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UNITED STATES

Form 10-Q

Commission file number 1-4682

Thomas & Betts Corporation

(901) 252-8000

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ     No o

      Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

1.     Basis of Presentation

      In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for the fair presentation of the financial position as of June 30, 2002 and December 30, 2001 and the results of operations and cash flows for the periods ended June 30, 2002 and July 1, 2001.

      Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the fiscal period ended December 30, 2001. The results of operations for the periods ended June 30, 2002 and July 1, 2001 are not necessarily indicative of the operating results for the full year.

      Certain reclassifications have been made to prior periods to conform to the current year presentation (See Note 13).

2.     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 and intangible assets with indefinite lives are not amortized, but must be tested for impairment at least annually. The impact of adopting SFAS No. 141 was not material. See Note 5 related to the adoption of SFAS No. 142.

      In July 2001, the 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 impact of adopting SFAS No. 143 is not expected to be material.

      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 was effective December 31, 2001 for the Corporation. The impact of adopting SFAS No. 144 was not material. Prior to the December 31, 2001 adoption of SFAS No. 144, the Corporation had assets held for sale, which under the transitional provisions of that pronouncement, will continue to be accounted for in accordance with SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.” Under provisions of SFAS No. 144, depreciation on assets held for sale was discontinued as of December 30, 2001.

      In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The rescission of SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” and SFAS No. 64, “Extinguishments of Debt made to Satisfy Sinking-Fund Requirements” eliminates an exception to general practice relating to the determination of whether certain items should be classified as extraordinary and is effective in fiscal years beginning after 2002, with earlier implementation encouraged. The amendment of SFAS No. 13, “Accounting for Leases” affects the accounting by the lessee for certain lease modifications that have economic effects similar to sale-leaseback transactions and is effective for transactions entered into after May 15, 2002. The rescission of SFAS No. 44, “Accounting for Intangible Assets for Motor Carriers” removes a no longer relevant standard from the authoritative literature. The rescission of SFAS No. 44 and all other provisions of

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NOTES TO CONDENSED CONSOLIDATED

SFAS No. 145 are effective for financial statements issued on or after May 15, 2002. The impact of adopting SFAS No. 145 is not expected to be material.

      In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires all companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities after December 31, 2002. The impact of adopting SFAS No. 146 is not expected to be material.

3.     Restricted Marketable Securities

      At June 30, 2002, Marketable Securities included approximately $20 million of investments which are pledged to secure letters of credit relating to certain tax refunds.

4.     Property, Plant and Equipment

      Property, plant and equipment is composed of the following:

5.     Goodwill and Other Intangible Assets

      Effective December 31, 2001, the Corporation adopted SFAS No. 142. SFAS No. 142 requires a transitional and annual test of goodwill associated with reporting units for indications of impairment. During the second quarter 2002, the Corporation completed its transitional impairment assessment for indications of impairment as of December 31, 2001. No indications of impairment were noted for any reporting units within the Corporation’s segments, except within the HVAC segment. A second more detailed impairment assessment involving the implied fair value of goodwill resulted in a non-cash charge of $44.8 million associated with the Corporation’s HVAC segment. As required, this transitional charge has been recorded as a cumulative effect of an accounting change in the Corporation’s condensed consolidated statement of operations for the first quarter of 2002. In the future, the Corporation expects to complete its annual impairment assessment in the fourth quarter of each year, unless circumstances dictate more frequent assessments.

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NOTES TO CONDENSED CONSOLIDATED

      The following SFAS No. 142 disclosures present the net loss and related per share amounts in the prior year periods as if amortization of goodwill had not been recorded. As of June 30, 2002, the Corporation has $0.9 million of other intangible assets, net of accumulated amortization, which it continues to amortize.

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NOTES TO CONDENSED CONSOLIDATED

6.     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.

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NOTES TO CONDENSED CONSOLIDATED

      Pre-tax charges associated with the project are expected to total approximately $80 to $85 million. As indicated below, the Corporation recorded $49.1 million in pre-tax charges in the fourth quarter of 2001 and $26.1 million during the six months ended June 30, 2002. The balance of the pre-tax charges is expected to be recorded over the remainder of 2002. The components of the 2001 and 2002 pre-tax charges related to this program are as follows:

      The following table summarizes the 2002 and 2001 restructuring provisions and activity:

7.     Basic and Fully Diluted Earnings Per Share

      Basic earnings per share are computed by dividing net earnings (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings (loss) 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. Due to the net losses for the six months of 2002 and the quarter and six-month periods for 2001, the assumed net exercise of stock options in those periods was excluded, as the effect would have been anti-dilutive.

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NOTES TO CONDENSED CONSOLIDATED

8.     Income Taxes

      In the first quarter 2002, the Corporation elected to take advantage of recent changes in U.S. tax laws that allow companies to extend the carryback period for certain federal net operating losses from two to five years. The Corporation filed its 2001 and amended prior years federal tax returns to reflect this decision and carried back and realized all federal net operating losses that existed as of December 30, 2001. Accordingly, the Corporation became eligible to receive cash tax refunds of approximately $65 million, of which approximately $46 million was received in April 2002. As of June 30, 2002, the Corporation had approximately $19 million of remaining income tax refunds, including interest of approximately $3.3 million, which were received in late July 2002. In the first quarter of 2002, these events resulted in an $11.0 million net tax charge to earnings composed of a $22.9 million tax charge from converting certain foreign tax credits into foreign tax deductions and an $11.9 million tax benefit from releasing a federal valuation allowance as of December 30, 2001 on deferred tax assets associated with minimum pension liabilities. As a result of these events, long-term deferred income tax assets as of December 30, 2001, that were classified as a long-term asset “Deferred income taxes” in the accompanying balance sheet as of that date, have been reclassified to income tax receivables during the first quarter of 2002.

      During the second quarter 2002, the Corporation recorded a tax benefit of $2.2 million as a result of the favorable completion of several tax audits and a reduction of worldwide tax exposures.

      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 June 30, 2002, will be sufficient to realize the recorded deferred tax assets, net of existing valuation allowances at June 30, 2002. 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 valuation allowances 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.

9.     Comprehensive Income (Loss)

      Total comprehensive income (loss) and its components are as follows: