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UNITED STATES

FORM 10-K

Commission File Number 1-4682

Thomas & Betts Corporation

(901) 252-8000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered Pursuant to Section 12(g) of the Act: None

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

     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. x

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x  No o

     As of June 30, 2002, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates (based on the average bid and asked prices of such equity on the New York Stock Exchange composite tape) was $1,084,344,362.

     As of March 12, 2003, 58,450,383 shares of the Registrant’s common stock were outstanding.

Documents Incorporated by Reference

     Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held May 7, 2003, are incorporated by reference into Part III hereof.

Table of Contents

Thomas & Betts Corporation and Subsidiaries

TABLE OF CONTENTS

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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. Such 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, performance or achievements 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:

	•	Continued economic weakness or recession in the U.S. or the Corporation’s other main markets, including Canada and 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 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 legal matters, pending or future tax examinations and risks associated with the coverage and cost of insurance;
	•	Realization of deferred tax assets, which is dependent upon generating sufficient taxable income prior to their expiration and the Corporation’s tax planning strategies;
	•	Availability and pricing of commodities and raw materials, especially steel, needed for the production of the Corporation’s products;
	•	Changes in customer demand for various products of Thomas & Betts that could affect its overall product mix, margins, plant utilization levels and asset valuations;
	•	Simultaneous changes in creditworthiness of several major customers;
	•	Recoverability of goodwill and other long-lived assets, which could be impacted if estimated future operating cash flows are not achieved; and
	•	Impact of interest rate changes and market volatility on earnings, cash flows, investments, derivatives and borrowings of the Corporation and on investments held in the Corporation’s retirement plans.

      The Corporation undertakes no obligation to revise the forward-looking statements included in this Report to reflect any future events or circumstances.

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PART I

Item 1.     BUSINESS

      Thomas & Betts Corporation is a leading designer and manufacturer of connectors and components for electrical and communication markets. The Corporation is also a leading producer of steel structures, used primarily for utility transmission, and industrial heating units. It operates approximately 140 manufacturing, distribution and office facilities around the world in approximately 20 countries. Manufacturing, marketing and sales activities are concentrated in North America, Europe and, to a lesser extent, Asia.

      The Corporation sells its products 1) through electrical, telephone, cable, heating, ventilation and air-conditioning distributors; 2) directly to original equipment manufacturers and certain end users; and 3) through mass merchandisers, catalog merchandisers and home improvement centers. Thomas & Betts pursues growth through market penetration, new product development, and, at times, acquisitions. See Note 4 in the Notes to Consolidated Financial Statements for information on acquisitions and divestitures during 2002, 2001 and 2000.

      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.

Available information

      The Corporation’s Internet address is www.TNB.com. The Corporation will make available free of charge on or through its Internet website, its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the Securities and Exchange Commission (“SEC”). The Corporation will voluntarily provide electronic or paper copies of its filings free of charge upon request.

General Segment Information

      The Corporation classifies its products into business segments that are based on a combination of product lines and channels to market 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 segment, have region-specific standards and are sold mostly in North America or in other regions sharing North American electrical codes. No customer accounted for 10% or more of the Corporation’s consolidated net sales for 2002. For additional segment financial information, including net sales to external customers, segment earnings (loss) from continuing operations and total assets, for the three years ended December 29, 2002, refer to Note 15 in the Notes to Consolidated Financial Statements and “Item 7. 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 original

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

      Demand for electrical products follows general economic conditions and is sensitive to activity in the construction market, industrial production levels and spending by utilities for replacements, expansions and efficiency improvements. The segment’s product lines are marketed and sold directly to original equipment manufacturers and utilities and to a variety of end users through major distributor chains, retail home centers, hardware outlets and thousands of independent distributors. The Corporation has relationships with approximately 5,000 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 Steel Structures segment designs, manufactures and markets tubular steel transmission and distribution poles and lattice steel transmission towers for North American power and telecommunications companies. 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® brand names. Total Steel Structures segment net sales were $129.7 million, $140.6 million and $121.9 million, or 9.6%, 9.4% and 6.9% of the Corporation’s consolidated net sales for 2002, 2001 and 2000, respectively.

Communications Segment

      The Communications segment designs, manufactures and markets components, subsystems and accessories used to construct, maintain and repair cable television (CATV) and telecommunications networks. The Corporation’s communications products include: 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®, Diamond-Sachs® and Kold-N-Klose®. Although the majority of the segment’s net sales are in North America, certain products are of an international standard and are also sold outside of North America. Total Communications segment net sales were $88.4 million, $108.1 million and

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HVAC Segment

      The HVAC segment 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® brand name through HVAC, mechanical and refrigeration distributors in approximately 2,000 locations throughout North America and Europe. Demand for HVAC products tends to be higher when customers are experiencing cold weather. To reduce the impact of this seasonality, the segment offers a summer promotional program with its distributors. Total HVAC segment net sales were $102.5 million, $98.5 million and $106.9 million, or 7.6%, 6.6% and 6.1% of the Corporation’s consolidated net sales for 2002, 2001 and 2000, respectively.

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 its facilities embrace quality programs, and as of December 29, 2002, approximately 90% meet ISO 9000, 9001 or 9002 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 potential future interruptions 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 segment and maintains regional facilities to respond to the specific needs of regional 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 $18.8 million, $20.7 million and $23.0 million, or 1.4%, 1.4% and

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Working Capital Practices

      The Corporation maintains sufficient inventory to enable it to provide a high level of service to its customers. Its inventory levels, payment terms and return policies are in accordance with general practices associated with the industries in which it operates and standard business procedures.

Patents and Trademarks

      Thomas & Betts owns more than 1,300 active patent registrations and applications worldwide. The Corporation has over 1,400 active trademarks and domain names worldwide, including: Thomas & Betts, T&B, T&B Access, 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, Flex-Cuf, 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, Sure Shot, Sure-Ty, Taylor, Termaster, The Grip of Steel, Ty-Fast, Ty-Rap, Union and Zinsco.

      While the Corporation considers its patents and trademarks (including trade dress) to be valuable assets, it does not believe that its competitive position is dependent solely on patent or trademark protection or that any business segment or its operations as a whole is dependent on any individual patent or trademark. However, the Meyer trademark is significant to the Steel Structures segment; the LRC, Snap-N-Seal, Diamond and Sachs trademarks are significant to the Communications segment; and the Reznor trademark is significant to the HVAC segment. In addition, the Corporation does not consider any of its individual licenses, franchises or concessions held to be material to its business as a whole or to any business segment.

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 its primary market, the electrical products industry. Thomas & Betts encounters competition in all areas of its business, and the methods and levels of competition (e.g., price, service, warranty and product performance) 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. The Corporation currently believes its Electrical segment is among the industry leaders in service to its customers.

      As Thomas & Betts works to enhance its product offerings, its competitors 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 certain of 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 certain of 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

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Employees

      As of December 29, 2002, the Corporation and its subsidiaries had approximately 10,000 full-time employees worldwide. Employees of the Corporation’s foreign subsidiaries in the aggregate comprise 49% of all employees. Of the total number of employees, 34% 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 in compliance, in all material respects, with applicable environmental laws and regulations and that the costs of maintaining such compliance with applicable environmental laws and regulations will not be material to the Corporation’s financial position or results of operations. See “Item 3 — Legal Proceedings” and Note 17 in the Notes to Consolidated Financial Statements.

Financial Information About Foreign and U.S. Operations

      Export sales originating in the U.S. were approximately $44 million, $46 million and $57 million for 2002, 2001 and 2000, respectively. See Note 16 in the Notes to Consolidated Financial Statements for information concerning financial results for foreign and U.S. operations.

      As of December 29, 2002, the Corporation had approximately 140 plant, office, distribution, storage and warehouse facilities, occupying approximately 7,823,000 sq. ft. in 23 U.S. states, the Commonwealth of Puerto Rico and in approximately 20 other countries. This space is composed of approximately 4,896,000 sq. ft. of manufacturing space; 2,364,000 sq. ft. of office, distribution, storage and warehouse space; and 563,000 sq. ft. of idle space.

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      The Corporation’s manufacturing locations by segment as of December 29, 2002 are as follows:

(a)	Manufacturing facility is scheduled to be closed during 2003.

      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 719,533 sq. ft. of space, most of which is leased. Included in this total is approximately 214,000 sq. ft. of leased space in Memphis, Tennessee, for the Corporation’s corporate headquarters.

      The Corporation has approximately 563,000 sq. ft. of idle manufacturing and office space in Massachusetts, New Jersey, Ohio, Pennsylvania and South Carolina, most of which is owned by the Corporation. Such space is not included in the above table.

      Management believes the Corporation’s properties are suitable and adequate for the Corporation’s current needs.

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      As of December 29, 2002, certain Steel Structures and Communications facilities, included in the above manufacturing locations, were operating at capacities significantly below full utilization. In general, the Corporation’s Electrical and HVAC segments are operating at the lower range of practical capacity utilization.

Item 3.     LEGAL PROCEEDINGS

Shareholder Litigation

      On February 16, 2000, a class action, Pifko v. Thomas & Betts Corp., et al (“Pifko”), was commenced in the United States District Court for the Western District of Tennessee. The action asserted claims under Rule 10b-5 and Section 20 of the Securities and Exchange Act of 1934 against the Corporation and its former chief executive officer and chief financial officer. The complaint alleged that the Corporation issued false and misleading quarterly reports and press releases for the first and third quarters of 1999. The allegations were based on the Corporation’s announcement on November 17, 1999 that accounting errors had been discovered requiring a restatement of results for those two quarters. Plaintiff filed an amended complaint in June 2000, adding several new class representatives. The amended complaint repeated the claims in the original complaint and added allegations concerning certain transactions which were alleged to have been improper or in violation of generally accepted accounting principles.

      On August 21, 2000, the Corporation issued a press release announcing material accounting charges to be taken in the second quarter 2000. Following issuance of the press release, plaintiffs’ counsel requested that the oral argument on defendants’ motion to dismiss be canceled and that they be given time to replead to include allegations incorporating the matters disclosed in the August press release. The court granted their request.

      Before the second amended pleading in Pifko was served, a new federal securities law class action, Nuckowski v. Thomas & Betts Corp., et al (“Nuckowski”) was filed in the same court. Nuckowski asserted claims on behalf of a proposed class of purchasers of Thomas & Betts common stock between February 15 and August 21, 2000. Like Pifko, the claims were based on alleged violations of Rule 10b-5 and Section 20 of the Securities and Exchange Act of 1934. The complaint essentially incorporated the disclosures in the August 2000 press release and alleged that defendants knowingly or recklessly released financial statements and press releases which failed to disclose the matters covered in the August press release.

      In September 2000, plaintiffs in the Pifko action filed a second amended class action complaint to expand the class period to cover all purchasers from the original class inception date, April 28, 1999, through August 21, 2000. It also added allegations related to information contained in the August press release.

      On December 12, 2000, the Court issued an order consolidating all the related cases into a single action, and appointing lead plaintiffs. In accordance with the order, the plaintiffs filed a consolidated complaint on January 25, 2001. The consolidated complaint essentially repeated the allegations in the earlier complaints described above.

      On March 12, 2001, defendants moved to dismiss the consolidated complaint. Before any argument on that motion occurred, however, plaintiffs indicated to the Court an intention to file a related complaint arising from the same events against the Corporation’s auditors, KPMG LLP (“KPMG”), a complaint which defendants did file on July 31, 2001. KPMG subsequently moved to dismiss the complaint. In an opinion dated April 8, 2002, the Court denied the

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      The Corporation and the plaintiffs subsequently agreed to retain a mediator to assist with settlement negotiations. The Court agreed to a brief adjournment to allow the mediation to occur. The mediation was conducted on September 12-13, 2002, and based on agreements reached, the parties signed a memorandum of understanding shortly thereafter settling all claims in the action against the Corporation and the individual defendants. The Corporation also reached agreement with its insurance carriers regarding their contributions to the settlement. Pursuant to the agreed terms, the Corporation and its insurers contributed $46.5 million (of which approximately $19 million was paid by the Corporation and the balance by the insurers) to a settlement fund for the benefit of the plaintiff class.

      The terms of the memorandum of understanding were incorporated into a stipulation of settlement, which received preliminary approval from the Court on November 5, 2002. After notice to the class, the Court held a final hearing and approved the settlement on December 20, 2002. At the hearing, the Court entered judgment dismissing all claims in the action against the Corporation and the individual defendants. No appeals were filed within the time allowed. The settlement is now final.

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 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.

      The Staff has advised the Corporation that it intends to recommend an enforcement action against the Corporation and certain individuals. The Corporation has initiated meetings and conversations with the Staff regarding the proposed charges and their possible resolution. The Corporation believes it has reached agreement with the Staff regarding the form of a consent order, which must then be approved by the Commission. If the proposed settlement now being finalized is approved, it would provide for injunctive relief against future violations by the Corporation, and would not require the Corporation to make any monetary payment. The proposed settlement is not expected to have a material impact on the Corporation’s operations or financial condition.

Kaiser Litigation

      By July 5, 2002, Kaiser Aluminum, its property insurers, 28 Kaiser injured workers, nearby businesses and 18,000 residents near the Kaiser facility in Louisiana certified as a class, filed product liability and business interruption cases against the Corporation and six other defendants in Louisiana state court seeking damages in excess of $550 million. These cases alleged that a Thomas & Betts cable tie mounting base failed thereby allowing bundled cables to come in contact with a 13.8 kv energized bus bar. This alleged electrical fault supposedly initiated a series of events culminating in an explosion, which leveled 600 acres of the Kaiser facility.

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      A seven-week trial in the fall 2001 resulted in a jury verdict in favor of the Corporation. However, 13 months later, the trial court overturned that verdict in granting plaintiffs’ judgment notwithstanding the verdict motions. On December 17, 2002, the trial court judge found the Thomas & Betts’ product, an adhesive backed mounting base, to be unreasonably dangerous and therefore assigned 25% fault to T&B. The judge set the damages for the injured workers at $20 million and the damages for Kaiser at $335 million. The Corporation’s 25% allocation is $88.8 million, plus legal interest. The Corporation has appealed this ruling. Management believes there are meritorious defenses to the claim and intends to contest the litigation vigorously.

      The appeal required a bond in the amount of $104 million (the judgment plus legal interest). Plaintiffs successfully moved the trial court to increase the bond to $156 million. Nonetheless, the Corporation’s liability insurers have secured the $156 million bond.

      The Corporation has insurance coverage for this claim. If the judgment of $88.8 million is upheld, it would be within insurance policy limits; therefore, management does not expect this claim to have a material impact on the Corporation’s results of operations or financial condition.

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 the Corporation’s 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 former or inactive facilities or properties in Connecticut (Monroe); Georgia (Decatur County); Indiana (Medora); Massachusetts (Attleboro, Boston, Canton); New Hampshire (New Milford); New Jersey (Butler, Elizabeth); New York (Horseheads); Pennsylvania (Perkasie, Pittsburgh); Ohio (Bucyrus) and Oklahoma (Stillwater). The sites further include active manufacturing locations in New Jersey (Hackettstown); New Mexico (Albuquerque); South Carolina (Lancaster); Alabama (Mobile); and Wisconsin (Hager City).

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      Five of these current and former manufacturing locations relate to activities of American Electric for the period prior to the acquisition of American Electric by the Corporation. These five sites are located in Decatur County, Georgia; Hager City, Wisconsin; Lancaster, South Carolina; Medora, Indiana; and Pittsburgh, Pennsylvania. Each of these sites except for one (Pittsburgh) is subject to an Asset Purchase Agreement dated June 28, 1985 between American Electric and ITT Corporation (“ITT”). ITT and the Corporation have shared responsibilities and costs at the four outstanding sites subject to this agreement. For certain of the sites covered by this agreement, ITT agreed to indemnify American Electric for environmental liabilities, if any, that occurred prior to the purchase of the facilities by American Electric. 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 22 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) and South Carolina (Inman); and for four offsite alleged disposal locations.

      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.

      There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 29, 2002.

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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 and October 2000 to December 2002), Chief Executive Officer (1985 to 1997) and Chairman of the Board (1992 to May 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), President — Electrical Components Division (1994 to 1995) and Senior Vice President (2000 to 2002) 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. 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. 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.

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      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 7, 2003. There is no arrangement or understanding between any officer and any person, other than a director or executive officer of the Corporation acting in his or her official capacity, pursuant to which any officer was selected. There is no family relationship between any executive officer and any other officer or director of the Corporation. There has been no event involving any executive officer of the Corporation under any bankruptcy act, criminal proceeding, judgment or injunction during the past five years.

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PART II

      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 as reported by the NYSE, and the dividends declared by the Board of Directors of the Corporation on its common stock.

      At March 7, 2003, the Corporation had 3,475 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 “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financing Activities.”

      For financial information regarding stock option and incentive plans refer to Note 11 in the Notes to Consolidated Financial Statements.

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Item 6.     SELECTED FINANCIAL DATA

Thomas & Betts Corporation and Subsidiaries

Manufacturing Restructuring Program

      In December 2001, Thomas & Betts announced a manufacturing consolidation and efficiency program. The program, which was substantially completed in 2002, affected approximately two-thirds of the Corporation’s total manufacturing operations, including all electrical products manufacturing plants in the United States, Europe and Mexico, and had three primary components: consolidating manufacturing capacity, improving processes, and investing in tooling and equipment.

      The total cost of the program was approximately $91 million, including $7 million of capital expenditures. The Corporation recorded $49.1 million in pre-tax charges in the fourth quarter of 2001 and $34.4 million during 2002. Thomas & Betts originally projected an on-going pre-tax savings of approximately $45 to $50 million annually from the manufacturing consolidation and efficiency program. However, due to lower than expected manufacturing volume levels associated with weak market conditions, the Corporation currently expects to realize in 2003 approximately half of the projected pre-tax savings from the program.

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Year 2002 Compared with 2001

Consolidated Results

(a)	To conform to current year presentation, research and development costs have been reclassified to cost of sales and amortization of intangibles has been reclassified to selling, general and administrative in the 2001 consolidated statement of operations.

Net Sales

      The Corporation’s net sales were $1,346 million in 2002, down 10.1% from $1,497 million in 2001. The decrease is due in part to persistently weak market conditions. Net sales in the prior year included approximately $80 million from divested and discontinued product lines.

Gross Margin

      The gross margin for the year 2002 was 24.6% of net sales compared with 21.2% in 2001. Several factors, including lower manufacturing expenses, lower freight expense, and improved pricing in the Electrical segment contributed to the improvement. The Corporation’s goal is to achieve a gross margin of at least 30% as a percentage of net sales when demand strengthens in its core markets. Gross margin for 2002 and 2001 included pretax charges of $32.8 million and $7.4 million, respectively, associated with the above mentioned manufacturing restructuring program. In addition, both periods were negatively impacted by unabsorbed manufacturing fixed costs associated with operating at the lower range of practical capacity.

Expenses

      Selling, general and administrative (SG&A) expenses were 21.0% of net sales in 2002, versus 22.8% in 2001. The Corporation continued its efforts to size selling and support functions commensurate with market conditions and to tightly manage expenses. The Corporation’s goal is to achieve its SG&A target of 20% or less of net sales when market demand rebounds. SG&A

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      Impairment charges on long-lived assets in 2001 included $30.0 million associated with the manufacturing restructuring plan, $36.6 million related to the impairment and subsequent sale of the Corporation’s American Electric and Dark-to-Light lighting product lines and $16.7 million to reduce certain non-strategic held for sale assets in its Communications segment to their estimated net realizable value. Impairment charges on long-lived assets in 2002 included a further reduction of $1.2 million for the Communication segment’s held for sale assets to their estimated net realizable value. Restructuring charges of $1.7 million and $11.7 million in 2002 and 2001, respectively, related to the manufacturing restructuring plan.

Income from Unconsolidated Companies

      Income from unconsolidated companies includes equity income from the Corporation’s joint ventures and other equity investments. Income from unconsolidated companies remained relatively flat at $2.6 million and $2.2 million for 2002 and 2001, respectively. See Note 14 in the Notes to Consolidated Financial Statements.

Interest Expense — Net

      The decrease in net interest expense from the prior year is due primarily to lower net interest rates, lower debt levels, and higher interest income. Lower net interest rates were due in part to interest rate swap agreements on $250 million of debt entered into during 2002. Interest expense — net includes interest income of $10.1 million in 2002 and $7.1 million in 2001. Interest income for 2002 includes $2.0 million of interest income on a note receivable repaid to the Corporation and $3.3 million of interest income associated with income tax refunds.

Other Expense (Income) — Net

      Other expense (income) — net for 2002 includes expense of $19 million for the settlement of a consolidated securities class action lawsuit and $3.2 million of income from insurance proceeds. The prior year includes expense of $27 million for the settlement of a patent infringement lawsuit.

Income Taxes

      The Corporation’s 2002 and 2001 effective tax rates for continuing operations are a provision of 271.6% and a benefit of (25.8)%, respectively. As a result of certain tax law changes during 2002, the Corporation recorded an $11.0 million net tax charge composed of a $22.9 million tax charge related to 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. See Note 7 in the Notes to Consolidated Financial Statements. In addition, during 2002 the Corporation recorded a tax benefit of $2.2 million as a result of completing several tax audits and a reduction of worldwide tax exposures, and a $2.0 million tax benefit from increased volumes in the Corporation’s Puerto Rican manufacturing operations as a result of the recently completed manufacturing restructuring program.

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Cumulative Effect of an Accounting Change

      During the second quarter of 2002, the Corporation completed its transitional evaluation of goodwill as of the beginning of 2002 as required under the new accounting standard SFAS No. 142. Consequently, the Corporation recorded in its first quarter 2002 a $44.8 million non-cash charge for an impairment of goodwill associated with its HVAC segment. This charge reflects the cumulative effect of adopting the accounting change and does not affect day-to-day operations of the Corporation.

      Net loss from continuing operations was $8.2 million in 2002 compared with a net loss from continuing operations of $138.9 million in 2001. When adjusted for the elimination of goodwill amortization in the prior year, in accordance with SFAS No. 142, the net loss from continuing operations in 2001 would have been $123.1 million. See Note 3 in the 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 charges.

Electrical

      Net sales for the Electrical segment were $1.03 billion in 2002 down from $1.15 billion in 2001, due in part to continued weakness in U.S. commercial and industrial construction markets, original equipment manufacturing markets and lower across-the-board capital spending by U.S. manufacturers. Net sales in the prior year included approximately $80 million from divested and discontinued product lines.

      Electrical segment earnings in 2002 were $27.1 million compared to a segment loss of $27.3 million in the prior year. When adjusted for the elimination of goodwill amortization, the Electrical segment loss would have been $15.1 million for 2001. The 2002 segment results were positively impacted by lower manufacturing and freight costs, improved selling prices and tight management of SG&A expenses. The Corporation has continued to strengthen its relationships with both distributors and end-users of its products, which has helped offset the impact of unfavorable conditions in its core industrial, commercial and utility markets. Electrical segment results in 2002 and 2001 were adversely impacted by charges associated with the restructuring of manufacturing operations of $32.8 million and $4.3 million, respectively. In addition, both periods were negatively impacted by unabsorbed manufacturing fixed costs associated with operating at the lower range of practical capacity.

Steel Structures

      Net sales for the Steel Structures segment decreased to $129.7 million in 2002 from $140.6 million in 2001. Segment earnings were $15.3 million in 2002 down from $18.2 million in 2001. When adjusted for the elimination of goodwill amortization, the segment would have had earnings of $20.3 million in 2001. Net sales and earnings in 2002 were adversely impacted by significantly lower demand in late 2002 due to delayed spending by utilities in expanding the power transmission grid and changes in project mix. Lower demand in this segment is expected to continue through at least the first half of 2003.

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Communications

      Net sales for the Communications segment were $88.4 million in 2002 down from $108.1 million in 2001. Segment earnings for 2002 were $3.2 million as compared to a segment loss of $10.2 million for 2001. The results for 2002 were positively impacted by the cessation of depreciation on assets held for sale of $7.3 million. Both net sales and earnings for 2002 were adversely impacted by a $4.6 million charge for exposure associated with the bankruptcy of a large customer in the cable TV industry. Although the Corporation has significantly reduced costs in the segment, telecommunications and broadband markets remain severely depressed.

HVAC

      Net sales for HVAC increased to $102.5 million in 2002 from $98.5 million in 2001. Segment earnings increased to $6.3 million in 2002 from $1.2 million in 2001. When adjusted for the elimination of goodwill amortization, the segment would have had earnings of $2.7 million in 2001. Although market demand remained at historically low levels, tight expense controls helped boost segment performance. In addition, a small acquisition made in 2002 contributed to higher sales volume.

Year 2001 Compared with 2000

Consolidated Results

(a)	To conform to 2002 presentation, research and development costs have been reclassified to cost of sales and amortization of intangibles has been reclassified to selling, general and administrative in the 2001 and 2000 consolidated statements of operations.

Net Sales

      The Corporation’s net sales decreased approximately 15% to $1,497 million in 2001 from $1,756 million in 2000. The decrease was 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

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Gross Margin

      The gross margin for the year 2001 was 21.2% of net sales compared with 15.2% in 2000. Gross margins in both periods were negatively impacted by unabsorbed manufacturing fixed costs associated with relatively low capacity utilization. Gross margin for 2001 was also adversely impacted by $7.4 million 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.
	•	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 22.8% of net sales in 2001, versus 26.3% 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 employee headcount reductions. SG&A expenses would have been 21.7% and 25.3% in 2001 and 2000, respectively, when adjusted for the elimination of goodwill amortization in accordance with SFAS No. 142. See Note 3 in the Notes to Consolidated Financial Statements.

      During the fourth quarter 2001, the Corporation began the process of closing certain facilities, primarily in the U.S., and implementing improvements in the remaining facilities affected by the program. As a result, pre-tax charges of $49.1 million were recorded in continuing operations during the fourth quarter 2001 for the manufacturing restructuring program. Of the $49.1 million recorded, impairment charges totaled $30.0 million and restructure charges totaled $11.7 million. The remaining charges of $7.4 million were included in cost of sales.

      The 2001 results also include $39.8 million in pre-tax charges on the sale of the Corporations’ American Electric and Dark-to-Light lighting product lines. 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

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      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 Communication segment (primarily the 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 Note 14 in the Notes to the Consolidated Financial Statements.

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 was due primarily to lower debt levels during 2001 as compared to 2000.

Other Expense (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 were a benefit of (25.8)% and (28.4)%, respectively.

Net Earnings (Loss) from Continuing Operations

      The consolidated loss from continuing operations in 2001 was $138.9 million as compared to a loss from continuing operations of $178.7 million in 2000. When adjusted for the elimination of goodwill amortization, the net loss from continuing operations for 2001 and 2000 would have been $123.1 million and $161.4 million, 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 2001 and prior periods exclude the impact of the Electronics OEM business. The 2001 and 2000 net results for 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 stipulated that Tyco Group S.A.R.L., the purchaser, retain $35 million held for post-closing adjustments on working capital and long-term tangible assets. In the fourth quarter 2001, the

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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 charges.

Electrical

      Net 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 when compared to 2000 was approximately $47 million. Year 2001 segment loss was $27.3 million as compared to a 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. In addition, 2001 results were impacted by deterioration in the performance of its unconsolidated companies.

Steel Structures

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

Communications

      Net 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 television (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

      Net sales for HVAC decreased to $98.5 million in 2001 from $106.9 million in 2000. Net 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.

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,

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	•	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 specific customer circumstances when evaluating the adequacy of accounts receivable related reserves and accruals.
	•	Inventory Valuation: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. To ensure inventories are carried at the lower of cost or market, the Corporation periodically evaluates the carrying value of its inventories. The Corporation also periodically performs an evaluation of inventory for excess and obsolete items. Such evaluations are based on management’s judgment and use of estimates. Such estimates incorporate inventory quantities on-hand, aging of the inventory, sales forecasts for particular product groupings, planned dispositions of product lines and overall industry trends.
	•	Goodwill and Other Intangible Assets: The Corporation follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires a transitional and annual test of goodwill and indefinite lived assets associated with reporting units for indications of impairment. The Corporation performed its transitional test of goodwill as of the beginning of 2002 and expects to perform its annual impairment assessment in the fourth quarter of each year, unless circumstances dictate more frequent assessments. Under the provisions of SFAS No. 142, each test of goodwill requires the Corporation to determine the fair value of each reporting unit, and compare the fair value to the reporting unit’s carrying amount. To the extent a reporting unit’s carrying amount exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Corporation must perform a second more detailed impairment assessment. The second impairment assessment involves allocating the reporting unit’s fair value to all of its recognized and unrecognized assets and liabilities in order to determine the implied fair value of the reporting unit’s goodwill as of the assessment date. The implied fair value of the reporting unit’s goodwill is then compared to the carrying amount of goodwill to quantify an impairment charge as of the assessment date. See Note 3 in the Notes to the Consolidated Financial Statements for information regarding the impairment charge of $44.8 million recorded in 2002 as a result of the adoption of SFAS No. 142 and other transitional disclosure information.
	•	Long-Lived Assets: The Corporation adopted the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” on December 31,

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		2001. SFAS No. 144 establishes accounting standards for the impairment of long-lived assets such as property, plant and equipment and intangible assets subject to amortization. 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 annually or 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 over the remaining useful life of the primary asset in the associated product groups 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. Adopting SFAS No. 144 did not have a material impact on the Corporation’s Consolidated Financial Statements. 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, have been 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. 121, depreciation on assets held for sale, which would have been $7.3 million for 2002, was discontinued as of December 31, 2001. See Note 5 in the Notes to the Consolidated Financial Statements.
	•	Income Taxes: The Corporation uses the asset and liability method of accounting for income taxes. This 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 29, 2002, 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.
	•	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.

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Liquidity and Capital Resources

      The Corporation’s cash and cash equivalents decreased to $178.0 million at December 29, 2002, from $234.8 million at December 30, 2001. The $80.4 million cash provided by operating activities was offset by $84.0 million used in investing activities, and $57.2 million used in financing activities.

Operating Activities

      Operating activities provided cash of $80.4 million in 2002 and $101.4 million in 2001. Operating activities for 2002 reflect the positive impact of $65 million of cash tax refunds received, including $3 million of associated interest income, which were offset by a $27 million payment for a previously announced patent lawsuit settlement, a $19 million payment for a class-action shareholder lawsuit settlement, and approximately $41 million for expenses associated with the manufacturing restructuring program. Cash provided from operations in 2001 was primarily a result of a significant reduction in accounts receivable.

      The Corporation became eligible to receive approximately $65 million in cash tax refunds, including $3 million of associated interest income, as a result of the Corporation’s decision to extend the carryback period for net operating losses from two to five years as allowed under the Job Creation and Worker Assistance Act of 2002. As mentioned above, the Corporation received these cash tax refunds during 2002.

Investing Activities

      Investing activities used cash of $84.0 million in 2002 and $4.2 million in 2001. The Corporation’s marketable securities increased to $65.9 million at December 29, 2002, from $7.0 million at December 30, 2001. The Corporation acquired $84.6 million of marketable securities during 2002, of which, approximately $20 million are pledged to secure letters of credit relating to certain tax refunds and approximately $40 million relates to investing excess available cash in Canada. The Corporation had proceeds from matured marketable securities of approximately $25.5 million during 2002 as compared to $4.2 million of proceeds in 2001.

      During 2002, the Corporation had capital expenditures totaling $23.8 million, down from $39.0 million in 2001. The capital expenditures for 2002 included $7 million associated with the manufacturing restructuring program. The Corporation intends to continue to tightly manage capital expenditures. For the year 2003, capital expenditures are projected to be $35 to $40 million.

      Investing activities for 2002 include proceeds of $3.7 million from the sale of property, plant and equipment. In addition, during 2002 the Corporation acquired the outstanding common stock of a French manufacturer of radiant heaters for total consideration of approximately $8 million cash (approximately $5 million, net of acquired cash).

      During 2001, the Corporation received net proceeds of $30.5 million from divestitures of product lines. During the third quarter 2001, the Corporation sold its American Electric and Dark-to-Light lighting product lines and received $24.5 million in net proceeds. The remaining proceeds from product line divestitures relate to the February 2001 sale of the Corporation’s copper and zinc ground rods product line.

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Financing Activities

      Financing activities used cash of $57.2 million in 2002 and $66.7 million in 2001. Cash used for 2002 financing activities reflected debt repayments of $61.9 million. In 2001, $22.4 million was used to repay debt and $48.8 million was used to pay dividends. As of December 29, 2002, the Corporation has current maturities of long-term debt of $65.1 million. Of the total current debt, $60 million of notes payable became due and was paid in February 2003 out of available cash resources.

Credit Facilities

      Outstanding letters of credit, or similar financial instruments which reduce the amount available under the credit facilities described below, amounted to $34.9 million at December 29, 2002. At times, 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 contracts entered into in the normal course of its business activities. Such performance related letters of credit totaled $1.6 million at December 29, 2002. The remaining letters of credit relate to third-party insurance claims processing, existing debt obligations and certain tax incentive programs.

      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 29, 2002 was $45 million before considering outstanding letters of credit of $35 million at December 29, 2002. This credit facility is subject to, among other things, limitations on equipment disposals, additional debt, liens and movement of equipment, and minimum liquidity requirements. This facility matures in November 2003. There were no borrowings outstanding under this facility as of December 29, 2002.

      The Corporation has a committed revolving credit facility with a Canadian bank which had availability as of December 29, 2002 of approximately CAD$30 million (approximately US$19 million as of December 29, 2002). 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 29, 2002.

      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.

      Management plans to enter into new credit facility agreements before its current credit facility agreements expire. At the time a new U.S. credit facility is executed, management may terminate its asset-securitization program described below. During negotiation of the new credit facility agreements, the Corporation will seek additional availability than currently exists under

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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 20, 2003, to a maximum of $120 million as needed as a source of liquidity. As of December 29, 2002, availability under this facility was approximately $51 million. The amount of accounts receivable which may be sold from time to time depends on the level of eligible accounts receivable and restrictions on concentrations of receivables. At December 29, 2002, no receivables have been sold under this program.

      Except for the asset securitization program described in the preceding paragraph, at December 29, 2002 and December 30, 2001, 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 29, 2002:

      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 the senior unsecured debt securities above were used for general corporate purposes including capital expenditures and repayment of outstanding indebtedness (including commercial paper issued for working capital purposes).

      During September 2002, the Corporation entered into interest rate swap agreements related to debt securities maturing in 2006 and thereafter. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” herein.

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Guarantee and Indemnification Arrangements

      Refer to Note 17 in the Notes to Consolidated Financial Statements for information regarding the Corporation’s guarantee and indemnification arrangements.

Contractual Obligations

      The following table reflects the Corporation’s total contractual cash obligations as of December 29, 2002.

Other

      As of December 29, 2002, the Corporation’s working capital (total current assets less total current liabilities) was $407.8 million which reflects a reduction of $6.8 million from December 30, 2001. This year-over-year net reduction in working capital reflects decreases in accounts receivable, inventory, current income tax accounts and in assets held for sale, which were partially offset by a reduction in accrued liabilities. The reduction in accrued liabilities reflects $27 million of payments made during 2002 for a patent lawsuit settlement accrued for during the fourth quarter 2001.

      The Corporation maintains a portfolio of marketable securities, which at year-end 2002 was valued at $65.9 million. Of the total investment portfolio, $23.8 million of securities were held in the United States and Puerto Rico and $42.1 million were held in Canada. Approximately $20 million of investments held in the United States are pledged to secure letters of credit relating to certain tax refunds. The Corporation has $9.2 million of marketable securities in connection with its Supplemental Executive Investment Plan which are reflected in other assets.

      Including the asset-securitization facility discussed above, the Corporation’s aggregate availability of funds as of December 29, 2002 is approximately $115 million before considering $34.9 million of 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 facilities in the foreseeable future.

      Total dividends paid in 2001 to shareholders, associated with the fourth quarter 2000 and the first and second quarters of 2001, were $48.8 million. 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

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      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.

      Due to operating results, the Corporation may not be able to access the public capital or commercial paper markets on reasonable 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, including some or all of the repayment of the $125 million of debt securities due January 2004, 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 and liquidity needs for the foreseeable future.

Value of Qualified Pension Assets

      At December 29, 2002, the fair market value of the Corporation’s domestic and foreign qualified pension assets was $193 million, and the related pension benefit obligation was $296 million. For 2002, the qualified pension funding amount was approximately $8 million and the qualified pension plan expense was $9 million. For 2003, the anticipated qualified pension funding amount is $6 million, and the expected qualified pension plan expense is $15 million. The material assumptions for 2003 are a long-term rate of return of 8.25% for the domestic plans and 7.90% for the foreign plans and a discount rate of 6.75% for the domestic plans and 5.92% for the foreign plans. The value of the qualified pension assets was lower in 2002 than in 2001 primarily because of adverse market changes. For additional information regarding the Corporations qualified pension plans and other retirement plans refer to Note 12 in the Notes to Consolidated Financial Statements.

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 the large number of customers comprising the Corporation’s customer base and their dispersion across many different industries and geographic areas. No customer receivable exceeds 7% of accounts receivable as of December 29, 2002.

Recently Issued Accounting Standards

      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 to the Corporation’s Consolidated Financial Statements.

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Forward-looking statements may prove inaccurate

      This Report includes various forward-looking statements regarding the Corporation which are subject to risks and uncertainties. Forward-looking statements include information concerning future results of operations and financial condition. Statements that contain words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” or similar expressions are forward-looking statements. These forward-looking statements are subject to risks and uncertainties and many factors could affect the future financial results of Thomas & Betts. 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.

2003 Outlook

      Management anticipates that 2003 net sales will be relatively flat with year 2002 and net earnings will improve over 2002 despite little, if any, improvement in underlying market conditions.

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 Credit Quality of Customers

	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.

•        SEC Investigation

	There is currently a formal investigation by the Securities and Exchange Commission Enforcement Division concerning the Corporation’s financial reporting and other matters. While the Corporation believes it has reached agreement with the SEC Staff regarding a resolution of the investigation, such agreement must be approved by the Commission. There is no assurance that the Commission will approve the agreement.
	If the proposed settlement now being finalized is approved, it would provide for injunctive relief against future violations by the Corporation, and would not require the Corporation to make any monetary payment. The proposed settlement is not expected to have a material impact on the Corporation’s operations or financial condition. However, should the Commission not approve the proposed agreement, management cannot predict the ultimate resolution of the investigation or its impact on the Corporation’s operations and financial condition.

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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, continued economic slowdown in the U.S. or in Thomas & Betts’ major foreign markets, including Canada and Europe, will reduce the Corporation’s overall net sales. Thomas & Betts does business in geographically diverse markets. In fiscal year 2002, approximately 28% 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.

	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’ net sales and cost of goods. Furthermore, significant changes in any number of governmental regulations 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. Future remediation technology advances could adversely impact expectations of remediation expenses.

In accordance with its risk management practices, the Corporation continually reevaluates risks, their potential cost and the cost of minimizing them. To reduce the Corporation’s exposure to material risks, at times, it purchases insurance. Certain risks are inherent in the manufacturing of the Corporation’s products and the Corporation’s insurance may not be adequate to cover potential claims against it involving its products. The Corporation is also exposed to risks inherent in the packaging and distribution of products. Although the Corporation maintains 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 can and will maintain this insurance on acceptable terms in the future.

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	Availability of insurance has not been a concern; however, the cost of insurance has increased for 2003 from prior years. Management expects future insurance costs to continue to rise but management cannot predict, at this time, whether such increased costs will be material.

Terrorist acts and acts of war (wherever located around the world) may cause damage or disruption to our employees, facilities, suppliers, distributors or customers, which could significantly impact our net sales, costs and expenses and financial condition. The terrorist attacks that took place in the United States on September 11, 2001 were unprecedented events that have created many economic and political uncertainties, some of which may materially harm our business and results of operations. The potential for future terrorist attacks, the national and international responses to terrorist attacks, and other acts of war or hostility have created many economic and political uncertainties, which could adversely affect our business and results of operations in ways that cannot presently be predicted. In addition, as a multi-national company with headquarters and significant operations located in the United States, we may be impacted by actions against the United States. We are uninsured for losses and interruptions caused by acts of war. However, our insurers have confirmed coverage for losses caused by terrorist acts within our policy limits.

Market Risk and Financial Instruments

      The Corporation is exposed to market risk from changes in interest rates, raw material prices and foreign exchange rates. At times, the Corporation may enter into various derivative instruments to manage certain of these risks. The Corporation does not enter into derivative instruments for speculative or trading purposes. The direction and order of magnitude of market risk has not significantly changed since December 30, 2001. 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

      The Corporation is exposed to the impact of interest rate changes and uses a combination of fixed and floating rate debt to manage this exposure. The Corporation uses interest rate swaps, at certain times, to manage the impact of benchmark interest rate changes on the market value of its borrowings and to lower the Corporation’s overall borrowing costs.

      During September 2002, the Corporation entered into interest rate swap agreements which effectively convert $250 million of the Corporation’s notes payable, with one-third maturing in each of the years 2006, 2008 and 2009, from fixed interest rates to floating interest rates based upon a six-month moving average of LIBOR plus the applicable spread. If LIBOR remains at December 29, 2002 levels, the agreements should reduce interest expense by approximately $1 million per quarter from that of the underlying fixed rate interest expense levels. As of December 29, 2002, the Corporation’s fixed-to-floating ratio had dropped to 60/40. After the repayment of $60 million notes payable in February 2003, this ratio changed to 56/44. The amount to be paid or received under the interest rate swap agreements is recorded as a component of net interest expense.

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      The following table provides information regarding the interest rate swap agreements.

      As of December 29, 2002, 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 $602.9 million. At December 29, 2002, the carrying value of long-term debt, including current maturities, was $622.0 million, excluding $3.1 million related to the interest rate swap agreements. The potential change in fair value resulting from a hypothetical 100 basis points change in interest rates would be $17.2 million as of December 29, 2002.

Commodity Risk

      The Corporation is exposed to risk from fluctuations in prices for raw materials (including steel, aluminum, zinc, copper, resins and rubber compounds) which are used to manufacture its products. At times, some of the risk associated with usage of copper, zinc and aluminum is mitigated through the use of futures contracts that fix the price the Corporation will pay for a commodity. As of December 29, 2002, the Corporation had no commodities futures contracts.

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 29, 2002, the Corporation had no outstanding forward foreign exchange contracts.

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INDEX

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of

      We have audited the accompanying consolidated balance sheets of Thomas & Betts Corporation and subsidiaries as of December 29, 2002 and December 30, 2001, 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 29, 2002. 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 as of December 29, 2002 and December 30, 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 29, 2002, in conformity with accounting principles generally accepted in the United States of America.

      As discussed in Note 3 to the consolidated financial statements, the Corporation changed its method of accounting for goodwill and other intangible assets in 2002.

/s/ KPMG LLP

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Thomas & Betts Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

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

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Thomas & Betts Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands)