Thomas & Betts 10Q 2010 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended September 30, 2010

or

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

8155 T&B Boulevard
Memphis, Tennessee		38125
(Address of principal executive offices)		(Zip Code)

(901) 252-8000

(Registrant’s telephone number, including area code)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act.


Large accelerated filer þ		Accelerated filer o
Non-accelerated filer o		Smaller reporting companyo
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes o No þ

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


		Outstanding Shares
Title of Each Class		at October 25, 2010

Common Stock, $.10 par value		51,820,311

Thomas & Betts Corporation and Subsidiaries

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements — Unaudited:		3
	Consolidated Statements of Operations for the Quarter and Nine months Ended September 30, 2010 and 2009		3
	Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009		4
	Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2010 and 2009		5
	Notes to Consolidated Financial Statements		6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		31
ITEM 4.	Controls and Procedures		31

PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings		32
ITEM 1A.	Risk Factors		32
ITEM 2.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		32
ITEM 6.	Exhibits		32
SIGNATURE			33
EXHIBIT INDEX			34
Statement re Computation of Ratio of Earnings to Fixed Charges
Certification of Principal Executive Officer Under Securities Exchange Act Rules 13a-14(a) or 15d-14(a)
Certification of Principal Financial Officer Under Securities Exchange Act Rules 13a-14(a) or 15d-14(a)
Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) or Rule 15d-14(b)
Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) or Rule 15d-14(b)
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Report includes “forward-looking comments and statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts regarding Thomas & Betts Corporation and are subject to risks and uncertainties in our operations, business, economic and political environment. For further explanation of these risks and uncertainties, see Item 1A. “Risk Factors” in ourForm 10-K for the year ended December 31, 2009. Forward looking statements contain words such as:


• “achieve”	• “anticipates”	• “intends”
• “should”	• “expects”	• “predict”
• “could”	• “might”	• “will”
• “may”	• “believes”	• other similar expressions

These forward-looking statements are not guarantees of future performance. Many factors could affect our future financial condition or results of operations. Accordingly, actual results, performance or achievements may differ materially from those expressed or implied by the forward-looking statements contained in this Report. We undertake no obligation to revise any forward-looking statement included in this Report to reflect any future events or circumstances.

A reference in this Report to “we”, “our”, “us”, “Thomas & Betts” or the “Corporation” refers to Thomas & Betts Corporation and its consolidated subsidiaries.

PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

Thomas & Betts Corporation and Subsidiaries

Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)


	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

Net sales	$	532,966		$	485,075		$	1,517,074		$	1,405,906
Cost of sales		363,276			337,485			1,047,743			988,965

Gross profit		169,690			147,590			469,331			416,941
Selling, general and administrative		98,772			91,957			293,797			277,605

Earnings from operations		70,918			55,633			175,534			139,336
Interest expense, net		(9,042	)		(8,478	)		(26,315	)		(26,317	)
Other (expense) income, net		(975	)		(2,101	)		90			1,649

Earnings before income taxes		60,901			45,054			149,309			114,668
Income tax provision		16,797			12,943			43,652			33,827

Net earnings	$	44,104		$	32,111		$	105,657		$	80,841

Earnings per share:
Basic	$	0.85		$	0.62		$	2.04		$	1.54

Diluted	$	0.84		$	0.61		$	2.00		$	1.53

Average shares outstanding:
Basic		51,602			52,178			51,863			52,356
Diluted		52,641			52,858			52,912			52,987

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

Thomas & Betts Corporation and Subsidiaries

Consolidated Balance Sheets
(In thousands)
(Unaudited)


	September 30,			December 31,
	2010			2009

ASSETS
Current Assets
Cash and cash equivalents	$	435,221		$	478,613
Restricted cash		2,919			2,918
Receivables, net		271,678			197,640
Inventories		243,201			209,268
Deferred income taxes		32,475			31,062
Prepaid income taxes		500			7,340
Other current assets		18,635			17,142

Total Current Assets		1,004,629			943,983

Property, plant and equipment, net		313,176			296,820
Goodwill		942,434			902,053
Other intangible assets, net		292,937			243,930
Other assets		64,798			66,621

Total Assets	$	2,617,974		$	2,453,407


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term debt	$	718		$	522
Accounts payable		171,702			149,556
Accrued liabilities		138,268			113,654
Income taxes payable		25,076			8,849

Total Current Liabilities		335,764			272,581

Long-Term Liabilities
Long-term debt, net of current maturities		639,103			638,014
Long-term benefit plan liabilities		123,410			122,573
Deferred income taxes		25,716			8,723
Other long-term liabilities		63,095			70,307
Contingencies (Note 15)
Shareholders’ Equity
Common stock		5,098			5,179
Additional paid-in capital		34,908			63,835
Retained earnings		1,480,862			1,375,205
Accumulated other comprehensive income (loss)		(89,982	)		(103,010	)

Total Shareholders’ Equity		1,430,886			1,341,209

Total Liabilities and Shareholders’ Equity	$	2,617,974		$	2,453,407

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

Thomas & Betts Corporation and Subsidiaries

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


	Nine Months Ended
	September 30,
	2010			2009

Cash Flows from Operating Activities:
Net earnings	$	105,657		$	80,841
Adjustments:
Depreciation and amortization		60,031			56,417
Share-based compensation expense		8,730			8,946
Deferred income taxes		(6,491	)		(1,658	)
Incremental tax benefits from share-based payment arrangements		(942	)		(19	)
Changes in operating assets and liabilities, net:
Receivables		(56,707	)		(7,863	)
Inventories		(26,463	)		51,878
Accounts payable		12,258			(45,798	)
Accrued liabilities		20,095			(24,857	)
Income taxes payable		21,885			7,065
Pension and other postretirement benefits		8,914			22,376
Other		(2,047	)		(1,901	)

Net cash provided by (used in) operating activities		144,920			145,427

Cash Flows from Investing Activities:
Purchases of businesses, net of cash acquired		(98,910	)		—
Purchases of property, plant and equipment		(22,253	)		(32,250	)
Restricted cash used for change in control payments		(1	)		5,054
Other		38			953

Net cash provided by (used in) investing activities		(121,126	)		(26,243	)

Cash Flows from Financing Activities:
Stock options exercised		5,162			451
Repayment of debt and other borrowings		(36,092	)		(148,288	)
Revolving credit facility proceeds (repayments), net		—			95,000
Repurchase of common shares		(42,853	)		(24,907	)
Incremental tax benefits from share-based payment arrangements		942			19

Net cash provided by (used in) financing activities		(72,841	)		(77,725	)

Effect of exchange-rate changes on cash and cash equivalents		5,655			23,476

Net increase (decrease) in cash and cash equivalents		(43,392	)		64,935
Cash and cash equivalents, beginning of period		478,613			292,494

Cash and cash equivalents, end of period	$	435,221		$	357,429

Cash payments for interest	$	23,769		$	26,527
Cash payments for income taxes	$	27,031		$	26,251

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

Thomas & Betts Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)


1.	Basis of Presentation

The financial information presented as of any date other than December 31 has been prepared from the books and records without audit. Financial information as of December 31 has been derived from the Corporation’s audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Corporation’s Annual Report onForm 10-K for the fiscal year ended December 31, 2009. The results of operations for the periods ended September 30, 2010 and 2009 are not necessarily indicative of the operating results for the full year.


2.	Basic and Diluted Earnings Per Share

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


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009

(In thousands, except per share data)
Net earnings	$	44,104	$	32,111	$	105,657	$	80,841

Basic shares:
Average shares outstanding		51,602		52,178		51,863		52,356

Basic earnings per share	$	0.85	$	0.62	$	2.04	$	1.54

Diluted shares:
Average shares outstanding		51,602		52,178		51,863		52,356
Additional shares on the potential dilution from stock options and nonvested restricted stock		1,039		680		1,049		631

		52,641		52,858		52,912		52,987

Diluted earnings per share	$	0.84	$	0.61	$	2.00	$	1.53

The Corporation had stock options that wereout-of-the-money that were excluded because of their anti-dilutive effect. Suchout-of-the money options were associated with 1.8 million shares of common stock for the third quarters of 2010 and 2009.Out-of-the money options were associated with 1.8 million shares of common stock for the first nine months of 2010 and 1.9 million shares of common stock for the first nine months of 2009.


3.	Acquisitions

On April 1, 2010, the Corporation acquired PMA AG (“PMA”), a leading European manufacturer of technologically advanced cable protection systems, for approximately $114 million. The purchase price consisted of cash of approximately $78 million and debt assumed of approximately $36 million. The debt assumed by the Corporation as part of this transaction was retired following completion of the acquisition.

PMA manufactures high-quality polyamide resin-based flexible conduit and fittings used in a broad variety of industrial applications to protect energy and data cables from external forces such as vibration, heat, fire, cold and tensile stress. The Corporation expects the PMA acquisition will broaden its existing product portfolio and enhance cross-selling of electrical products into markets served by PMA and the Corporation.

The results of PMA’s operations have been included in the consolidated financial statements of the Corporation since the April 1, 2010 acquisition date. Since the acquisition date, PMA’s net sales and net earnings, inclusive of purchase accounting adjustments, were not significant relative to the consolidated results.

Acquisition-related costs for the PMA acquisition (included in selling, general and administrative expenses) were not significant.

The following table summarizes fair values for the assets acquired and liabilities assumed at the date of acquisition:


(In millions)
Fair Value of Consideration:
Cash paid, net of cash acquired	$	78

Recognized amounts of identifiable assets acquired and liabilities assumed:
Current assets (primarily receivables and inventories)	$	16
Property, plant and equipment		30
Identifiable intangible assets		60
Current liabilities		(6	)
Debt assumed (subsequently retired)		(36	)
Other long-term liabilities		(19	)

Total identifiable net assets		45
Goodwill		33

Net cash paid	$	78

The purchase price allocation resulted in goodwill of approximately $33 million and other intangible assets of approximately $60 million, all of which was assigned to the Corporation’s Electrical segment. Of the $60 million of intangible assets, approximately $12 million has been assigned to intangible assets with indefinite lives (consisting of trade/brand names) and approximately $48 million has been assigned to intangible assets with estimated lives up to 13 years (consisting primarily of customer relationships). Goodwill is not deductible for tax purposes.

In late January 2010, the Corporation acquired JT Packard & Associates, Inc. (“JT Packard”), the nation’s largest independent service provider for critical power equipment used by industrial and commercial enterprises in a broad array of markets, for approximately $21 million. The purchase price allocation resulted in goodwill of approximately $6 million and other intangible assets of approximately $11 million, all of which was assigned to the Corporation’s Electrical segment.

Related to a 2007 acquisition, the Corporation recorded a restructuring accrual which included approximately $14 million of severance costs and approximately $8 million of lease cancellation costs. The accrual was recorded as part of the Corporation’s purchase price allocation of the acquired business. At December 31, 2009, there was $3.5 million of remaining accrual. The Corporation made payments against the accrual of $0.4 million during the third quarter of 2010 and

$1.6 million during the first nine months of 2010. At September 30, 2010, the remaining restructuring accrual of $1.9 million consisted of $0.3 million associated with severance costs and $1.6 million related to lease cancellation costs.


4.	Inventories

The Corporation’s inventories at September 30, 2010 and December 31, 2009 were:


	September 30,		December 31,
	2010		2009

(In thousands)
Finished goods	$	117,034	$	94,184
Work-in-process		26,831		22,933
Raw materials		99,336		92,151

Total inventories	$	243,201	$	209,268


5.	Property, Plant and Equipment

The Corporation’s property, plant and equipment at September 30, 2010 and December 31, 2009 were:


	September 30,		December 31,
	2010		2009

(In thousands)
Land	$	32,076	$	23,111
Building		218,949		205,941
Machinery and equipment		730,842		714,303
Construction-in-progress		14,386		11,311

Property, plant and equipment, gross		996,253		954,666
Less: Accumulated depreciation		683,077		657,846

Property, plant and equipment, net	$	313,176	$	296,820


6.	Goodwill and Other Intangible Assets

The following table reflects activity for goodwill by segment during the third quarter of 2010:


	Quarter Ended September 30, 2010
					Other —
	Balance at				Primarily		Balance at
	Beginning of				Currency		End of
	Period		Additions		Translation		Period

(In thousands)
Electrical	$	867,713	$	—	$	9,296	$	877,009
Steel Structures		64,759		—		—		64,759
HVAC		607		—		59		666

	$	933,079	$	—	$	9,355	$	942,434

The following table reflects activity for goodwill by segment during the first nine months of 2010:


	Nine Months Ended September 30, 2010
					Other —
	Balance at				Primarily			Balance at
	Beginning of				Currency			End of
	Period		Additions		Translation			Period

(In thousands)
Electrical	$	836,582	$	39,838	$	589		$	877,009
Steel Structures		64,759		—		—			64,759
HVAC		712		—		(46	)		666

	$	902,053	$	39,838	$	543		$	942,434

The following table reflects activity for other intangible assets during the third quarter of 2010:


	Quarter Ended September 30, 2010
									Other —
	Balance at								Primarily			Balance at
	Beginning of					Amortization			Currency			End of
	Period			Additions		Expense			Translation			Period

(In thousands)
Intangible assets subject to amortization	$	277,755		$	—	$	—		$	4,857		$	282,612
Accumulated amortization		(75,102	)		—		(7,619	)		(405	)		(83,126	)

		202,653			—		(7,619	)		4,452			199,486
Other intangible assets not subject to amortization		91,910			—		—			1,541			93,451

Total	$	294,563		$	—	$	(7,619	)	$	5,993		$	292,937

The following table reflects activity for other intangible assets during the first nine months of 2010:


	Nine Months Ended September 30, 2010
									Other —
	Balance at								Primarily			Balance at
	Beginning of					Amortization			Currency			End of
	Period			Additions		Expense			Translation			Period

(In thousands)
Intangible assets subject to amortization	$	227,920		$	54,902	$	—		$	(210	)	$	282,612
Accumulated amortization		(61,112	)		—		(21,962	)		(52	)		(83,126	)

		166,808			54,902		(21,962	)		(262	)		199,486
Other intangible assets not subject to amortization		77,122			16,727		—			(398	)		93,451

Total	$	243,930		$	71,629	$	(21,962	)	$	(660	)	$	292,937


7.	Income Taxes

The Corporation’s income tax provision for the third quarter of 2010 was $16.8 million, or an effective rate of 27.6% of pre-tax income, compared to a tax provision in the third quarter of 2009 of $12.9 million, or an effective rate of 28.7% of pre-tax income. The Corporation’s income tax provision for the nine months ended September 30, 2010 was $43.7 million, or an effective rate of 29.2% of pre-tax income, compared to a tax provision for the nine months ended September 30, 2009 of $33.8 million, or an effective rate of 29.5% of pre-tax income. The effective rate for the third quarter and first nine months of 2010 reflects the favorable impact of the release of a $1.5 million tax reserve assumed with the 2007 acquisition of Lamson & Sessions. This benefit to the effective rate for the first nine months of 2010 was partially offset by the first quarter $0.3 million non-cash income tax charge recorded as a result of the Health Care and Education Reconciliation Act which was signed into law during the first quarter of 2010. The first quarter charge relates to a reversal of deferred tax assets due to the elimination, beginning in 2013, of the non-taxable treatment for retiree drug subsidies the Corporation expects to receive from the U.S. government. The effective rate for each period also reflects benefits from the Puerto Rican manufacturing operations, which have a significantly lower effective tax rate than the Corporation’s blended statutory tax rate in other jurisdictions.

The Corporation had net deferred tax assets totaling $35.5 million as of September 30, 2010 and $51.1 million as of December 31, 2009. Realization of the deferred tax assets is dependent upon the Corporation’s ability to generate sufficient future taxable income. Management believes that it is more-likely-than-not that future taxable income, based on tax laws in effect as of September 30, 2010, will be sufficient to realize the recorded deferred tax assets, net of any valuation allowance.


8.	Comprehensive Income

Total comprehensive income and its components are as follows:


	Quarter Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010		2009

(In thousands)
Net earnings	$	44,104	$	32,111		$	105,657	$	80,841
Net unrealized gains (losses) on cash flow hedge, net of tax		1,100		(374	)		1,829		4,934
Foreign currency translation adjustments		34,027		30,675			4,433		53,453
Amortization of net prior service costs and net actuarial losses, net of tax		2,104		2,984			6,766		8,991

Comprehensive income	$	81,335	$	65,396		$	118,685	$	148,219


9.	Fair Value of Financial Instruments

The Corporation’s financial instruments include cash and cash equivalents, restricted cash, short-term receivables and payables and debt. Financial instruments also include an interest rate swap agreement, which is discussed further in Note 10 below. The carrying amounts of the Corporation’s financial instruments generally approximated their fair values at September 30, 2010 and December 31, 2009, except that, based on the borrowing rates available to the Corporation under current market conditions, the fair value of long-term debt (including current maturities) was approximately $664 million at September 30, 2010 and approximately $630 million at December 31, 2009.


10.	Derivative Instruments

The Corporation is exposed to market risk from changes in interest rates, foreign exchange rates and raw material prices, among others. At times, the Corporation may enter into various derivative instruments to manage certain of those risks. The Corporation does not enter into derivative instruments for speculative or trading purposes.

Interest Rate Swap Agreement

During 2007, the Corporation entered into a forward-starting interest rate swap for a notional amount of $390 million. The notional amount reduces to $325 million on December 15, 2010, $200 million on December 15, 2011 and $0 on October 1, 2012. The interest rate swap hedges $390 million of the Corporation’s exposure to changes in interest rates on borrowings under its $750 million credit facility. The Corporation has designated the receive variable/pay fixed interest rate swap as a cash flow hedge for accounting purposes. Under the interest rate swap, the Corporation receives one-month London Interbank Offered Rate (“LIBOR”) and pays an underlying fixed rate of 4.86%. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the applicable periods during which the hedged transaction affects earnings. Gains or losses on the derivative representing hedge ineffectiveness are recognized in current period earnings.

The Corporation values the interest rate swap at fair value. Fair value is the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Measuring fair value involves a hierarchy of valuation inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly; and, Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring a company to develop its own valuation assumptions.

The Corporation’s interest rate swap was reflected in the Corporation’s consolidated balance sheet in other long-term liabilities at its fair value of $25.7 million as of September 30, 2010 and $28.7 million as of December 31, 2009. This swap is measured at fair value at the end of each reporting period. The Corporation’s fair value estimate was determined using significant unobservable inputs and assumptions (Level 3) and, in addition, the liability valuation reflects the Corporation’s credit standing. The valuation technique utilized by the Corporation to calculate the swap fair value is the income approach. Using inputs for current market expectations of LIBOR rates, Eurodollar futures prices, treasury yields and interest rate swap spreads, this approach compares the present value of a constructed zero coupon yield curve and the present value of an extrapolated forecast of future interest rates. This determined value is then reduced by a credit valuation adjustment that takes into effect the current credit risk of the interest rate swap counterparty or the Corporation, as applicable. The credit valuation adjustment (which was a reduction in the liability) was $0.2 million as of September 30, 2010.

The Corporation’s balance of accumulated other comprehensive income has been reduced by $15.8 million, net of tax of $9.7 million, as of September 30, 2010 and $17.6 million, net of tax of $10.8 million, as of December 31, 2009 to reflect the above interest rate swap liability.

The following is a reconciliation associated with the interest rate swap of the fair value activity using Level 3 inputs during the third quarter and first nine months of 2010 and 2009:


	Quarter Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009

(In millions)
Asset (liability) at beginning of period	$	(27.5	)	$	(31.1	)	$	(28.7	)	$	(39.7	)
Total gains or losses (realized/unrealized):
Included in earnings		(4.6	)		(4.6	)		(13.6	)		(13.2	)
Included in other comprehensive income		1.9			(0.6	)		3.0			8.1
Settlements		4.5			4.6			13.6			13.1

Asset (liability) at end of period	$	(25.7	)	$	(31.7	)	$	(25.7	)	$	(31.7	)

The ineffective portion of the swap reflected in interest expense, net during the third quarter and the first nine months of 2010 and 2009 was immaterial.

Forward Foreign Exchange Contracts

The Corporation had no outstanding forward sale or purchase contracts as of September 30, 2010 or December 31, 2009. The Corporation is exposed to the effects of changes in exchange rates primarily from the Canadian dollar and European currencies. From time to time, the Corporation utilizes forward foreign exchange contracts for the sale or purchase of foreign currencies to mitigate this risk.

Commodities Futures Contracts

During the first nine months of 2010 and 2009, the Corporation had no outstanding commodities futures contracts. The Corporation is exposed to risk from fluctuating prices for certain materials used to manufacture its products, such as: steel, aluminum, copper, zinc, resins and rubber compounds. At times, some of the risk associated with usage of aluminum, copper and zinc has been mitigated through the use of futures contracts that mitigate the price exposure to these commodities.


11.	Debt

The Corporation’s long-term debt at September 30, 2010 and December 31, 2009 was:


	September 30,		December 31,
	2010		2009

(In thousands)
Senior credit facility^(a)	$	390,000	$	390,000
Unsecured notes:
5.625% Senior Notes due 2021, net of discount^(b)		248,232		248,014
Other, including capital leases		1,589		522

Long-term debt (including current maturities)		639,821		638,536
Less current maturities		718		522

Long-term debt, net of current maturities	$	639,103	$	638,014


^(a)		Interest is paid monthly.

^(b)		Interest is paid semi-annually.

As of September 30, 2010 and December 31, 2009, the Corporation had outstanding $250 million of 5.625% Senior Notes due 2021. The indentures underlying the unsecured notes 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 has a revolving credit facility with total availability of $750 million and a five-year term expiring in October 2012. All borrowings and other extensions of credit under the Corporation’s revolving credit facility are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties. The proceeds of any loans under the revolving credit facility may be used for general operating needs and for other general corporate purposes in compliance with the terms of the facility. The Corporation pays an annual commitment fee to maintain this facility of 10 basis points. At September 30, 2010 and December 31, 2009, $390 million was outstanding under this facility.

Fees to access the facility and letters of credit under the facility are based on a pricing grid related to the Corporation’s debt ratings with Moody’s, S&P, and Fitch during the term of the facility.

The Corporation’s revolving credit facility requires that it maintain:


	•	a maximum leverage ratio of 3.75 to 1.00; and

	•	a minimum interest coverage ratio of 3.00 to 1.00.

It also contains customary covenants that could restrict the Corporation’s ability to: incur additional indebtedness; grant liens; make investments, loans, or guarantees; declare dividends; or repurchase company stock.

Outstanding letters of credit, which reduced availability under the credit facility, amounted to $25.0 million at September 30, 2010. The letters of credit relate primarily to third-party insurance claims processing.

The Corporation has a EUR 10.0 million (approximately US$13.5 million) committed revolving credit facility with a European bank. The Corporation pays an annual commitment fee of 20 basis points on the undrawn balance to maintain this facility. This credit facility contains standard

covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default. This facility has an indefinite maturity, and no borrowings were outstanding as of September 30, 2010 and December 31, 2009. Outstanding letters of credit, which reduced availability under the European facility, amounted to EUR 0.6 million (approximately US$0.9 million) at September 30, 2010.

The Corporation has a CAN 30.0 million (approximately US$29.3 million) committed revolving credit facility with a Canadian bank. The Corporation pays an annual commitment fee of 12.5 basis points on the undrawn balance to maintain this facility. This credit facility contains standard covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default. This facility matures in June 2011, and no borrowings were outstanding as of September 30, 2010 and December 31, 2009.

As of September 30, 2010, the Corporation’s aggregate availability of funds under its credit facilities is $376.9 million, after deducting outstanding letters of credit. The Corporation has the option, at the time of drawing funds under any of the credit facilities, of selecting an interest rate based on a number of benchmarks including LIBOR, the federal funds rate, or the prime rate of the agent bank.

As of September 30, 2010, the Corporation also had letters of credit in addition to those discussed above that do not reduce availability under the Corporation’s credit facilities. The Corporation had $2.7 million of such additional letters of credit that relate primarily to environmental assurances, third-party insurance claims processing, performance guarantees and acquisition obligations.


12.	Share-Based Payment Arrangements

Share-based compensation expense, net of tax, of $1.4 million was charged against income during the third quarter of 2010 and $1.6 million was charged against income during the third quarter of 2009. The Corporation also had 35,744 stock options exercised at a weighted average exercise price of $21.50 per share and had 38,998 stock options forfeited or expired during the third quarter of 2010.

Share-based compensation expense, net of tax, of $5.4 million was charged against income during the first nine months of 2010 and $5.5 million was charged against income during the first nine months of 2009. During the first nine months of 2010, the Corporation granted 7,268 stock options with a weighted average exercise price of $39.84 per share and an average grant date fair value of $15.39 per share. The Corporation also had 253,074 stock options exercised at a weighted average exercise price of $20.39 per share and had 64,700 stock options forfeited or expired during the first nine months of 2010.

The first nine months of both 2010 and 2009 include compensation expense, net of tax, of $0.3 million, which was charged to selling, general and administrative expense as of the grant date for stock awards under the Corporation’s Non-Employee Directors Equity Compensation Plan. During the first nine months of 2010, the Corporation granted non-employee members of the Board of Directors a total of 11,061 shares of common stock with a weighted average grant date fair value of $40.68.


13.	Pension and Other Postretirement Benefits

Net periodic cost for the Corporation’s pension and other postretirement benefits included the following components:


	Quarter Ended
							Other
							Postretirement
	Pension Benefits						Benefits
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009

(In thousands)
Service cost	$	2,768		$	3,062		$	2		$	1
Interest cost		7,315			7,457			229			310
Expected return on plan assets		(8,298	)		(6,595	)		—			—
Plan net loss (gain)		3,094			3,776			(31	)		(35	)
Prior service cost (gain)		283			277			(63	)		(63	)
Transition obligation (asset)		(4	)		(3	)		192			192
Curtailment and settlement loss		—			—			—			—

Net periodic benefit cost	$	5,158		$	7,974		$	329		$	405


	Nine Month Ended
							Other
							Postretirement
	Pension Benefits						Benefits
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009

(In thousands)
Service cost	$	8,045		$	9,186		$	4		$	4
Interest cost		21,745			22,370			688			929
Expected return on plan assets		(24,692	)		(19,785	)		—			—
Plan net loss (gain)		9,248			11,327			(93	)		(104	)
Prior service cost (gain)		847			830			(189	)		(189	)
Transition obligation (asset)		(12	)		(8	)		575			575
Curtailment and settlement loss		1,213			1,300			—			—

Net periodic benefit cost	$	16,394		$	25,220		$	985		$	1,215

Contributions to our qualified pension plans during the nine months ended September 30, 2010 and 2009 were not significant. We expect required contributions to our qualified pension plans during the remainder of 2010 to be minimal.


14.	Segment Disclosures

The Corporation has three reportable segments: Electrical, Steel Structures and HVAC. The Corporation’s reportable segments are based primarily on product lines and represent the primary mode used to assess allocation of resources and performance. The Corporation evaluates its business segments primarily on the basis of segment earnings, with segment earnings defined as earnings before corporate expense, depreciation and amortization expense, share-based compensation expense, interest, income taxes and certain other items. Corporate expense includes legal, finance and administrative costs. The Corporation has no material inter-segment sales.

The Electrical segment designs, manufactures and markets thousands of essential components used to manage the connection, distribution, transmission and reliability of electrical products in industrial, construction and utility applications. The Steel Structures segment designs, manufactures and markets highly engineered tubular steel transmission structures. The HVAC segment designs, manufactures and markets heating and ventilation products for commercial and industrial buildings. The Corporation’s U.S. Electrical and International Electrical operating segments have been aggregated in the Electrical reporting segment since they have similar economic characteristics as well as similar products and services, production processes, types of customers and methods used for distributing their products.


	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

(In thousands)
Net Sales
Electrical	$	453,905		$	410,872		$	1,280,991		$	1,163,062
Steel Structures		57,232			50,922			166,753			167,817
HVAC		21,829			23,281			69,330			75,027

Total	$	532,966		$	485,075		$	1,517,074		$	1,405,906

Segment Earnings
Electrical	$	92,259		$	78,267		$	246,007		$	194,480
Steel Structures		11,092			10,082			29,027			36,630
HVAC		2,868			3,221			9,466			11,505

Segment earnings		106,219			91,570			284,500			242,615
Corporate expense		(12,615	)		(14,908	)		(40,205	)		(37,916	)
Depreciation, amortization expense and share-based compensation expense		(22,686	)		(21,029	)		(68,761	)		(65,363	)
Interest expense, net		(9,042	)		(8,478	)		(26,315	)		(26,317	)
Other (expense) income, net		(975	)		(2,101	)		90			1,649

Earnings before income taxes	$	60,901		$	45,054		$	149,309		$	114,668


15.	Contingencies

Legal Proceedings

The Corporation is 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 or 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 which are not predictable with assurance. The Corporation has provided for losses to the extent probable and estimable. The legal matters that have been recorded in the Corporation’s consolidated financial statements are based on gross assessments of expected settlement or expected outcome and do not reflect possible recovery from insurance companies or other parties. Additional losses, even though not anticipated, could have a material adverse effect on the Corporation’s financial position, results of operations or liquidity in any given period.

Guarantee and Indemnification Arrangements

The Corporation generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time and usage of the product depending on the nature of the product, the geographic location of its sale and other factors. The accrued product warranty costs are based primarily on historical experience of actual warranty claims as well as current information on repair costs.

The following table provides the changes in the Corporation’s accruals for estimated product warranties:


	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

(In thousands)
Balance at beginning of period	$	2,798		$	3,032		$	3,064		$	3,112
Liabilities accrued for warranties issued during the period		404			270			1,141			1,027
Deductions for warranty claims paid during the period		(453	)		(325	)		(1,471	)		(1,076	)
Changes in liability for pre-existing warranties during the period, including expirations		10			(35	)		25			(121	)

Balance at end of period	$	2,759		$	2,942		$	2,759		$	2,942

The Corporation also continues to monitor events that are subject to guarantees and indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses under the guarantees and indemnifications at fair value when those losses are estimable.


16.	Share Repurchase Plan

In 2008, our Board of Directors approved a share repurchase plan that authorized us to buy up to 5,000,000 of our common shares. In 2008, the Corporation repurchased, with available cash resources, 2,425,000 common shares through open-market transactions. During 2009, the Corporation repurchased, with available cash resources, 1,000,000 common shares through open-market transactions, including 500,000 shares during the third quarter of 2009. The Corporation repurchased, with available cash resources, 500,000 common shares through open-market transactions during the third quarter of 2010 and 1,075,000 during the first nine months of 2010. This authorization expired on October 22, 2010.

In September 2010, the Corporation’s Board of Directors approved a share repurchase plan that authorizes the Corporation to buy up to 3,000,000 of its common shares. The Corporation has not repurchased any shares under this plan during the third quarter. The timing of future repurchases, if any, will depend upon a variety of factors, including market conditions. This authorization expires on December 31, 2012.


17.	Subsequent Events

On October 1, 2010, the Corporation acquired Cable Management Group, Ltd. (“CMG”), a leading global manufacturer of cable protection systems specified in industrial, infrastructure, and construction applications, for £70 million (approximately $110 million). CMG manufactures a broad range of metallic and non-metallic flexible conduit and fitting systems used to protect critical power and data systems from fire, dust, moisture, vibration and corrosion.

Management performed an evaluation of the Corporation’s activities through the time of filing this Quarterly Report onForm 10-Q and has concluded that, other than the CMG acquisition discussed above, there are no significant subsequent events requiring recognition or disclosure in these consolidated financial statements.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

Executive Overview

Thomas & Betts Corporation is a leading designer and manufacturer of essential components used to manage the connection, distribution, transmission and reliability of electrical products in industrial, construction and utility applications. We are also a leading producer of commercial heating and ventilation units used in commercial and industrial buildings and highly engineered steel structures used for utility transmission. We have operations in approximately 20 countries. Manufacturing, marketing and sales activities are concentrated primarily in North America and Europe.

Critical Accounting Policies

The preparation of financial statements contained in this report requires the use of estimates and assumptions to determine certain amounts reported as net sales, costs, expenses, assets or liabilities and certain amounts disclosed as contingent assets or liabilities. Actual results may differ from those estimates or assumptions. Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in our Annual Report onForm 10-K for the fiscal year ended December 31, 2009. We believe our critical accounting policies include the following:


	•	Revenue Recognition: We recognize revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. We recognize revenue for service agreements over the applicable service periods. Sales discounts, quantity and price rebates, and allowances are estimated based on contractual commitments and experience and recorded as a reduction of revenue in the period in which the sale is recognized. Quantity rebates are in the form of volume incentive discount plans, which include specific sales volume targets oryear-over-year sales volume growth targets for specific customers. Certain distributors can take advantage of price rebates by subsequently reselling our products into targeted construction projects or markets. Following a distributor’s sale of an eligible product, the distributor submits a claim for a price rebate. A number of distributors, primarily in our Electrical segment, have the right to return goods under certain circumstances and those returns, which are reasonably estimable, are accrued as a reduction of revenue at the time of shipment. We analyze historical returns and allowances, current economic trends and specific customer circumstances when evaluating the adequacy of accounts receivable related reserves and accruals. We provide allowances for doubtful accounts when credit losses are both probable and estimable.

	•	Inventory Valuation: Inventories are stated at the lower of cost or market. Cost is determined using thefirst-in, first-out (FIFO) method. To ensure inventories are carried at the lower of cost or market, we periodically evaluate the carrying value of our inventories. We also periodically perform 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 history and forecasts for particular product groupings, planned dispositions of product lines and overall industry trends.

	•	Goodwill and Other Intangible Assets: We apply the acquisition (purchase) method of accounting for all business combinations. Under this method, all assets and liabilities acquired in a business combination, including goodwill, indefinite-lived intangibles and other intangibles, are recorded at fair value. The initial recording of goodwill and other intangibles


		requires subjective judgments concerning estimates of the fair value of the acquired assets and liabilities. Goodwill consists principally of the excess of cost over the fair value of net assets acquired in business combinations and is not amortized. For each amortizable intangible asset, we use a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are consumed. If that pattern cannot be reliably determined, the straight-line amortization method is used. We perform an annual impairment test of goodwill and indefinite-lived intangible assets. We perform our annual impairment assessment as of the beginning of the fourth quarter of each year, unless circumstances dictate more frequent interim assessments. In evaluating when an interim assessment of goodwill is necessary, we consider, among other things, the trading level of our common stock, changes in expected future cash flows and mergers and acquisitions involving companies in our industry. In evaluating when an interim assessment of indefinite-lived intangible assets is necessary, we review for significant events or significant changes in circumstances. Our evaluation process did not result in an interim assessment of goodwill or long-lived intangible assets for recoverability for the quarter ended September 30, 2010.

In conjunction with each test of goodwill we determine the fair value of each reporting unit and compare the fair value to the reporting unit’s carrying amount. A reporting unit is defined as an operating segment or one level below an operating segment. We determine the fair value of our reporting units using a combination of three valuation methods: market multiple approach; discounted cash flow approach; and comparable transactions approach. The market multiple approach provides indications of value based on market multiples for public companies involved in similar lines of business. The discounted cash flow approach calculates the present value of projected future cash flows using appropriate discount rates. The comparable transactions approach provides indications of value based on an examination of recent transactions in which companies in similar lines of business were acquired. The fair values derived from these three valuation methods are then weighted to arrive at a single value for each reporting unit. Relative weights assigned to the three methods are based upon the availability, relevance and reliability of the underlying data. We then reconcile the total values for all reporting units to our market capitalization and evaluate the reasonableness of the implied control premium.

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 we 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.

Methods used to determine fair values for indefinite-lived intangible assets involve customary valuation techniques that are applicable to the particular class of intangible asset and apply inputs and assumptions that we believe a market participant would use.


	•	Long-Lived Assets: We review long-lived assets to beheld-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Indications of impairment require significant judgment by management. For purposes of recognizing and measuring impairment of long-lived assets, we evaluate assets at the lowest level of identifiable cash flows for associated product groups. 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, we estimate fair values 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 dispose.


	•	Pension and Other Postretirement Benefit Plan Actuarial Assumptions: We recognize the overfunded or underfunded status of benefit plans in our consolidated balance sheets. For purposes of calculating pension and postretirement medical benefit obligations and related costs, we use certain actuarial assumptions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expenseand/or liability measurement. We evaluate these assumptions annually. Other assumptions include employee demographic factors (retirement patterns, mortality and turnover), rate of compensation increase and the healthcare cost trend rate. See additional information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Qualified Pension Plans.

	•	Income Taxes: We use 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 requires an evaluation of asset realizability based on a more-likely-than-not criteria. We have valuation allowances for deferred tax assets primarily associated with foreign net operating loss carryforwards and foreign income tax credit carryforwards. Realization of the deferred tax assets is dependent upon our ability to generate sufficient future taxable income. We believe that it is more-likely-than-not that future taxable income, based on enacted tax laws in effect as of September 30, 2010, will be sufficient to realize the recorded deferred tax assets net of existing valuation allowances.

	•	Environmental Costs: Environmental expenditures that relate to current operations are expensed or capitalized, as appropriate. Remediation costs that relate to an existing condition caused by past operations are accrued when it is probable that those costs will be incurred and can be reasonably estimated based on evaluations of currently available facts related to each site. The operation of manufacturing plants involves a high level of susceptibility in these areas, and there is no assurance that we will not incur material environmental or occupational health and safety liabilities in the future. Moreover, expectations of remediation expenses could be affected by, and potentially significant expenditures could be required to comply with, 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.

Summary of Consolidated Results


	Quarter Ended September 30,
	2010						2009
				% of Net						% of Net
	In Thousands			Sales			In Thousands			Sales

Net sales	$	532,966			100.0		$	485,075			100.0
Cost of sales		363,276			68.2			337,485			69.6

Gross profit		169,690			31.8			147,590			30.4
Selling, general and administrative		98,772			18.5			91,957			18.9

Earnings from operations		70,918			13.3			55,633			11.5
Interest expense, net		(9,042	)		(1.7	)		(8,478	)		(1.8	)
Other (expense) income, net		(975	)		(0.2	)		(2,101	)		(0.4	)

Earnings before income taxes		60,901			11.4			45,054			9.3
Income tax provision		16,797			3.1			12,943			2.7

Net earnings	$	44,104			8.3		$	32,111			6.6

Earnings per share:
Basic	$	0.85					$	0.62

Diluted	$	0.84					$	0.61


	Nine Months Ended September 30,
	2010						2009
				% of Net						% of Net
	In Thousands			Sales			In Thousands			Sales

Net sales	$	1,517,074			100.0		$	1,405,906			100.0
Cost of sales		1,047,743			69.1			988,965			70.3

Gross profit		469,331			30.9			416,941			29.7
Selling, general and administrative		293,797			19.3			277,605			19.8

Earnings from operations		175,534			11.6			139,336			9.9
Interest expense, net		(26,315	)		(1.8	)		(26,317	)		(1.8	)
Other (expense) income, net		90			0.0			1,649			0.1

Earnings before income taxes		149,309			9.8			114,668			8.2
Income tax provision		43,652			2.8			33,827			2.4

Net earnings	$	105,657			7.0		$	80,841			5.8

Earnings per share:
Basic	$	2.04					$	1.54

Diluted	$	2.00					$	1.53

2010 Compared with 2009

Overview

Net sales in the third quarter and the first nine months of 2010 increased from the respective prior-year periods reflecting the positive impact of first quarter and second quarter acquisitions of JT Packard & Associates, Inc. and PMA AG, respectively, and higher sales volumes in the Electrical segment and Steel Structures segment. The increased sales volumes for the Steel Structures segment

were largely offset by lower selling prices reflecting lower steel commodity costs and more competitive market conditions.

Earnings from operations in the third quarter and first nine months of 2010 increased from the respective prior-year periods, both in dollars and as a percent of sales. These improvements reflect current year acquisitions, higher sales volumes, previous actions to manage costs, headcount and capacity as well as the impact of a weaker U.S. dollar. Results in the first nine months of 2010 included a pre-tax charge of $5.3 million ($0.06 per share) in the second quarter for environmental remediation and pre-tax charges of $3.2 million ($0.04 per share) in the first quarter for facility consolidations related to our Electrical segment. The third quarter and first nine months of 2009 included a pre-tax charge of $4.0 million ($0.05 per share) for environmental remediation.

Net Sales and Gross Profit

Net sales in the third quarter of 2010 were $533.0 million, up $47.9 million, or 9.9%, from the prior-year period and included approximately $28 million from acquisitions. For the first nine months of 2010, net sales were $1.5 billion, up $111.2 million, or 7.9%, from the prior-year period and included approximately $63 million from acquisitions. Theyear-over-year sales increases also reflect higher sales volumes in our Electrical and Steel Structures segments. The increased sales volumes for the Steel Structures segment were largely offset as a result of lower steel commodity costs and more competitive market conditions. Foreign currency exchange positively impacted sales by approximately $2 million in the third quarter of 2010 and approximately $35 million in the first nine months of 2010 when compared to the corresponding prior-year periods. This positive impact reflects a weaker U.S. dollar in the current year.

Gross profit in the third quarter of 2010 was $169.7 million, or 31.8% of net sales, compared to $147.6 million, or 30.4% of net sales, in the third quarter of 2009. Gross profit in the first nine months of 2010 was $469.3 million, or 30.9% of net sales, compared to $416.9 million, or 29.7% of net sales, in the first nine months of 2009. Theyear-over-year increases in gross margin for both the third quarter and first nine months of 2010 reflect the positive impact from the current year acquisitions, higher production volumes, continued pricing discipline, improved product mix and previous actions taken to manage costs, headcount and capacity.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expense in the third quarter of 2010 was $98.8 million, or 18.5% of net sales, compared to $92.0 million, or 18.9% of net sales, in the prior-year period. SG&A expense in the first nine months of 2010 was $293.8 million, or 19.3% of net sales, compared to $277.6 million, or 19.8% of net sales, in the prior-year period. The first nine months of 2010 reflect a second quarter pre-tax $5.3 million environmental remediation charge. The third quarter and first nine months of 2009 reflect a pre-tax $4.0 million environmental remediation charge. SG&A as a percent of sales in the current year periods reflects our continued overall efforts to tightly manage expenses, loweryear-over-year pension costs, and increased costs as a result of current year acquisitions.

Income Taxes

The effective tax rate in the third quarter of 2010 was 27.6% compared to 28.7% in the third quarter of 2009. The effective tax rate for the first nine months of 2010 was 29.2% compared to 29.5% in the first nine months of 2009. The decreased effective rate for the third quarter and first nine months of 2010 reflects the favorable impact of the release of a $1.5 million tax reserve assumed with the 2007 acquisition of Lamson & Sessions. This benefit to the effective rate for the first nine months of 2010 was partially offset by a non-cash income tax charge during the first quarter of 2010 of $0.3 million related to the impact of the Health Care and Education Reconciliation Act, which was signed into law during the first quarter of 2010. The first quarter charge relates to a reversal of deferred tax assets due to the elimination, beginning in 2013, of the non-taxable treatment for retiree drug subsidies the Corporation expects to receive from the U.S. government. The effective rate for both years also reflects benefits from our Puerto Rican manufacturing operations.

Net Earnings

Net earnings in the third quarter of 2010 were $44.1 million, or $0.84 per diluted share, compared to $32.1 million, or $0.61 per diluted share, in the prior-year period. Net earnings in the first nine months of 2010 were $105.7 million, or $2.00 per diluted share, compared to $80.8 million, or $1.53 per diluted share, in the prior-year period. The third quarter and first nine months of 2010 included the favorable impact of the release of a $1.5 million ($0.03 per share) tax reserve. The nine months ended September 30, 2010 included a pre-tax $5.3 million ($0.06 per share) environmental remediation charge and $3.2 million ($0.04 per share) of first quarter, pre-tax charges related to facility consolidation. The three and nine months ended September 30, 2009 included a pre-tax $4.0 million ($0.05 per share) environmental remediation charge.

Summary of Segment Results

Net Sales


	Quarter Ended September 30,								Nine Months Ended September 30,
	2010				2009				2010				2009
	In		% of Net		In		% of Net		In		% of Net		In		% of Net
	Thousands		Sales		Thousands		Sales		Thousands		Sales		Thousands		Sales

Electrical	$	453,905		85.2	$	410,872		84.7	$	1,280,991		84.4	$	1,163,062		82.7
Steel Structures		57,232		10.7		50,922		10.5		166,753		11.0		167,817		12.0
HVAC		21,829		4.1		23,281		4.8		69,330		4.6		75,027		5.3

	$	532,966		100.0	$	485,075		100.0	$	1,517,074		100.0	$	1,405,906		100.0

Segment Earnings


	Quarter Ended September 30,										Nine Months Ended September 30,
	2010					2009					2010					2009
	In			% of Net		In			% of Net		In			% of Net		In			% of Net
	Thousands			Sales		Thousands			Sales		Thousands			Sales		Thousands			Sales

Electrical	$	92,259			20.3	$	78,267			19.0	$	246,007			19.2	$	194,480			16.7
Steel Structures		11,092			19.4		10,082			19.8		29,027			17.4		36,630			21.8
HVAC		2,868			13.1		3,221			13.8		9,466			13.7		11,505			15.3

Segment earnings		106,219			19.9		91,570			18.9		284,500			18.8		242,615			17.3
Corporate expense		(12,615	)				(14,908	)				(40,205	)				(37,916	)
Depreciation, amortization expense and share-based compensation expense		(22,686	)				(21,029	)				(68,761	)				(65,363	)
Interest expense, net		(9,042	)				(8,478	)				(26,315	)				(26,317	)
Other (expense) income, net		(975	)				(2,101	)				90					1,649

Earnings before income taxes	$	60,901				$	45,054				$	149,309				$	114,668

We have three reportable segments: Electrical, Steel Structures and HVAC. We evaluate our business segments primarily on the basis of segment earnings, with segment earnings defined as earnings before corporate expense, depreciation and amortization expense, share-based compensation expense, interest, income taxes and certain other items.

Our segment earnings are significantly influenced by the operating performance of our Electrical segment that accounted for more than 80% of our consolidated net sales and consolidated segment earnings during the periods presented.

Electrical Segment

Electrical segment net sales in the third quarter of 2010 were $453.9 million, up $43.0 million, or 10.5%, from the third quarter of 2009. Electrical segment net sales in the first nine months of 2010 were $1.3 billion, up $117.9 million, or 10.1%, from the prior-year period. Current year acquisitions contributed net sales of approximately $28 million during the third quarter of 2010 and approximately $63 million during the first nine months of 2010. Increased volumes also positively impactedyear-over-year sales in both periods and reflect improved global industrial and utility distribution demand, partially offset by weaker construction demand. The weaker U.S. dollar had a negligible positive impact onyear-over-year third quarter 2010 net sales but positively impacted net

sales for the first nine months of 2010 by approximately $36 million versus the corresponding prior-year period. In contrast to the prior year, during 2010 the Electrical segment has experienced a more traditional seasonal increase in sales during the second and third quarters reflecting the construction season and expects a more traditional seasonal decrease in sales from the third quarter to the fourth quarter of 2010.

Electrical segment earnings in the third quarter of 2010 were $92.3 million, up $14.0 million, or 17.9%, from the third quarter of 2009. Electrical segment earnings in the first nine months of 2010 were $246.0 million, up $51.5 million, or 26.5%, from the prior-year period. The increase inyear-over-year segment earnings compared to both prior-year periods reflects the contribution from current year acquisitions, increased production volumes, continued discipline around pricing, the weaker U.S. dollar and previous actions taken to manage costs, headcount and capacity. The first nine months of 2010 also reflect first quarter pre-tax charges of $3.2 million for facility consolidations.

Steel Structures Segment

Net sales in the third quarter of 2010 in our Steel Structures segment were $57.2 million, up $6.3 million, or 12.4%, from the third quarter of 2009 and increased slightly in the first nine months of 2010, compared to the prior-year period, to $166.8 million. Net sales increases over the corresponding prior-year periods reflect the positive impact of higher volumes, which were largely offset by the negative price impact from loweryear-over-year plate steel costs and more competitive market conditions. Segment earnings in the third quarter of 2010 were $11.1 million, up $1.0 million, or 10.0%, from the third quarter of 2009. Segment earnings in the first nine months of 2010 were $29.0 million, down $7.6 million, or 20.8%, compared to the unusually strong earnings performance in the prior-year. Segment earnings in the third quarter of 2010 reflect a favorable project mix which is expected to moderate in the fourth quarter of 2010.

HVAC Segment

Net sales in the third quarter of 2010 in our HVAC segment were $21.8 million, down $1.5 million, or 6.2%, from the third quarter of 2009. Net sales in the first nine months of 2010 in our HVAC segment were $69.3 million, down $5.7 million, or 7.6%, from the prior-year period. HVAC segment earnings in the third quarter of 2010 were $2.9 million, down $0.4 million, or 11.0%, from the third quarter of 2009. HVAC segment earnings in the first nine months of 2010 were $9.5 million, down $2.0 million, or 17.7%, from the prior-year period. Theyear-over-year sales and earnings declines for both of the current year periods reflect lower sales volumes resulting from weak commercial construction markets.

Liquidity and Capital Resources

We had cash and cash equivalents of $435.2 million and $478.6 million at September 30, 2010 and December 31, 2009, respectively.

The following table reflects the primary category totals in our Consolidated Statements of Cash Flows:


	Nine Months Ended
	September 30,
	2010			2009

(In thousands)
Net cash provided by (used in) operating activities	$	144,920		$	145,427
Net cash provided by (used in) investing activities		(121,126	)		(26,243	)
Net cash provided by (used in) financing activities		(72,841	)		(77,725	)
Effect of exchange-rate changes on cash		5,655			23,476

Net increase (decrease) in cash and cash equivalents	$	(43,392	)	$	64,935

Operating Activities

Cash provided by operating activities in the first nine months of 2010 was primarily attributable to net earnings of $105.7 million. The first nine months of 2010 included depreciation and amortization of $60.0 million and share-based compensation expense of $8.7 million. Net changes in working capital (accounts receivable, inventories and accounts payable), which negatively impacted cash in the first nine months of 2010, were partially offset by higher accrued liabilities, including benefit plan liabilities, and income taxes payable.

Cash provided by operating activities in the first nine months of 2009 was primarily attributable to net earnings of $80.8 million. The first nine months of 2009 included depreciation and amortization of $56.4 million and share-based compensation expense of $8.9 million. Changes in working capital (accounts receivable, inventories and accounts payable) as well as accrued liabilities, including benefit plan liabilities, negatively impacted cash in the first nine months of 2009.

Investing Activities

Investing activities in the first nine months of 2010 included approximately $78 million to acquire PMA (cash portion of the purchase price) and approximately $21 million to acquire JT Packard. During the first nine months of 2010, we had capital expenditures to support our ongoing business plans totaling $22.3 million. Investing activities in the first nine months of 2009 included capital expenditures to support our ongoing business plans totaling $32.3 million. We expect capital expenditures to be in the $40-$45 million range for the full year 2010.

Financing Activities

Financing activities in the first nine months of 2010 primarily included the repurchase of 1,075,000 common shares for $42.9 million and repayment of approximately $36 million to retire debt assumed as part of the PMA acquisition.

Financing activities in the first nine months of 2009 primarily included the repurchase of 1,000,000 common shares for $24.9 million and repayments of $148.3 million of debt using a combination of cash and $125.0 million in borrowings under our $750 million revolving credit facility. Net proceeds from borrowings under our revolving credit facility were $95.0 million in the first nine months of 2009.

$750 million Credit Facility

Our revolving credit facility has total availability of $750 million and a five-year term expiring in October 2012. All borrowings and other extensions of credit under our revolving credit facility are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties. The proceeds of any loans under the revolving credit facility may be used for general operating needs and for other general corporate purposes in compliance with the terms of the facility. At September 30, 2010 and December 31, 2009, $390 million was outstanding under this facility.

In 2007, we entered into an interest rate swap to hedge our exposure to changes in the London Interbank Offered Rate (“LIBOR”) rate on $390 million of borrowings under this facility. See Item 3. “Quantitative and Qualitative Disclosures about Market Risk”.

Our revolving credit facility requires that we maintain:


	•	a maximum leverage ratio of 3.75 to 1.00; and

	•	a minimum interest coverage ratio of 3.00 to 1.00.

It also contains customary covenants that could restrict our ability to: incur additional indebtedness; grant liens; make investments, loans, or guarantees; declare dividends; or repurchase company stock. We do not expect these covenants to restrict our liquidity, financial condition, or access to capital resources in the foreseeable future.

Other Credit Facilities

We have a EUR 10.0 million (approximately US$13.5 million) committed revolving credit facility with a European bank that has an indefinite maturity. Outstanding letters of credit, which reduced availability under the European facility, amounted to EUR 0.6 million (approximately US$0.9 million) at September 30, 2010. This credit facility contains standard covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default.

We have a CAN 30.0 million (approximately US$29.3 million) committed revolving credit facility with a Canadian bank that matures in June 2011. There were no balances outstanding or letters of credit that reduced availability under the Canadian facility at September 30, 2010. This credit facility contains standard covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default.

Other Letters of Credit

As of September 30, 2010, we also had letters of credit in addition to those discussed above that do not reduce availability under our credit facilities. We had $2.7 million of such additional letters of credit that relate primarily to environmental assurances, third-party insurance claims processing, performance guarantees and acquisition obligations.

Compliance and Availability

We are in compliance with all covenants or other requirements set forth in our credit facilities. However, if we fail to be in compliance with the financial or other covenants of our credit

agreements, then the credit agreements could be terminated, any outstanding borrowings under the agreements could be accelerated and immediately due, and we could have difficulty obtaining immediate credit availability to repay the accelerated obligations and in obtaining credit facilities in the future. As of September 30, 2010, the aggregate availability of funds under our credit facilities is $376.9 million, after deducting outstanding letters of credit. Availability is subject to the satisfaction of various covenants and conditions to borrowing.

Credit Ratings

As of September 30, 2010, we had investment grade credit ratings from Standard & Poor’s (BBB rating), Moody’s Investor Service (Baa2 rating) and Fitch Ratings (BBB rating) on our senior unsecured debt. Should these credit ratings drop, repayment under our credit facilities and securities will not be accelerated; however, our credit costs may increase. Similarly, if our credit ratings improve, we could potentially have a decrease in our credit costs. The maturity of any of our debt securities does not accelerate in the event of a credit downgrade.

Fees to access the $750 million credit facility and letters of credit under the facility are based on a pricing grid related to our debt ratings with Moody’s, S&P, and Fitch during the term of the facility.

Debt Securities

Thomas & Betts had the following unsecured debt securities outstanding as of September 30, 2010:

Issue Date

Amount

Interest Rate

Interest Payable

Maturity Date

November 2009

250.0 million

5.625

May 15 and November 15

November 2021

The indentures underlying the unsecured 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. We are in compliance with all covenants and other requirements set forth in the indentures.

Qualified Pension Plans

Contributions to our qualified pension plans during the first nine months of 2010 were not significant. We expect required contributions to our qualified pension plans in 2010 to be minimal.

Acquisitions

In late January 2010, we used existing cash resources to acquire JT Packard & Associates, Inc., the nation’s largest independent service provider for critical power equipment used by industrial and commercial enterprises in a broad array of markets, for approximately $21 million.

On April 1, 2010, we used existing cash resources to acquire PMA AG, a leading European manufacturer of technologically advanced cable protection systems, for approximately $114 million including cash used in the acquisition of approximately $78 million and cash used to retire debt assumed of approximately $36 million.

Other

In 2008, our Board of Directors approved a share repurchase plan that authorized us to buy up to 5,000,000 of our common shares. In 2008, we repurchased, with available cash resources,

2,425,000 common shares through open-market transactions. During 2009, we repurchased, with available cash resources, 1,000,000 common shares through open-market transactions, including 500,000 shares during the third quarter of 2009. We repurchased, with available cash resources, 500,000 common shares through open-market transactions during the third quarter of 2010 and 1,075,000 during the first nine months of 2010. This authorization expired on October 22, 2010.

We do not currently pay cash dividends. Future decisions concerning the payment of cash dividends on our common stock will depend upon our results of operations, financial condition, strategic investment opportunities, continued compliance with credit facilities and other factors that the Board of Directors may consider relevant.

As of September 30, 2010, we have $435.2 million in cash and cash equivalents and $376.9 million of aggregate availability under our credit facilities. We filed a universal shelf registration statement with the Securities and Exchange Commission on December 3, 2008, utilizing the well-known seasoned issuer (WKSI) process. The registration statement permits us to issue common stock, preferred stock and debt securities. The registration statement is effective for a period of three years from the date of filing. We continue to have cash requirements to, among other things, support working capital and capital expenditure needs, service debt and fund our retirement plans as required. We generally intend to use available cash and internally generated funds to meet these cash requirements in addition to pursuing longer-term strategic initiatives such as acquisitions and may borrow under existing credit facilities or access the capital markets as needed for liquidity. Though improved from levels seen early in 2009, credit markets remain tight with limited availability of credit in select market sectors. Our ability to satisfy our liquidity requirements has not been adversely affected by the volatility in the credit markets. We believe that we have sufficient liquidity to satisfy both short-term and long-term requirements.

Off-Balance Sheet Arrangements

As of September 30, 2010, we did not have any off-balance sheet arrangements.

Refer to Note 15 in the Notes to Consolidated Financial Statements for information regarding our guarantee and indemnification arrangements.


Item 3.	*Quantitative and Qualitative Disclosures About Market Risk*

Market Risk and Financial Instruments

Thomas & Betts is exposed to market risk from changes in interest rates, foreign exchange rates and raw material prices, among others. At times, we may enter into various derivative instruments to manage certain of these risks. We do not enter into derivative instruments for speculative or trading purposes.

For the period covered by this report, we have not experienced any material changes since December 31, 2009 in market risk that affect the quantitative and qualitative disclosures presented in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2009 Annual Report onForm 10-K.


Item 4.	*Controls and Procedures*


(a)	Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to the Corporation is made known to the Chief Executive Officer and Chief Financial Officer who certify the Corporation’s financial reports.

Our Chief Executive Officer and Chief Financial Officer have evaluated the Corporation’s disclosure controls and procedures as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.


(b)	Changes in Internal Control over Financial Reporting

There have been no significant changes in internal control over financial reporting that occurred during the quarter covered by this report that have materially affected or are reasonably likely to materially affect the Corporation’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	*Legal Proceedings*

See Note 15, “Contingencies,” in the Notes to Consolidated Financial Statements, which is incorporated herein by reference. See also Item 3. “Legal Proceedings,” in our 2009 Annual Report onForm 10-K, which is incorporated herein by reference.


Item 1A.	*Risk Factors*

There have been no material changes from the risk factors as previously set forth in our 2009 Annual Report onForm 10-K under Item 1A. “Risk Factors,” which is incorporated herein by reference.


Item 2.	*Purchases of Equity Securities by the Issuer and Affiliated Purchasers*

The following table reflects activity related to equity securities purchased by the Corporation during the quarter ended September 30, 2010:

Issuer Purchases of Equity Securities

Total Number

Maximum

of Common

Number

Shares

of Common

Total

Average

Purchased

Shares that

Number of

Price Paid

as Part of

May Yet Be

Common

per

Publicly

Purchased

Shares

Common

Announced

Under

Period

Purchased

Share

Plans

the Plans

October 2008 Plan (5,000,000 common shares authorized)

September 7, 2010 to September 16, 2010

500,000

40.53

500,000

^(a)

Total for the quarter ended September 30, 2010

500,000

40.53

500,000

^(a)

September 2010 Plan (3,000,000 common shares authorized)

Total for the quarter ended September 30, 2010

—

3,000,000


^(a)		This authorization expired on October 22, 2010.


Item 6.	*Exhibits*

The Exhibit Index that follows the signature page of this Report is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Thomas & Betts Corporation
(Registrant)


	By:	/s/ William E. Weaver, Jr.

William E. Weaver, Jr.

Senior Vice President and

Chief Financial Officer

(principal financial officer)

Date: October 29, 2010

EXHIBIT INDEX


Exhibit No.			Description of Exhibit

	10	.1	The Thomas & Betts Supplemental Executive Investment Plan as amended and restated effective September 1, 2010 (Filed as an Exhibit to the Registrant’s Current Report onForm 8-K dated September 1, 2010 and incorporated herein by reference)
	12		Statement re Computation of Ratio of Earnings to Fixed Charges
	31	.1	Certification of Principal Executive Officer Under Securities Exchange ActRules 13a-14(a) or 15d-14(a)
	31	.2	Certification of Principal Financial Officer Under Securities Exchange ActRules 13a-14(a) or 15d-14(a)
	32	.1	Certification of Principal Executive Officer Pursuant toRule 13a-14(b) orRule 15d-14(b) of the Securities Exchange Act of 1934 and furnished solely pursuant to 18 U.S.C. § 1350 and not filed as part of the Report or as a separate disclosure document
	32	.2	Certification of Principal Financial Officer Pursuant toRule 13a-14(b) orRule 15d-14(b) of the Securities Exchange Act of 1934 and furnished solely pursuant to 18 U.S.C. §1350 and not filed as part of the Report or as a separate disclosure document
	101	*	Interactive data files pursuant to Rule 405 ofRegulation S-T: (i) the Consolidated Statements of Operations for the Quarter and Nine months Ended September 30, 2010 and 2009, (ii) the Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009, (iii) the Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2010 and 2009 and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text


*		Pursuant to Rule 406T ofRegulation S-T, the interactive data included in Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	8th grade Avg

Thomas & Betts (TNB) Inactive 10-Q2010 Q3 Quarterly report

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