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UNITED STATES

Form 10-Q

Commission file number 1-4682

Thomas & Betts Corporation

(901) 252-5000

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

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

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

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

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THOMAS & BETTS CORPORATION AND SUBSIDIARIES

      In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for the fair presentation of the financial position as of September 28, 2003 and December 29, 2002 and the results of operations and cash flows for the periods ended September 28, 2003 and September 29, 2002.

      Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the fiscal period ended December 29, 2002. The results of operations for the periods ended September 28, 2003 and September 29, 2002 are not necessarily indicative of the operating results for the full year.

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

      Due to the net loss for the quarter and nine months ended September 29, 2002, the assumed net exercise of stock options in those periods were excluded, as the effect would have been anti-dilutive. Options for shares of Common Stock that were excluded because of their anti-dilutive effect were 5.5 million and 5.2 million shares for the third quarter of 2003 and 2002, respectively, and 5.6 million and 4.5 million shares for the first nine months of 2003 and 2002, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

      The Corporation applies the intrinsic-value-based method to account for its fixed-plan stock options. The following table illustrates the effect on net earnings (loss) and earnings (loss) per share if the Corporation had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation.

      A valuation using the fair-value-based accounting method has been made for applicable stock options granted as of September 28, 2003 and September 29, 2002. That valuation was performed using the Black-Scholes option-pricing model.

      The Corporation’s income tax provision for the first nine months of 2003 reflects a $2.0 million tax benefit recorded in the second quarter 2003 resulting primarily from the favorable completion of a foreign tax audit and a corresponding reduction in worldwide tax exposures and a $2.0 million tax benefit recorded in the first quarter 2003 from the favorable completion of a domestic tax audit and a corresponding reduction in U.S. tax exposure.

      The Corporation’s income tax provision for the first nine months of 2002 reflects a $2.2 million tax benefit in the second quarter 2002 resulting from the favorable completion of several tax audits and a reduction of worldwide tax exposures. In addition, during the first quarter 2002, the Corporation elected to take advantage of changes in U.S. tax laws that allow companies to extend the carryback period for certain federal net operating losses from two to five years. The Corporation filed its 2001 and amended prior years federal tax returns to reflect this decision and carried back and recognized all federal net operating losses that existed as of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

December 30, 2001. Accordingly, the Corporation received a cash tax refund of approximately $65 million during the subsequent two quarters of 2002. During the first quarter 2002, this decision also resulted in an $11.0 million net tax charge composed of a $22.9 million tax charge from converting certain foreign tax credits into foreign tax deductions and an $11.9 million tax benefit from releasing a federal valuation allowance on deferred tax assets associated with minimum pension liabilities.

      Realization of the deferred tax assets is dependent upon the Corporation’s ability to generate sufficient future taxable income and, if necessary, execution of its tax planning strategies. Management believes that it is more-likely-than-not that future taxable income and tax planning strategies, based on tax laws in effect as of September 28, 2003, will be sufficient to realize the recorded deferred tax assets, net of existing valuation allowances at September 28, 2003. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Projected future taxable income is based on management’s forecast of the operating results of the Corporation, and there can be no assurance that such results will be achieved. Management periodically reviews such forecasts in comparison with actual results and expected trends. Management has identified certain tax planning strategies that it could utilize to avoid the loss carryforwards expiring prior to their realization. These tax planning strategies include primarily sales of non-core assets. In the event management determines that sufficient future taxable income, in light of tax planning strategies, may not be generated to fully realize the net deferred tax assets, the Corporation will increase the valuation allowance by a charge to income tax expense in the period of such determination. Additionally, if events change in subsequent periods which indicate that a previously recorded valuation allowance is no longer needed, the Corporation will decrease the valuation allowance by providing an income tax benefit in the period of such determination.

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

instruments to manage certain of those risks. The Corporation does not enter into derivative instruments for speculative or trading purposes.

      The Corporation is exposed to risk from fluctuating prices for certain materials used to manufacture its products, such as: steel, aluminum, zinc, copper, resins and rubber compounds. 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. Commodities futures contracts utilized by the Corporation have not previously been designated as hedging instruments and do not qualify for hedge accounting treatment under the provisions of SFAS No. 133 and SFAS No. 138. Mark-to-market gains and losses for commodities futures, if any, are recorded in cost of sales. As of September 28, 2003, the Corporation had outstanding commodities futures contracts of $1.7 million. As of December 29, 2002, the Corporation had no outstanding commodities futures contracts. Cost of sales for the quarters ended September 28, 2003 and September 29, 2002 reflected no effect and a loss of $0.6 million, respectively, related to the mark-to-market adjustments for commodities futures contracts. Cost of sales for the nine months ended September 28, 2003 and September 29, 2002 reflected no net effect and a gain of $0.4 million, respectively, related to the mark-to-market adjustments for commodities futures contracts.

      From time to time, the Corporation utilizes forward foreign exchange contracts for the sale or purchase of certain foreign currencies, principally Canadian, Japanese and European currencies. Forward foreign exchange contracts utilized by the Corporation have not previously been designated as hedging instruments and do not qualify for hedge accounting treatment under the provisions of SFAS No. 133 and SFAS No. 138. Mark-to-market gains and losses for forward foreign exchange contracts, if any, are recorded in other expense — net. As of September 28, 2003, the Corporation had outstanding forward foreign exchange contracts of $19.7 million related to European currencies. The Corporation had no outstanding forward foreign exchange contracts as of December 29, 2002. Other expense — net for the quarter and nine months ended September 28, 2003 reflected a loss of $0.5 million related to the mark-to-market adjustments for forward foreign exchange contracts. Other expense — net for the quarter and nine months ended September 29, 2002 reflected no impact from mark-to-market adjustments for forward foreign exchange contracts.

      In September 2002, the Corporation entered into three interest rate swap agreements (“interest swaps”) that effectively converted $250 million notional amount of debt from a fixed interest rate to a floating interest rate based on a six-month average of LIBOR plus the applicable spread. In addition in June 2003, the Corporation replaced one of the three interest rate swap agreements in a notional amount of $83.3 million relating to the debt securities maturing in 2006, with new interest rate swap agreements for the same notional amount maturing primarily in 2013 (the term of the $125 million senior unsecured notes due June

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

2013 — see Note 7). The approximately $3 million received by the Corporation from closing its previous position will reduce the future effective interest rate of the underlying debt instrument. The new interest rate swap agreements effectively converted $83.3 million notional amount of debt from a fixed interest rate to a floating interest rate based on a six-month average of LIBOR plus the applicable spread.

      The Corporation’s interest rate swaps qualify for the short-cut method of accounting for a fair value hedge under SFAS No. 133. The amount to be paid or received under the interest rate swap agreement is recorded as a component of net interest expense. At September 28, 2003, the net out-of-the-money fair value of the interest swaps totaled $2.2 million and $4.2 million is classified in other long-term liabilities and $2.0 million is classified in other long-term assets, with an off-setting net decrease in the fair value of the debt hedged. At December 29, 2002, the net in-the-money fair value of the interest swaps totaled an asset of $3.1 million and is classified in other long-term assets, with an off-setting increase in the fair value of debt hedged. As of September 28, 2003, the Corporation had interest rate swap agreements totaling a notional amount of $250 million with approximately one-third maturing in each of the years 2008, 2009 and 2013. Net interest expense for the quarters ended September 28, 2003 and September 29, 2002 reflect a benefit of $1.7 million and $0.2 million, respectively, associated with these interest rate swap agreements. Net interest expense for the nine months ended September 28, 2003 and September 29, 2002 reflect a benefit of $4.6 million and $0.2 million, respectively, associated with these interest rate swap agreements.

	7.	Debt

      The Corporation’s long-term debt at September 28, 2003 and December 29, 2002 was:

      In May 2003, the Corporation issued $125 million of senior, unsecured notes. The notes were issued at par and bear interest at 7.25%. The notes mature on June 1, 2013 with a first interest payment on December 1, 2003. Net proceeds from the sale are earmarked to repay existing $125 million 8.25% senior, unsecured notes due in January 2004.

      In June 2003, the Corporation entered into a $175 million committed revolving credit facility with a bank group which is secured by, among other things, accounts receivable, inventory and equipment located in the United States. This credit facility contains, among other

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

things, conditions precedent for borrowing; covenants restricting investments, disposition of collateral and payment of dividends; financial covenants regarding additional debt, liens, minimum liquidity and capital expenditures; and standard events of default. The Corporation pays an unused commitment fee of 62.5 basis points to maintain this facility. There were no borrowings outstanding under this facility as of September 28, 2003. Any borrowings outstanding as of June 2006 would mature on that date.

      In September 2003, the Corporation amended its committed revolving credit facility with a Canadian bank, which is secured by inventory and accounts receivable located in Canada, to increase the borrowing capacity from CAD$30 million to CAD$45 million (approximately US$33 million). The Corporation also extended the term of the Canadian credit facility from March 2004 to September 2006. There were no borrowings outstanding under this facility as of September 28, 2003. Any borrowing outstanding as of September 2006 would mature on that date.

      Principal payments due on long-term debt, including capital leases, for the remainder of calendar year 2003 and in each of the calendar years 2004 through 2007 are $0.8 million, $129.1 million, $9.0 million, $150.9 million and $0.5 million, respectively.

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

      The manufacturing initiatives had three major components:

	•	Revising manufacturing processes to improve equipment and labor productivity;
	•	Consolidating manufacturing capacity; and
	•	Investing in tooling and training to achieve superior levels of productivity.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)

      The total cost of the program was approximately $84 million plus approximately $7 million of capital expenditures. The components of pre-tax charges related to this program are as follows:

      The following table summarizes the provision for restructured operations and activity since inception: