funding with respect to the foreign plans.
This amount is reflected in gain on sale of discontinued operations.

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12. POSTRETIREMENT BENEFITS (CONTINUED)

Net periodic pension cost for 2001, 2000 and 1999 for the Corporation's
defined benefit pension plans included the following components:

Assumed weighted-average rates used in developing the net periodic pension
cost were:

The following is information regarding the Corporation's 2001 and 2000
pension benefit obligation:

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12. POSTRETIREMENT BENEFITS (CONTINUED)

The present value of projected benefits for the U.S. plans recorded at
December 30, 2001 and December 31, 2000 was determined using discount rates of
7.3% and 7.5%, respectively, and an assumed rate of increase in compensation of
4.5%.

As of December 30, 2001 and December 31, 2000 the Corporation had recorded
minimum pension liabilities of $31.4 million and $2.4 million, respectively.

The Corporation's recognized defined benefit pension liability for 2001 and
2000 included the following components:

Postretirement Plans

The Corporation provides certain health-care and life insurance benefits to
certain retired employees and certain active employees who meet age and length
of service requirements. The Corporation is recognizing the estimated liability
for those benefits over the estimated lives of the individuals covered, and is
not funding that liability. The plan is closed to new entrants. Plan net gains
and losses are amortized over a five-year period.

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12. POSTRETIREMENT BENEFITS (CONTINUED)

The net periodic cost for postretirement health-care and life insurance
benefits in 2001, 2000 and 1999 included the following components:

The following is information regarding the Corporation's 2001 and 2000
postretirement benefit obligation:

During 2000, the Corporation gave domestic non-union participants the
option of (1) remaining in the postretirement plan, which was amended in the
fourth quarter of 2000 to significantly increase their amount of co-payment for
continuing benefits, or (2) terminating from the postretirement plan in exchange
for receiving payments directly from the Corporation to offset the participant's
cost of obtaining alternate coverage from other non-Corporation sources.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% in 2001 and 7.5% in 2000. For
certain domestic union members, an increase in the cost of covered health-care
benefits of 7.1% was assumed for 2001, and graded down annually to 5.0% for 2005
and future years. For all other members the cost of covered health-care benefits
is capped at 3.0% for all future years. A 1.0% increase or 1.0% decrease in the
health-care cost trend rate would increase or decrease the accumulated
postretirement benefit

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12. POSTRETIREMENT BENEFITS (CONTINUED)

obligation by $0.2 million at December 30, 2001, and would have no material
impact on the net periodic cost for the year then ended.

Other Benefits

The Corporation sponsors defined contribution plans for its U.S. employees
for which the Corporation's contributions are based on a percentage of employee
contributions. The cost of those plans for continuing operations was $4.3
million, $5.4 million and $6.8 million in 2001, 2000 and 1999, respectively.

Included in other assets are marketable securities (trading) under a
supplemental executive investment plan that totaled $11.9 million as of December
30, 2001 and $18.0 million as of December 31, 2000.

13. LEASES

The Corporation and its subsidiaries are parties to various leases relating
to plants, distribution facilities, office facilities, automobiles and other
equipment. Related real estate taxes, insurance and maintenance expenses are
normally obligations of the Corporation. It is expected that in the normal
course of business the majority of the leases will be renewed or replaced by
other leases. Capitalized leases are not significant.

Future minimum payments under noncancelable operating leases consisted of
the following at December 30, 2001:

Rent expense for operating leases was $31.8 million, $30.1 million, and
$31.5 million in 2001, 2000 and 1999, respectively.

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14. OTHER FINANCIAL DATA

Other (expense) income--net consisted of the following:

During the fourth quarter 2001, the Corporation recorded an expense of $27
million for settlement of a patent infringement lawsuit. ADC Communications,
Inc. (ADC) alleged that Augat Communications, acquired by Thomas & Betts in
1996, infringed on certain bay and jack patents beginning in 1994. During trial
preparation in the fourth quarter of 2001, the Corporation engaged new counsel
and reassessed the strength of its defenses. Subsequent to year end, the parties
entered into a mediation that resulted in a settlement. The Corporation paid $20
million related to this settlement in the first quarter of 2002 and the
remaining $7 million will be paid in the fourth quarter of 2002. In 2000, the
Corporation received $15 million for settlement of a trade secret and trade
dress infringement lawsuit. Included in 1999 is $16 million received as a result
of a termination fee related to a proposed acquisition.

The Corporation expenses the cost of advertising as it is incurred. Total
advertising expense was $20.6 million in 2001, $29.4 million in 2000 and $22.7
million in 1999.

Accrued liabilities included salaries, fringe benefits and other
compensation amounting to $38.3 million and $40.2 million in 2001 and 2000,
respectively.

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14. OTHER FINANCIAL DATA (CONTINUED)

On December 30, 1997, the Corporation's Board of Directors declared a
dividend of one preferred stock purchase right for each outstanding share of
common stock of the Corporation. The rights attach to and automatically trade
with the outstanding shares of the Corporation's common stock.

The rights as specified in the Rights Agreement, as amended, will become
exercisable only in the event that any person or group of affiliated persons
becomes a holder of 15% or more of the Corporation's outstanding common stock,
or commences a tender exchange offer, which, if consummated, would result in
that person's or affiliated persons' owning at least 15% of the Corporation's
outstanding common stock. Once the rights become exercisable, they entitle all
shareholders, other than an acquiring person, to purchase one two-hundredths of
a share of preferred stock, which entitles the holder to purchase, for $100, a
number of shares of common stock having a market value of twice the exercise
price. In addition, at any time after any person has become an acquiring person,
but before any person becomes the beneficial owner of 50% or more of the
outstanding common stock, the Board of Directors may exchange all or part of the
rights (other than rights beneficially owned by an acquiring person and certain
affiliated persons) for shares of common stock at an exchange ratio of one share
of common stock per right. The rights may be redeemed at a price of $.005 per
right at any time prior to their expiration on December 15, 2003.

The following table reflects activity for accounts receivable reserve
allowances for sales discounts and allowances, quantity and price rebates, and
bad debts during the three years ended December 30, 2001:

The Corporation conducts portions of its business through investments in
companies accounted for using the equity method. Those companies are primarily
engaged in the design, manufacture and selling of components used in assembling,
maintaining or repairing electrical

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14. OTHER FINANCIAL DATA (CONTINUED)

systems. Summarized financial information for the Corporation's equity investees
on a combined basis was:

Leviton Manufacturing Co.: In August 1994, the Corporation completed the
purchase of a minority interest (29.1% of the outstanding common stock
representing 23.55% of the voting common stock) in Leviton Manufacturing Co.,
Inc., a leading U.S. manufacturer of wiring devices, for approximately $51
million consisting of cash and common stock. Leviton's chief executive officer
opposed the Corporation's acquisition. The chief executive officer, with his
wife, owns approximately 50.5% of Leviton's outstanding common stock (76.45% of
Leviton's voting common stock) through a voting trust (a majority sufficient for
the approval of all corporate actions that Leviton might undertake; however, the
majority is not sufficient to permit either federal income tax consolidation or
pooling of interests accounting treatment in a merger). The remainder of the
outstanding common stock, all of which is non-voting, is owned by approximately
19 other Leviton family members. The opposition of the chief executive officer
to the Corporation's investment has resulted in litigation between Leviton and
the Corporation, consisting of the Corporation's proceeding in Delaware in
February 1995 to compel Leviton to make additional financial and other
information available to the Corporation, and of Leviton's subsequent action
against the Corporation and other parties in New York seeking damages and other
relief in connection with the transaction in which the Corporation acquired its
Leviton investment. The Corporation does not have and has not sought
representation on Leviton's board of directors, which would be opposed by
Leviton's chief executive officer, and does not receive copies of Leviton's
board minutes.

Notwithstanding the existence of an adversarial relationship with the
controlling shareholder of Leviton, the Corporation developed relationships with
certain key members of Leviton management and believed that those relationships
and other factors support management's conclusion that the Corporation has the
ability to exercise significant influence over Leviton's financial and operating
policies. The Corporation owns more than 20% of Leviton's voting stock, and
there are no restrictions to the Corporation's ability to exercise the
attributes of ownership; however, situations have not arisen to date in which
the Corporation has had an opportunity to vote its Leviton shares in a matter
that would demonstrate significant influence over Leviton's financial and
operating policies. In addition, because the Corporation is a non-family
shareholder, the Corporation believes that it has a greater ability than other
shareholders to challenge actions by Leviton management that the Corporation
considers adverse to shareholders' interests. Since inception, senior management
responsible for Leviton's day-to-day operations and operating and

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. OTHER FINANCIAL DATA (CONTINUED)

financial policies have engaged in an ongoing dialogue with the Corporation, and
they have acknowledged that the Corporation's presence as a Leviton shareholder
has influenced the manner in which Leviton conducts business. Further, Leviton
has taken certain actions following discussions with the Corporation that have
been consistent with the Corporation's requests and suggestions. The
Corporation's equity in earnings of Leviton was not material in 2001.

The Corporation's ability to exercise significant influence effectively
ended in January 2002 with the retirement of the Corporation's primary liaison
between Leviton's management and the Corporation. In addition, the Corporation's
current management does not have a relationship with Leviton's management at
this time from which it could exercise such influence were it so inclined. In
light of these developments, the Corporation has determined that it no longer
has the ability to influence the operating and financial policies of Leviton.
Therefore, GAAP requires that the Corporation adopt the cost method of
accounting for this investment on a prospective basis beginning in the first
quarter of 2002. The Corporation adopted the cost method of accounting for its
investment in Leviton beginning in the first quarter of 2002.

15. SEGMENT AND OTHER RELATED DISCLOSURES

The Corporation has four reportable segments: Electrical, Steel Structures,
Communications, and HVAC. During the first quarter of 2001, the Corporation
began reporting its Steel Structures and HVAC businesses as segments. These
businesses were previously included in Other results. Information for the prior
periods has been restated to conform to the current period presentation.

The Electrical segment manufactures and sells a broad package of electrical
connectors, components and accessories consisting primarily of fasteners,
connectors, fittings, metal framing, boxes and covers for use in industrial,
commercial, residential and utility construction, renovation and maintenance
applications. The Steel Structures segment includes steel transmission poles and
towers used for utility, cellular, lighting and municipal applications. The
Communications segment produces and sells a package of drop-line hardware,
connectors, fasteners, grounding materials, and various components for use in
cable television, telecommunications and data communications applications. The
HVAC segment includes heating and ventilation products for commercial and
industrial applications.

The Corporation's reportable segments are based on a combination of product
lines and channels to market, and represent the primary mode used to assess
allocation of resources and performance. Management evaluates each segment's
profit or loss performance based on earnings before interest and taxes; gains
and losses on sales of receivables; foreign exchange gains and losses;
impairments; restructuring; and other special charges. The significant
accounting policies applied to the segments to determine earnings are those
described in Note 2--Summary of Significant Accounting Policies. The Corporation
has no material inter-segment sales. General corporate assets not allocated to
segments are principally cash, marketable securities, income tax related assets,
and other miscellaneous assets.

Page 76 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. SEGMENT AND OTHER RELATED DISCLOSURES (CONTINUED)

SEGMENT INFORMATION

Page 77 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. SEGMENT AND OTHER RELATED DISCLOSURES (CONTINUED)

The following are reconciliations of the total of reportable segments to
the consolidated company:

- ------------------------------

(a) Increase in 2000 reflects a portion of proceeds from the Electronics OEM
sale.

16. FINANCIAL INFORMATION RELATING TO OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS

The Corporation conducts business in three principal areas: U.S., Europe
and Canada.

Page 78 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. FINANCIAL INFORMATION RELATING TO OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
(CONTINUED)

17. CONTINGENCIES

Shareholder Litigation

During 2000 certain shareholders of the Corporation filed five separate
class-action suits in the United States District Court for the Western District
of Tennessee against the Corporation, Clyde R. Moore and Fred R. Jones. The
complaints allege 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 August 21, 2000, were damaged when the market value of the
stock dropped by nearly 29% on December 15, 1999, dropped nearly 26% on June 20,
2000 and fell another 8% on August 22, 2000. An unspecified amount of damages is
sought.

On December 12, 2000, the Court issued an order consolidating all five of
the actions into a single action. The consolidated complaint essentially repeats
the allegations in the earlier complaints.

The Corporation intends to contest the litigation vigorously and has filed
a motion to dismiss. At this stage, 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
indemnification by the Corporation in connection with this litigation.

A parallel federal securities law class action was filed by the same
plaintiffs against KPMG LLP, the Corporation's independent auditors, mirroring
the Rule 10b-5 allegations in the action discussed above against the
Corporation. This suit was consolidated with the action against the Corporation
on August 14, 2001.

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 are amounts to be agreed to by Tyco and
the Corporation, or

Page 79 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. CONTINGENCIES (CONTINUED)

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 was substantially below the Agreed Amounts. Management reviewed the
Tyco Statement Calculation and disputed substantially all of the differences
between the Tyco Statement Calculation and the Corporation's records. As of
December 31, 2000, Tyco held back $35 million of proceeds.

Subsequent to 2001, the Corporation settled this dispute with Tyco. Under
terms of the settlement agreement, Tyco will retain $35 million held for
post-closing adjustments on working capital and long-term tangible assets.
Thomas & Betts recorded an $8 million net-of-tax charge to gain on sale of
discontinued operations in the fourth quarter of 2001 to reflect this
settlement.

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, or other types of relief and some matters may remain unresolved for
several years. Such matters may be subject to many uncertainties and outcomes
are not predictable with assurance. The Corporation has provided for losses to
the extent probable and estimable; however, additional losses, even though not
anticipated, could be material with respect to financial position, results of
operations or liquidity in any given period.

Environmental Matters

Under the requirements of the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, (the "Superfund Act") and
certain other laws, the Corporation is potentially liable for the cost of
clean-up at various contaminated sites identified by the United States
Environmental Protection Agency and other agencies. The Corporation has been
notified that it is named a potentially responsible party (PRP) at various sites
for study and clean-up costs. In some cases there are several named PRPs and in
others there are hundreds.

Page 80 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. CONTINGENCIES (CONTINUED)

The Corporation generally participates in the investigation or clean-up of
potentially contaminated sites through cost-sharing agreements with terms which
vary from site to site. Costs are typically allocated based upon the volume and
nature of the materials sent to the site. However, under the Superfund Act and
certain other laws, as a PRP, the Corporation can be held jointly and severally
liable for all environmental costs associated with the site.

When the Corporation becomes aware of a potential liability at a particular
site, it conducts studies to estimate the amount of the liability. If
determinable, the Corporation accrues what it considers to be the most accurate
estimate of its liability at that site, taking into account the other
participants involved in the site and their ability to pay. The Corporation has
acquired facilities subject to environmental liability where, in one case, the
seller has committed to indemnify the Corporation for those liabilities, and, in
another, subject to an asset purchase agreement, the seller assumed
responsibility for paying its proportionate share of the environmental clean-up
costs.

As of December 30, 2001 and December 31, 2000 the Corporation's accrual for
future environmental costs was approximately $19 million and $23 million,
respectively. The Corporation is not able to predict the extent of its ultimate
liability with respect to all of its pending or future environmental matters.
However, the Corporation does not believe that any additional liability with
respect to the aforementioned environmental matters will be material to its
financial or competitive positions, results of operations or liquidity.

Page 81 of 87

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY FINANCIAL DATA

(a) Basic per share amounts are based on average shares outstanding in each
quarter. Diluted per share amounts reflect potential dilution from stock
options when applicable.

(b) Information has been restated for the change in inventory costing method
from LIFO to FIFO during 2001 for all inventories not previously accounted
for on the FIFO method, as more fully discussed in Note 3.

(c) The Corporation's independent auditors have informed the Corporation that
they did not have an adequate basis to complete the reviews of quarterly
information in accordance with Statements on Auditing Standards No. 71 for
the interim quarters of 2000.

(d) The fourth quarter of 2001 included restructuring and asset impairment
charges (see Note 5), a charge to reflect a settlement agreement associated
with the 2000 sale of the Electronics OEM business (see Note 4) and a
charge related to the settlement of a patent infringement lawsuit (see Note
14).

Unaudited -- See accompanying accountant's report.

Page 82 of 87

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

- ------------------------------

(1) Audit Committee

(2) Corporate Governance Committee

(3) Executive Committee

(4) Human Resources Committee

Page 83 of 87

Information regarding members of the Corporation's Board of Directors is
presented in sections "Security Ownership," "Board and Committee Membership,"
"Compensation" and "Proposal No. 1, Election of Directors" and on pages 4
through 13 and pages 25 through 28 of the Definitive Proxy Statement for the
Corporation's Annual Meeting of Shareholders to be held May 1, 2002 and is
incorporated herein by reference.

Information regarding executive officers of the Corporation is included in
Part I of this Form 10-K under the caption "Executive Officers of the
Registrant" pursuant to Instruction 3 to Item 401(b) of Regulation S-K and
General Instruction G(3) of Form 10-K.

Information required by Item 405 of Regulation S-K is presented in "Section
16(a) Beneficial Ownership Reporting Compliance" on page 6 of the Definitive
Proxy Statement and is incorporated herein by reference.

Information for Items 11 through 13 of this Report appears in the
Definitive Proxy Statement for the Corporation's Annual Meeting of Shareholders
to be held on May 1, 2002, as indicated in the following table, and is
incorporated herein by reference.

Page 84 of 87

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this Report:

1. Financial Statements

The Index on page 44 hereof is being filed in connection with this
Report and incorporated herein by reference.

2. Financial Statement Schedules

All financial statement schedules have been omitted because they are
not applicable, not material, or the required information is included
in the financial statements listed above or the notes thereto.

3. Exhibits

Exhibits 10.14, 10.20, 10.21, 12, 18, 21, 23 and 24 are being filed in
connection with this Report and incorporated herein by reference.

The Exhibit Index on pages E-1 through E-4 is incorporated herein by
reference.

Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10,
10.15 and 10.21 are the management contracts and compensatory plans or
arrangements required to be filed as exhibits to this Report pursuant
to Item 14(c) of this Report.

(b) Reports on Form 8-K

During the last quarter of the period covered by this Report, the
Corporation filed the following Current Reports on Form 8-K:

On October 23, 2001, the Corporation filed a Current Report on Form 8-K,
Items 5, 7 and 9, related to the Corporation's October 23, 2001 conference call
with analysts in which the Corporation discussed its financial results for the
fiscal quarter ended September 30, 2001.

On December 19, 2001, the Corporation filed a Current Report on Form 8-K,
Items 5, 7 and 9, related to the Corporation's December 18, 2001 conference call
with analysts in which the Corporation discussed its comprehensive program to
streamline production, improve productivity and reduce costs in its U.S.,
European and Mexican electrical products manufacturing facilities.

Page 85 of 87

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Corporation has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

THOMAS & BETTS CORPORATION
(Registrant)

By: /s/ JOHN P. MURPHY
------------------------------------
John P. Murphy
Senior Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Corporation and in the capacities and on the dates indicated.

Page 86 of 87

Page 87 of 87

EXHIBIT INDEX

E-1

E-2

E-3

E-4