Back to GetFilings.com
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________________ TO _________________.
COMMISSION FILE NUMBER 1-4682
THOMAS & BETTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 22-1326940
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8155 T&B BOULEVARD, MEMPHIS, TENNESSEE 38125
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 252-8000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------------
Common Stock, no par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /
As of February 13, 1998, 55,121,199 shares of the Registrant's Common Stock
were outstanding, and the aggregate market value of the voting stock held by
non-affiliates of the Registrant (based on the average bid and asked prices of
such stock on the New York Stock Exchange) was $3,004,411,428.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended
December 28, 1997, are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held May 6, 1998, are incorporated by reference into Part III.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
PART I
ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 11
ITEM 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Executive Officers of the Registrant . . . . . . . . . . . 13
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Shareholder Matters. . . . . . . . . . . . . . . . . . . . 15
ITEM 6. Selected Financial Data. . . . . . . . . . . . . . . . . . 16
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation . . . . . . . . . . . . 16
ITEM 7A. Quantitative and Qualitative Disclosures about
Market Risk . . . . . . . . . . . . . . . . . . . . . . . 16
ITEM 8. Financial Statements and Supplementary Data. . . . . . . . 16
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . 17
PART III
ITEM 10. Directors and Executive Officers of the Registrant . . . . 17
ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . 18
ITEM 12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . . 18
ITEM 13. Certain Relationships and Related Transactions . . . . . . 18
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . 19
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Page 2 of 21
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Thomas & Betts Corporation (the Corporation) is a leading manufacturer of
connectors and components for worldwide electrical and electronics markets. The
Corporation operates over 100 manufacturing and distribution facilities in 20
countries. The Corporation was established in 1898 as a sales agency for
electrical wires and raceways, was incorporated in New Jersey in 1917 and
reincorporated in Tennessee in May 1996. Executive offices are located at 8155
T&B Boulevard, Memphis, Tennessee 38125, and the telephone number is
901-252-8000.
The products manufactured and sold by the Corporation are classified into
business segments that are organized around market channels: Electrical
Construction and Maintenance Components (Electrical), Electronic/OEM Components
(Electronics) and Other Products and Components (Other). The Corporation's
products are sold worldwide through those channels to electrical, electronic and
heating, ventilation and air-conditioning (HVAC) distributors; original
equipment manufacturers (OEMs); mass merchandisers; catalog merchandisers; and
home centers. No single customer in any one of these market channels accounted
for more than 5% of 1997 net sales.
In addition to new product development, market penetration, new markets,
and joint venture arrangements, the Corporation pursues acquisitions as a means
of growth. In 1997, the Corporation completed six acquisitions for total
consideration of approximately $62.0 million, consisting of cash and 793,560
shares of common stock. The July 1997 acquisition of Diamond Communications
Products, Inc., a manufacturer of hardware for the worldwide communications
industry, enhanced the Corporation's offering in the "drop-end" portion of the
cable television industry that connects cable service to people's homes. Other
1997 acquisitions increased the breadth of products offered within the
Electrical segment.
In late 1996, the Corporation acquired Augat Inc., a worldwide manufacturer
of electronic connectors and devices for the telecommunications, cable
television, automotive and information processing industries. As a result of
that acquisition, the Corporation gained a position among the world's five
largest electronic connector manufacturers, balanced its electronic and
electrical businesses and achieved critical mass in higher-growth markets. Also
in 1996, the Corporation acquired Amerace Corporation, a manufacturer of
electrical components for utility and industrial markets, and six smaller
companies and product lines.
ELECTRICAL CONSTRUCTION AND MAINTENANCE COMPONENTS
The Corporation's Electrical segment's markets include industrial
construction, renovation, maintenance and repair; commercial and residential
construction and renovation; project construction; and industrial OEM, primarily
in North America. Total sales of the segment were $764.2, $643.4 and $573.6
million, or 36.1%, 32.4% and 33.1% of total sales for 1997, 1996 and 1995,
respectively.
Page 3 of 21
The Corporation designs, manufactures and markets thousands of different
electrical connectors, components and other products for electrical
applications. Management believes that the Corporation has a leading position
in the market for many of those products. Products include fittings and
accessories for electrical raceways; fastening products, such as plastic and
metallic ties for bundling wire and flexible tubing; connectors, such as
compression and mechanical connectors for high-current power and grounding
applications; indoor and outdoor switch and outlet boxes, covers and
accessories; floor boxes; metal framing used as structural supports for
conduits, cable trays, electrical enclosures and lighting raceways; ground rods
and clamps; outdoor security, roadway and hazardous location lighting; circuit
breakers, safety switches and meter centers; and other products, including
insulation products, wire markers and application tooling products. Products
are sold under a variety of the Corporation's brand names.
Electrical products are sold through electrical distributors and retail
outlets such as home centers and mass merchants. The Corporation has
relationships with over 2,000 national, regional and independent distributors
and buying groups with locations across North America. The Corporation has
strong relationships with its distributors as a result of the breadth and
quality of its product line, innovative service programs, product innovation,
competitive pricing and brand name recognition among its customers. The
Corporation has a network of factory and independent sales representatives who
work with distributors, end users and retail outlets to increase demand for its
products. The Corporation has thousands of customers, and no single end user,
distributor, retailer or group of affiliated distributors accounted for more
than 7% of the Electrical segment's 1997 net sales.
A small portion of Electrical segment sales is currently realized outside
of North America as electrical standards vary by region, and historically the
Corporation has emphasized North American standards. The Corporation sees
potential to further grow participation in markets outside of North America by
developing or acquiring product lines that conform to other regional standards.
ELECTRONIC/OEM COMPONENTS
The Corporation's electronic components are sold primarily to OEM's in the
automotive, information services, office equipment, industrial electronics,
telecommunications and broadband communications - including cable television
(CATV), test equipment, computer-aided-engineering and manufacturing systems,
instrumentation, medical electronics markets, and additional applications in
aerospace, businesses and also through electronics, telecommunications and CATV
distributors. No single end user or distributor of the Corporation's electronic
components accounted for more than 12% of the Electronics segment 1997 net
sales. Total Electronics segment sales were $893.9, $903.9 and $834.1 million,
or 42.3%, 45.5% and 48.1% of the Corporation's total sales for 1997, 1996 and
1995, respectively.
The Corporation's electronic/OEM components include: printed circuit
connectors; IDC connectors for mass termination of flat cables;
custom-engineered connectors for automotive and professional electronics
applications; flexible interconnects, flat cables and assemblies for automotive
and other applications; cable ties; terminals; D-subminiature connectors, a
broad group of industry standard connectors; custom and standard switches,
printed circuit board sockets and terminal blocks;
Page 4 of 21
modular voice and data connectors and related components; CATV drop hardware; RF
connectors; fiber management systems; and fiber optic connectors and splitters.
These components are sold under a variety of the Corporation's brand names.
The Corporation manufactures and sells its standard components in North
America through electronic distributors and directly to end users, and provides
customer-specific components directly to major OEM's. The Corporation sells
through national, regional and local distributors serving a large customer base.
The Corporation also manufactures and markets its electronic/OEM components
internationally, with design, manufacturing and distribution capabilities in
Europe and the Far East. In Europe and the Far East, as in North America,
electronic/OEM components are sold primarily to automotive, computer, office
equipment, test equipment, instrumentation, industrial automation and
telecommunications markets, and certain electronic components of the Corporation
are developed and manufactured for specific customer applications.
OEM customers have shown a trend of reducing the number of their preferred
suppliers, focusing on companies that can meet quality and delivery standards
and that have a global presence, a broad product package, strong design
capability and competitive prices. The Corporation has achieved a preferred
supplier designation from many of its most important OEM customers for
electronic components, and continues to seek this preferred status from other
accounts.
OTHER PRODUCTS AND COMPONENTS
The Corporation sells its other products and components, comprised of
heating products, steel poles and towers, and utility and telecommunications
components, through distributors and directly to end-users. No single end-user
or distributor accounted for more than 3% of the Corporation's Other Products
and Components segment 1997 net sales. Total Other Products and Components
sales were $456.7, $437.8 and $325.7 million, or 21.6%, 22.1% and 18.8% of the
Corporation's total sales for 1997, 1996 and 1995, respectively.
HEATING PRODUCTS
The Corporation designs, manufactures and markets heating and ventilation
products for commercial and industrial buildings. Products include gas, oil and
electric unit heaters, gas-fired duct furnaces, indirect and direct gas-fired
make-up air heaters, infrared heaters, and evaporative cooling and heat recovery
products for the heating, ventilation and air-conditioning (HVAC) marketplace
under the Reznor and E.K. Campbell brand names. Those products are sold through
HVAC, mechanical and refrigeration distributors in over 2,000 locations
throughout North America and Europe.
Page 5 of 21
TRANSMISSION POLES AND TOWERS
The Corporation designs, manufactures and markets transmission and
distribution poles and towers for North American power and telecommunications
companies and for export. Those products are primarily sold to five types of
end-users: investor-owned utilities; cooperatives, which purchase power from
utilities and manage its distribution to end-users; municipal utilities; cable
television operating companies; and telephone companies. The Corporation's
products include tubular steel transmission and distribution poles and lattice
steel transmission towers. The Corporation manufactures and sells its
transmission towers and its transmission and distribution poles under the
Lehigh, Meyer and Thomas & Betts brand names.
TELECOMMUNICATIONS COMPONENTS
The Corporation designs, manufactures and markets aerial, pole, pedestal
and buried splice enclosures; connectors; encapsulation and sheath repair
systems; cable ties; and specialty devices for cable television companies and
telephone operating companies. Components are sold under a variety of the
Corporation's brand names both directly to end-users and through distributors.
OTHER COMPONENTS
The Corporation designs, manufactures and markets flood, roadway and
security lighting fixtures and connectors, grounding systems, and fastening and
metal framing components for North American power companies and for HVAC, PVF
(Pipe, Valve and Fittings) and specialty tool distributors. Those products are
primarily sold to four markets: investor-owned utilities, cooperatives,
municipal utilities, and HVAC and plumbing distributors. The Corporation's other
component products include power connectors and grounding systems; roadway,
security and area lighting fixtures; metal framing; cable ties; meter sockets;
evaporative cooling and energy recovery equipment; and power connectors.
Products are sold under a variety of the Corporation's brand names.
MANUFACTURING AND DISTRIBUTION
The Corporation 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 processes, including computer software for
scheduling, material requirements, shop floor control, capacity planning, and
the warehousing and shipment of products.
Page 6 of 21
The Corporation's products enjoy a reputation for quality in the markets in
which they are sold. 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. These techniques
include just-in-time manufacturing programs for more efficient use of machine
tools in manufacturing different products, statistical process control,
statistical problem solving, and other processes related to the Corporation's
SIGNATURE SERVICE/DMI program.
From its origin as a delivery guarantee, the SIGNATURE SERVICE/DMI program
has evolved into a partnership for profitability that encompasses purchasing
incentives, extensive marketing support, training and service discounts. The
DMI process is now the benchmark in the electrical component industry for how
business, through electronic commerce, should be conducted. In 1997,
participation in the DMI program increased 26% over the previous year. The DMI
advanced partnership includes customer-cost-reduction processes such as
automatic stock replenishment, advanced distributor inventory modeling,
automatic receiving, price synchronization, invoice balancing and summary
billing. The program also provides rights to return merchandise which are
prevalent in the electrical components industry. Combining those
business-process redefinitions with a leading effort in electronic commerce,
such as extensive use of industry-standard Electronic Data Interchange (EDI),
has made the DMI partnership a success for the Corporation as well as for its
participating distributors.
RAW MATERIALS
The Corporation purchases a wide variety of raw materials for the
manufacture of its products, including metals such as brass, copper, aluminum,
steel plate, steel strip and malleable iron castings, and resins and rubber
compounds. The Corporation's sources of raw materials and component parts are
well established and are sufficiently numerous to avoid serious interruption of
production in the event that certain suppliers are unable to provide raw
materials and component parts.
RESEARCH AND DEVELOPMENT
The Corporation has research, development and engineering capabilities in
each of the three regions of the world in which it operates in order to respond
locally to its customers' needs and technological requirements. The Corporation
has a reputation for innovation based upon its ability to develop quality new
and improved products that meet the specific application needs of its customers.
The Corporation allocates significant resources to its research and
development activities. The Corporation's research, development and engineering
expenditures for the creation and application of new and improved products and
processes were $51.9, $47.2 and $44.1 million for 1997, 1996 and 1995,
respectively.
Page 7 of 21
The research and development activities of the Corporation are focused on
complementary product areas and specific high-growth markets. Most research and
development activity in 1997 took place in the Electronics segment with efforts
focused in part on the Metallized Particle Interconnect (MPI-TM-), a
next-generation microprocessor socket for high-end computers and workstations.
PATENTS AND TRADEMARKS
The Corporation owns approximately 2,043 active patent registrations and
applications worldwide. The Corporation has over 1,283 active trademark
registrations and applications worldwide, including THOMAS & BETTS, T&B,
AGASTAT, ALCOSWITCH, AMERICAN ELECTRIC LIGHTING, ANCHOR, ANSLEY, ARMIGER, ASTER,
AUGAT, BLACKBURN, BOWERS, BUCHANAN, CANSTRUT, CATAMOUNT, CENTER-LOK,
COLOR-KEYED, COMMANDER, DIAMOND, ELASTOMERIC TECHNOLOGIES, EK CAMPBELL,
ELASTIMOLD, ELECTROLINE, EPITOME, ELECTROLAY, EVER-LOK, E-Z-CODE, FLEXSTRIP,
HAZLUX, HOLMBERG, KINDORF, KOLD-N-CLOSE, LIQUID TITE, LRC, MARR, MARRETTE,
MAX-GARD, MEYER, MICROLECTRIC, MPI, NEVADA WESTERN, PHOTON, RDI, REZNOR,
RUSSELLSTOLL, SACHS, SIGNATURE SERVICE, SNAP-N-SEAL, STA-KON, STEEL CITY,
SUPERSTRUT, TAYLOR, TELZON, TY-FAST, TY-RAP, UNION, VALON and ZINSCO. While the
Corporation considers its patents and trademarks (including trade dress) to be
valuable assets, it does not believe that its competitive position is dependent
solely on patent or trademark protection or that its operations are dependent
on any individual patent or trademark. The Corporation does not consider any of
its licenses, franchises or concessions to be material to its business.
COMPETITION
The Corporation encounters competition in all areas of its business, and
the methods of competition vary across the Corporation's segments. The
Corporation competes primarily on the basis of product quality, technology,
price, performance and customer service. Although no single company competes
directly with the Corporation in all of its product lines, various companies
compete in one or more product lines. There are many companies that manufacture
a number of products that compete with those of the Corporation. All of the
Corporation's products are in competition with products of other manufacturers,
some of which have substantially greater sales and assets than the Corporation.
In addition, the Corporation competes with many smaller companies.
EMPLOYEES
As of December 28, 1997, the Corporation and its subsidiaries had
approximately 16,400 full-time employees worldwide. Employees of the
Corporation's international subsidiaries in the aggregate comprise approximately
40% of all employees. The Corporation believes its relationship with its
employees is excellent.
Page 8 of 21
REGULATION
The Corporation is subject to federal, state and local environmental laws
and regulations which govern the discharge of pollutants into the air, soil and
water, as well as the handling and disposal of solid and hazardous wastes. The
Corporation believes that it is currently in substantial compliance with all
applicable environmental laws and regulations and that the costs of maintaining
or coming into compliance with such environmental laws and regulations will not
be material to the Corporation's financial statements.
FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. DOMESTIC OPERATIONS
For information concerning financial results for industry segments and
foreign and U.S. domestic operations for the three years ended December 28,
1997, December 29, 1996, and December 31, 1995, refer to Notes 12 and 13,
respectively, of Notes to Consolidated Financial Statements contained in the
Corporation's 1997 Annual Report to Shareholders, which are incorporated herein
by reference. Export sales originating in the U.S. were $29.3, $43.5 and $37.2
million for 1997, 1996 and 1995, respectively.
ITEM 2. PROPERTIES
The Corporation has total plant, office and distribution space of
approximately 10,232,000 sq. ft. in 175 locations in 29 states, the Commonwealth
of Puerto Rico and 18 other countries. This space is composed of 6,796,000 sq.
ft. of manufacturing space, 2,627,000 sq. ft. of office and distribution space
and 809,000 sq. ft. of idle space.
Page 9 of 21
The following table lists the Corporation's manufacturing locations by
segment as of December 28, 1997:
Approximate Area
In Sq. Ft.
No. Of -----------------
Segment Location Facilities Leased Owned
- ------- -------- ---------- ------ -----
Electrical Construction
and Maintenance Components
Arkansas 1 246,000
California 2 249,000
Georgia 2 220,000 160,000
Massachusetts 1 116,000
Mississippi 1 237,000
Ohio 1 57,000
Oklahoma 1 108,000
Pennsylvania 1 80,000
Puerto Rico 4 112,000 28,000
Tennessee 2 457,000
Texas 1 36,000
Canada 7 109,000 305,000
Mexico 5 361,000
Electronic/OEM Components
Arizona 1 11,000
California 1 120,000
Florida 1 65,000
Maine 1 100,000
Massachusetts 1 53,000
Michigan 4 110,000 230,000
New Jersey 1 65,000
New York 2 389,000
Pennsylvania 2 41,000
South Carolina 3 89,000
Washington 2 120,000
Canada 2 53,000
England 3 37,000 69,000
Hungary 1 62,000
Japan 1 75,000
Luxembourg 2 27,000 43,000
Malaysia 1 24,000
Mexico 2 785,000
Singapore 1 60,000
Switzerland 1 188,000
Page 10 of 21
Approximate Area
In Sq. Ft.
No. Of -----------------
Segment Location Facilities Leased Owned
- ------- -------- ---------- ------ -----
Other Products and Components
Kansas 1 43,000
New Jersey 1 168,000
New Mexico 1 100,000
Pennsylvania 1 227,000
South Carolina 1 105,000
Texas 1 136,000
Wisconsin 1 171,000
Belgium 1 13,000
Mexico 1 136,000
The Corporation leases approximately 228,000 sq. ft. of space in Memphis,
Tennessee, for its corporate and divisional headquarters. Principal sales
offices and distribution facilities are located in 2,399,000 sq. ft. of
property; approximately one-half of which is leased.
The Corporation has 809,000 sq. ft. of idle manufacturing and office space
primarily in Alabama, Arkansas, Florida, Massachusetts, New Jersey,
Pennsylvania, and Canada, not included in the above table.
ITEM 3. LEGAL PROCEEDINGS
Owners and operators of sites containing hazardous substances, as well as
generators of hazardous substances, are subject to broad liability under various
federal and state environmental laws and regulations, including liability for
cleanup costs and damages arising out of past disposal activity. Such liability
in many cases may be imposed regardless of fault or the legality of the original
disposal activity. The Corporation is the owner or operator or former owner of
various manufacturing facilities currently being evaluated by the Corporation
for the presence of contamination which may require remediation, including
closed facilities in Anniston, Alabama; Elizabeth, New Jersey; Pittsburgh,
Pennsylvania; and St. Louis, Missouri; and currently operated facilities in
Hager City, Wisconsin; and Lancaster, South Carolina. In addition, the
Corporation is evaluating three manufacturing plants which were sold by American
Electric prior to its acquisition by the Corporation, which are located in
Bainbridge, Georgia; Medora, Indiana; and Monroe, Louisiana and which may
require site remediation.
All but two of the above facilities (Elizabeth and Lancaster) were
purchased by American Electric from other parties between the years 1985 and
1988. With respect to all but one of those former American Electric facilities
(Pittsburgh), at the time of those purchases by American Electric, the sellers
committed to indemnify American Electric for environmental liabilities that
occurred prior to the purchase of the facilities by American Electric. The
Corporation believes that the indemnities are reliable; however, there can be no
assurances that such indemnities will be honored. Subsequent
Page 11 of 21
to the Corporation's acquisition of American Electric, the Corporation entered
into agreements with the sellers to cooperate with each other in resolving
obligations in connection with the above-mentioned environmental issues.
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, 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
(the "Superfund" Act) or similar state environmental statutes. Pursuant to the
Asset Purchase Agreement dated June 28, 1985, between American Electric and ITT
Corporation (ITT), ITT has to date assumed responsibility for costs associated
with contamination prior to June 1985 at four of these sites. The Corporation
has assumed responsibility for its share of costs at the remaining eight sites
covered by this Agreement.
In January 1996, the Corporation acquired Amerace Corporation. Pursuant to
the various environmental laws and regulations described above, Amerace is
evaluating or remediating, or may have liability associated with, contamination
at four facilities formerly owned or operated by Amerace (located in Butler, New
Jersey; Richland, Michigan; Tenafly, New Jersey; and Union, New Jersey) and at
one facility currently owned and operated by Amerace located in Hackettstown,
New Jersey. In addition, Amerace has received notifications from the EPA or
from similar state environmental regulatory agencies or private parties that
Amerace, along with others, may currently be potentially responsible for its
share of the costs relating to the remediation of 10 sites pursuant to the
Superfund Act, or similar state environmental statutes.
In December 1996, the Corporation acquired Augat Inc. Pursuant to the
various environmental laws and regulations described above, Augat is evaluating
or remediating, or may have liability associated with, contamination at five
facilities currently owned or operated by Augat (located in Canton,
Massachusetts; Horseheads, New York; Mashpee, Massachusetts; and at two
facilities in Montgomery, Alabama). In addition, Augat has received
notifications from the EPA or from similar state environmental regulatory
agencies or private parties that Augat, along with others, may currently be
potentially responsible for its share of the costs relating to the remediation
of five sites pursuant to the Superfund Act or similar state environmental
statutes. During 1997, Augat entered into settlements for de minimus amounts
with respect to two of these sites, and Augat's designation as a Potential
Responsible Party was withdrawn with respect to one of those sites.
In July 1997, the Corporation acquired Diamond Communications, Inc.
Pursuant to the various environmental laws and regulations described above,
Diamond is evaluating, and may have liability associated with, contamination at
the Garwood, New Jersey, facility currently owned and operated by Diamond.
The Corporation is not able to predict with certainty the extent of its
ultimate liability with respect to any pending or future environmental matters.
However, the Corporation does not believe that any such liability, with respect
to the aforementioned environmental matters, will be material to its financial
statements.
Page 12 of 21
The Corporation is subject to other legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of management, the
aggregate liability, if any, with respect to these other actions will not
materially adversely affect the financial position or results of operations of
the Corporation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 28, 1997.
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):
Date Assumed
Name Position Age Present Position
---- -------- --- ----------------
Clyde R. Moore President and 44 May 1997
Chief Executive Officer
Fred R. Jones Vice President-Finance 50 August 1995
and Treasurer
(Chief Financial Officer)
T. Roy Burton President-Electronics/OEM Group 50 May 1997
Jerry Kronenberg Vice President-General Counsel 63 September 1994
Gregory M. Langston Group President-International 42 February 1998
David D. Myler Vice President-Administration 53 January 1994
W. Neil Parker President-Electrical Components 55 May 1997
Group
Gary R. Stevenson Vice President-Operations 45 January 1994
Page 13 of 21
Mr. Moore previously was president and chief operating officer of FL
Industries, Inc. (1990 to 1992) and president of its American Electric
Division from 1985 until its acquisition by Thomas & Betts Corporation in
1992. He was president-Electrical Division (1992 to 1994) and chief
operating officer (1994 to 1997) of the Corporation. He has been president
of the Corporation since 1994.
Mr. Jones previously was president of ABB Financial Services, Inc. (1990 to
1992) and senior vice president and chief financial officer (1992 to 1995)
of Joy Technologies, Inc. (manufacturer of industrial, mining and pollution
control equipment).
Mr. Burton previously was vice president and general manager of Bendix
Connector Operations (1989 to 1992), vice president, Information Technology
Operations (1992 to 1993), and vice president, Aerospace Operations (1993
to 1994) of Amphenol Corporation. He was president-Electronics/OEM
Division (1994 to 1997).
Mr. Kronenberg was previously chairman of the Labor and Employee Relations
Committee of the law firm of McBride, Baker & Coles (1990 to 1994).
Mr. Langston was previously managing director of Square D Australia (1989
to 1990), managing director of Square D Asia Pacific (1991 to 1992),
president of Square D de Mexico (1992) and president of Groupe Schneider
Mexico (1992 to 1995). He was president-Utility Division, (1995 to 1997)
and president-Utility Group (1997 to February 1998).
Mr. Myler was previously vice president, Administration (1991 to 1994) of
Thomas & Betts Holdings, Inc. (name changed from FL Industries, Inc. on
June 11, 1992).
Mr. Parker was previously vice president of General Electric Canada (1983
to 1992), president of Thomas & Betts Limited (1992 to 1996),
president-Thomas & Betts Canada (1995 to 1996), president, Electrical
Components Division (1996 to 1997) and chief executive officer of Thomas &
Betts Limited (1996 to 1998).
Mr. Stevenson was previously vice president, Operations of the American
Electric Division of FL Industries, Inc. (1989 to 1992) and vice
president-Operations (1992 to 1994) of Thomas & Betts Holdings, Inc. (name
changed from FL Industries, Inc. on June 11, 1992).
Executive officers are elected by, and serve at the discretion of, the
Board of Directors for a term of one year, which expires May 6, 1998. There is
no arrangement or understanding between any officer and any person, other than a
director or an executive officer of the Corporation acting in his official
capacity, pursuant to which any officer was selected. There are no family
relationships between any executive officer and any other officer or director of
the Corporation. There has been no event involving any executive officer under
any bankruptcy act, criminal proceeding, judgment or injunction during the past
five years.
Page 14 of 21
PART II
Information for Items 5 through 8 of this Report appears in the
Corporation's 1997 Annual Report to Shareholders as indicated in the following
table and is incorporated herein by reference.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Information regarding market information, shareholders and dividends is
contained in the Financial Highlights, Quarterly Review and Corporate
Information sections of the Corporation's 1997 Annual Report to Shareholders, on
pages 1, 30, 36 and 39 and is incorporated herein by reference.
Page 15 of 21
PAGE IN
ANNUAL REPORT TO
SHAREHOLDERS
------------
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Data . . . . . . . 37
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATION. . . . . . . . . . . . . . . . . . . . 17-20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK. . . . . . . . . . . . . . . . 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Earnings. . . . . . . 21
Consolidated Balance Sheets. . . . . . . . . . . 22
Consolidated Statements of Cash Flows. . . . . . 23
Consolidated Statements of Shareholders'
Equity . . . . . . . . . . . . . . . . . . . . 24
Notes to Consolidated Financial Statements . . . 24-34
FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-K and in written and oral statements
made by the Corporation may constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words "believe," "expect" and "anticipate"
and similar expressions identify forward-looking statements. Although these
statements reflect the Corporation's current views with respect to future events
and financial performance, they are subject to many uncertainties and factors
relating to the Corporation's operations and business environment which may
cause the actual results of the Corporation to be materially different from any
future results expressed or implied by such forward-looking statements.
Examples of such uncertainties include, but are not limited to: changes in
customer demand for various products of the Corporation that could affect its
overall product mix, margins, plant utilization levels and asset valuations;
economic slowdown in the U.S. (contrary to the Corporation's expectations of
favorable economic conditions throughout 1998) or economic slowdowns in the
Corporation's major offshore markets, including Canada, Western Europe
(particularly Germany and the U.K.), Japan and Taiwan; effects of significant
changes in monetary and fiscal policies in the U.S.
Page 16 of 21
and abroad which could result in currency fluctuations, including fluctuations
in the Canadian dollar, German mark and Japanese yen; inflationary pressures
which could raise interest rates and consequently the Corporation's cost of
funds; unforeseen difficulties in completing identified restructuring actions
initiated in 1996 in connection with the Augat merger, including disposal of
idle facilities, geographic shifts of production locations and closure of
redundant administrative facilities; unforeseen problems in the Corporation's
computer systems and from third parties with whom the Corporation deals on
financial transactions, specifically those related to "Year 2000" date-
recognition ability in time-sensitive software; availability and pricing of
commodities and materials needed for production of the Corporation's products,
including steel, copper, zinc, aluminum and plastic resins; increased downward
pressure on selling prices for the Corporation's products; unforeseen
difficulties arising from the integration of acquired businesses with the
Corporation's operations; changes in financial results and consequently in
equity income from the Corporation's equity investments in Taiwan, Japan,
Belgium and the U.S.; changes in environmental regulations and policies that
could impact projections of remediation expenses; significant changes in
governmental policies domestically and abroad that could create trade
restrictions, patent enforcement issues, tax-rate changes and changes in tax
treatment of such items 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.
The Corporation does not, by making any forward-looking statements,
undertake any obligation to update them (whether as a result of new information,
future events or otherwise).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
Information for Item 9 of this Report appears on page 20 of the Definitive
Proxy Statement for the Corporation's 1998 Annual Meeting of Shareholders to be
held on May 6, 1998, and is incorporated herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding members of the Corporation's Board of Directors is
presented in sections "Security Ownership of Management," "Election of
Directors," "The Board of Directors," and "Committees of the Board of Directors"
and on pages 2 through 9 of the Definitive Proxy Statement for the Corporation's
1998 Annual Meeting of Shareholders which will be held May 6, 1998, and is
incorporated herein by reference. Information regarding executive officers of
the Corporation is included above in Part I of this Form 10-K under the caption
"Executive Officers of the Registrant" pursuant to Instruction 3 to Item 401(b)
of Regulation S-K and General Instruction G(3) of Form 10-K.
Page 17 of 21
Information for Items 11 through 13 of this Report appears in the
Definitive Proxy Statement for the Corporation's 1998 Annual Meeting of
Shareholders to be held on May 6, 1998, as indicated in the following table and
is incorporated herein by reference.
PAGE IN PROXY
STATEMENT
---------
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation . . . . . . . . . . . . . . . . . 10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Security Ownership of Management . . . . . . . . . . . . 2
Security Ownership of Certain Beneficial
Owners. . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Employment Contracts, Termination of Employment and
Change-of-Control Arrangements. . . . . . . . . . . 13
Page 18 of 21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The consolidated financial statements of the Corporation,
together with the report thereon of KPMG Peat Marwick LLP, dated
February 5, 1998, are presented on pages 21-35 of the
Corporation's 1997 Annual Report to Shareholders and are
incorporated herein by reference. With the exception of the
aforementioned information and the information incorporated by
reference in Items 5, 6, 7, 7A and 8 hereof, the Corporation's
1997 Annual Report to Shareholders is not to be deemed as filed
as part of this Report.
2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted because they
are not applicable or the required information is included in the
consolidated financial statements, or the notes thereto,
contained in the Corporation's 1997 Annual Report to Shareholders
and incorporated herein by reference.
3. EXHIBITS
Exhibits 3.1, 3.2, 4.1 through 4.6, 10.1 through 10.14, 12, 13,
21, 23.1, 23.2, 24 and 99 are being filed in connection with
this Report and incorporated herein by reference.
The Exhibit Index on pages E-1 through E-3 is incorporated herein
by reference.
(b) REPORTS ON FORM 8-K
During the last quarter of the period covered by this Report on
Form 10-K, the Corporation filed one Current Report on Form 8-K,
dated December 4, 1997, under Items 5 and 7, reporting the
adoption of a shareholder rights plan.
Page 19 of 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Corporation has duly caused this Report to
be signed on its behalf by the undersigned, hereunto duly authorized.
THOMAS & BETTS CORPORATION
(Registrant)
BY: /s/ Fred R. Jones
-------------------------------------
Fred R. Jones
Vice President--Finance and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Corporation in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- --------- -------- ----
/s/CLYDE R. MOORE President, Chief Executive Officer March 19, 1998
- -------------------------- (PRINCIPAL EXECUTIVE OFFICER) and Director
Clyde R. Moore
/s/FRED R. JONES Vice President--Finance and Treasurer March 19, 1998
- -------------------------- (PRINCIPAL FINANCIAL OFFICER AND
Fred R. Jones PRINCIPAL ACCOUNTING OFFICER)
/s/T. KEVIN DUNNIGAN* Chairman of the Board and Director
- --------------------------
(T. Kevin Dunnigan)
/s/JEANANNE K. HAUSWALD* Director
- --------------------------
Jeananne K. Hauswald
/s/ROBERT A. KENKEL* Director
- --------------------------
Robert A. Kenkel
/s/JOHN N. LEMASTERS* Director
- --------------------------
John N. Lemasters
/s/JEAN-PAUL RICHARD* Director
- --------------------------
Jean-Paul Richard
Page 20 of 21
SIGNATURE CAPACITY DATE
- --------- -------- ----
/s/IAN M. ROSS* Director
- --------------------------
Ian M. Ross
/s/WILLIAM H. WALTRIP* Director
- --------------------------
William H. Waltrip
*By: /s/ Fred R. Jones March 19, 1998
---------------------
Fred R. Jones
As attorney-in-fact for the
above-named officers and
directors pursuant to powers
of attorney duly executed by
such persons.
Page 21 of 21
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ -----------------------
3.1 Charter of the Corporation, as amended
3.2 By-laws of the Corporation
4.1 Indenture dated as of January 15, 1992, between the Corporation and
Morgan Guaranty Trust Company of New York, as Trustee, relating to the
Corporation's unsecured debt securities. (Filed as Exhibit 4.5 to the
Corporation's Registration Statement on Form 8-B, filed May 2, 1996,
and incorporated herein by reference.)
4.2 First Supplemental Indenture dated as of May 2, 1996, between the
Corporation and Morgan Guaranty Trust Company of New York. (Filed as
Exhibit 4.3 to the Corporation's Registration Statement on Form 8-B,
filed May 2, 1996, and incorporated herein by reference.)
4.3 Second Supplemental Indenture dated as of February 10, 1998, between
the Corporation and The Chase Manhattan Bank, as Trustee, and form of
note relating to the Corporation's Medium-Term Notes; the last of
which is due February 13, 2003. (Filed as Exhibits 1, 4.1 and 4.2 to
the Corporation's Current Report on Form 8-K dated February 10, 1998,
Commission File No. 1-4682, and incorporated herein by reference.)
4.4 Form of 6 1/2% Senior Note due January 15, 2006. (Filed as Exhibit
4.3 to the Corporation's Registration Statement No. 333-893 on Form
S-4, and incorporated herein by reference.)
4.5 Form of 8 1/4% Senior Note due January 15, 2004. (Filed as an exhibit
to the Corporation's 1991 Annual Report on Form 10-K, Commission File
No. 1-4682, and incorporated herein by reference.)
4.6 Rights Agreement dated as of December 3, 1997, between the Corporation
and First Chicago Trust Company of New York, as Rights Agent, and form
of right certificate. (Filed as Exhibits 1 and 2 to the Corporation's
Registration Statement on Form 8-A, filed December 15, 1997, and
incorporated herein by reference.)
10.1 Credit Agreement dated March 29, 1995, among the Corporation and
Morgan Guaranty Trust Company of New York, individually and as agent,
and certain lenders. (Filed as an exhibit to the Corporation's 1995
Annual Report on Form 10-K, Commission File No. 1-4682, and
incorporated herein by reference.)
10.2 Amendment No. 1 to Credit Agreement dated December 8, 1995, among the
Corporation and Morgan Guaranty Trust Company of New York,
individually and as agent, and certain lenders. (Filed as an exhibit
to the Corporation's 1995 Annual Report on Form 10-K, Commission File
No. 1-4682, and incorporated herein by reference.)
E-1
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
10.3 Amendment No. 2 to Credit Agreement dated May 2, 1996, among the
Corporation and Morgan Guaranty Trust Company of New York,
individually and as agent, and certain lenders. (Filed as Exhibit
10.1 to the Corporation's Registration Statement on form 8-B, filed
May 2, 1996, and incorporated herein by reference.)
10.4 Amendment No. 3 to Credit Agreement dated December 5, 1997, among the
Corporation and Morgan Guaranty Trust Company of New York,
individually and as agent, and certain lenders.
10.5 1990 Stock Option Plan and Form of Stock Option Agreement pursuant to
1990 Stock Option Plan. (Filed as an exhibit to the Corporation's
1990 Annual Report on Form 10-K, Commission File No. 1-4682, and
incorporated herein by reference.)
10.6 1993 Management Stock Ownership Plan, as amended, and forms of grant
agreements.
10.7 Executive Incentive Plan. (Description of the executive incentive
plan contained in the Definitive Proxy Statement for the Corporation's
1998 Annual Meeting of Shareholders, under the heading "The Human
Resources Committee Report on Executive Compensation," is incorporated
herein by reference.)
10.8 Pension Restoration Plan.
10.9 Retirement Plan for Nonemployee Directors, as amended.
10.10 Deferred Fee Plan for Nonemployee Directors.
10.11 Form of executive officer employment agreement, as amended.
10.12 Agreement with Kevin Dunnigan dated February 5, 1997. (Filed as an
exhibit to the Corporation's 1996 Annual Report on Form 10-K,
Commission File No. 1-4682, and incorporated herein by reference.)
10.13 1985 Stock Option Plan. (Filed as an exhibit to the Corporation's
1992 Annual Report on Form 10-K, Commission File No. 1-4682, and
incorporated herein by reference.)
10.14 Supplemental Executive Retirement Plan.
12 Statement re Computation of Ratio of Earnings to Fixed Charges.
(Filed as Exhibit 12 to the Corporation's Current Report on Form 8-K,
dated February 5, 1998, Commission File No. 1-4682, and incorporated
herein by reference.)
13 Annual Report to Shareholders for the fiscal year ended December 28,
1997.
21 Subsidiaries of the Corporation.
23.1 Consent of Independent Public Accountants.
E-2
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
23.2 Consent of Independent Public Accountants.
24 Power of Attorney.
99 Independent Auditor's Report on Augat, Inc.
E-3