EXHIBIT 20.1
NEWS | Thomas & Betts Corporation | |||
| 8155 T&B Boulevard | ||||
| Memphis, TN 38125 | ||||
| (901) 252-5466 | ||||
FOR IMMEDIATE RELEASE
THOMAS & BETTS REPORTS SECOND QUARTER 2003 RESULTS
MEMPHIS, Tenn. — July 21, 2003 — Thomas & Betts Corporation (NYSE: TNB) today reported net income for the quarter ended June 29, 2003 of $6.8 million, or $0.12 earnings per basic and fully diluted share, compared to net earnings of $0.4 million, or $0.01 earnings per basic and fully diluted share, in the second quarter 2002.
Sales in the second quarter 2003 were $322.7 million, down 5.5 percent from the $341.3 million reported in the second quarter 2002. The sales decline reflects reduced investment by the utility sector, where Thomas & Betts is a leading provider of steel structures used for transmission systems and high-voltage electrical connectors and switchgear.
“We are pleased that we were able to show fundamental improvement in our performance despite the on-going weakness across all of our markets,” said T. Kevin Dunnigan, chairman and chief executive officer of Thomas & Betts. “We continue to improve our internal operations, lower our expense structure and strengthen our competitive positioning as we ride out the very weak conditions in our core markets.”
In the second quarter 2003, the company’s gross margin was 25.9 percent of sales, compared to 22.7 percent of sales in the second quarter last year. Management noted that the continued low sales volume limited the positive contribution from the consolidation program undertaken in U.S., European and Mexican electrical products manufacturing facilities in 2002. The company continues to focus on improving overall manufacturing efficiencies at current production levels.
Selling, general and administrative expense was $68.6 million in the quarter just ended, or 21.3 percent of sales, down from $73.8 million in the year-ago quarter. Net interest expense was $9.1 million in the quarter, compared to $7.6 million in the second quarter 2002. Second quarter 2003 net interest expense reflects $0.9 million in incremental interest expense resulting from the company’s recent offering of $125 million senior notes, the proceeds of which will be used to pay off $125 million in senior notes due January 2004. Prior-year, second quarter, net interest expense was positively impacted by $3.3 million associated with income tax refunds.
Taxes in the second quarter 2003 and second quarter 2002 include tax benefits of $2.0 million and $2.2 million, respectively. These tax benefits resulted from the completion of tax audits and a corresponding reduction in worldwide tax exposure.
SEGMENT RESULTS
Sales in the company’s Electrical segment were $256.8 million for the second quarter 2003, down 3.1 percent from the $265.2 million reported in the prior-year period. The decline in segment sales is due to significant weakness in demand for high-voltage connectors and switchgear used by utility customers. Earnings in this segment were $11.8 million versus a loss of $0.8 million in the year-ago period. 2002 results included $13.4 million in charges related to restructuring operations.
Sales and earnings in the Steel Structures segment reflect reduced capital investment by the utility sector, specifically for transmission and distribution systems. Sales in this segment were $21.3 million for the second quarter 2003, down 36.4 percent from the $33.6 million reported in the year-ago period. Earnings in this segment were $0.7 million compared to $4.9 million in the second quarter 2002, reflecting the reduced sales volume.
The company’s Communications segment reported sales of $19.1 million in the second quarter 2003, down from $23.4 million in the same period last year. Segment earnings were $2.6 million in the quarter just ended versus a loss of $0.3 million in second quarter 2002. Second quarter 2003 results reflect tight operating expense controls implemented in response to continued weak demand in telecommunications and broadband markets.
Sales in the HVAC segment, which provides industrial heating and ventilation products, were $25.4 million for the quarter just ended, up from $19.2 million recorded in the second quarter 2002. The segment reported earnings of $0.4 million in the second quarter versus $0.2 million in the year-earlier period. 2003 segment results include the positive impact of an acquisition completed in the fourth quarter 2002.
YEAR-TO-DATE RESULTS
For the six months ended June 29, 2003, Thomas & Betts reported sales of $634.1 million, down 7.2 percent on a year-over-year basis. The decline is due largely to reduced capital investment by the utility sector. Net earnings for the first six months of 2003 were $11.8 million, or $0.20 per basic and fully diluted share, versus a net loss of $56.1 million, or a loss of $0.96 per share for the first six months of 2002. 2002 six-months results included a $44.8 million ($0.77 loss per share) goodwill impairment charge associated with the HVAC segment, which was reflected as a cumulative effect of an accounting change.
DIRECTIONAL GUIDANCE
Despite continued weakness in the company’s core markets, management expects to report sequential improvement in third and fourth quarter 2003 earnings from operations in both dollar and percent terms. Full year 2003 earnings from operations and net earnings are expected to exceed 2002 full-year results by more than the 2002 cost of the company’s manufacturing restructuring program.
CORPORATE OVERVIEW
Thomas & Betts is a leading designer and manufacturer of connectors and components for electrical and communication markets, engineered steel structures used for utility transmission, lighting and wind towers, and industrial heating units. Headquartered in Memphis, Tenn., the company has manufacturing, distribution and office facilities worldwide. The company had sales of $1.3 billion in 2002. Visit Thomas & Betts at www.tnb.com.
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NOTE:The attached financial tables support the information provided in this news release:
Condensed Consolidated Statements of Operations
Segment Information
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flows
CONTACT: Tricia Bergeron
(901) 252-8266
Email: tricia.bergeron@tnb.com
CONFERENCE CALL/ WEBCAST INFORMATION
Thomas & Betts will hold a conference call and webcast to discuss second quarter 2003 results on Tuesday, July 22, 2003 at 11:00 a.m. EDT (10:00 a.m. CDT). The telephone number to participate in the call is 773.756.4790 (the ID for the call is TNB). The call can also be accessed via the Thomas & Betts corporate website at www.tnb.com.
The conference call will be recorded and available for replay through 12:00 midnight EDT on Thursday, July 24, 2003. To access the replay, please call 402.220.3565 (no ID is required). The recorded webcast will also be available at www.tnb.com.
This press release includes forward-looking statements that are subject to many uncertainties in the company’s operations, business, economic, and political environment. Forward-looking statements are identified by terms such as “achieve”, “guidance”, “expect”, “believe”, “anticipate” and “plan.” Such uncertainties, which are discussed further in the company’s annual, quarterly and current filings with the Securities and Exchange Commission, may cause the actual results of the company to be materially different from any future results expressed or implied by such forward-looking statements.
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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Quarter Ended | Year to Date | |||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
Net sales | $ | 322,661 | $ | 341,279 | $ | 634,143 | $ | 683,330 | ||||||||||
| Cost of sales | 239,182 | 263,780 | 465,588 | 522,052 | ||||||||||||||
| Gross margin | 83,479 | 77,499 | 168,555 | 161,278 | ||||||||||||||
| Gross margin — % of net sales | 25.9 | % | 22.7 | % | 26.6 | % | 23.6 | % | ||||||||||
| Selling, general and administrative | 68,618 | 73,809 | 141,550 | 146,405 | ||||||||||||||
| Selling, general and administrative — % of net sales | 21.3 | % | 21.6 | % | 22.3 | % | 21.4 | % | ||||||||||
| Provision — restructured operations | — | 361 | — | 1,626 | ||||||||||||||
Earnings (loss) from operations | 14,861 | 3,329 | 27,005 | 13,247 | ||||||||||||||
| Income from unconsolidated companies | 558 | 398 | 1,412 | 1,100 | ||||||||||||||
| Interest expense — net | (9,139 | ) | (7,581 | ) | (17,419 | ) | (18,480 | ) | ||||||||||
| Other (expense) income — net | 232 | 1,200 | (371 | ) | 441 | |||||||||||||
| Earnings (loss) before income taxes | 6,512 | (2,654 | ) | 10,627 | (3,692 | ) | ||||||||||||
| Income tax provision (benefit) | (242 | ) | (3,023 | ) | (1,131 | ) | 7,586 | |||||||||||
Net earnings (loss) before cumulative effect of an accounting change | 6,754 | 369 | 11,758 | (11,278 | ) | |||||||||||||
| Cumulative effect of an accounting change | — | — | — | (44,815 | ) | |||||||||||||
Net earnings (loss) | $ | 6,754 | $ | 369 | $ | 11,758 | $ | (56,093 | ) | |||||||||
Basic earnings (loss) per share: | ||||||||||||||||||
| Net earnings (loss) before cumulative effect of an accounting change | $ | 0.12 | $ | 0.01 | $ | 0.20 | $ | (0.19 | ) | |||||||||
| Cumulative effect of an accounting change | — | — | — | (0.77 | ) | |||||||||||||
| Net earnings (loss) | $ | 0.12 | $ | 0.01 | $ | 0.20 | $ | (0.96 | ) | |||||||||
Diluted earnings (loss) per share: | ||||||||||||||||||
| Net earnings (loss) before cumulative effect of an accounting change | $ | 0.12 | $ | 0.01 | $ | 0.20 | $ | (0.19 | ) | |||||||||
| Cumulative effect of an accounting change | — | — | — | (0.77 | ) | |||||||||||||
| Net earnings (loss) | $ | 0.12 | $ | 0.01 | $ | 0.20 | $ | (0.96 | ) | |||||||||
Average shares outstanding: | ||||||||||||||||||
| Basic | 58,461 | 58,292 | 58,412 | 58,253 | ||||||||||||||
| Diluted | 58,463 | 58,459 | 58,416 | 58,253 | ||||||||||||||
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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
| Quarter Ended | Year to Date | ||||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
| (In thousands) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
Net sales: | |||||||||||||||||||
| Electrical | $ | 256,801 | $ | 265,150 | $ | 497,839 | $ | 521,676 | |||||||||||
| Steel Structures | 21,346 | 33,581 | 43,311 | 68,706 | |||||||||||||||
| Communications | 19,148 | 23,358 | 41,415 | 52,695 | |||||||||||||||
| HVAC | 25,366 | 19,190 | 51,578 | 40,253 | |||||||||||||||
Total net sales | $ | 322,661 | $ | 341,279 | $ | 634,143 | $ | 683,330 | |||||||||||
Segment earnings (loss): | |||||||||||||||||||
| Electrical | $ | 11,762 | $ | (771 | ) | $ | 19,762 | $ | 1,906 | ||||||||||
| Steel Structures | 695 | 4,925 | 1,522 | 8,833 | |||||||||||||||
| Communications | 2,561 | (275 | ) | 5,251 | 3,812 | ||||||||||||||
| HVAC | 401 | 209 | 1,882 | 1,422 | |||||||||||||||
Total reportable segment earnings (loss) | 15,419 | 4,088 | 28,417 | 15,973 | |||||||||||||||
| Total reportable segment earnings (loss) — % of net sales | 4.8 | % | 1.2 | % | 4.5 | % | 2.3 | % | |||||||||||
| Provision — restructured operations | — | (361 | ) | — | (1,626 | ) | |||||||||||||
| Interest expense — net | (9,139 | ) | (7,581 | ) | (17,419 | ) | (18,480 | ) | |||||||||||
| Other (expense) income — net | 232 | 1,200 | (371 | ) | 441 | ||||||||||||||
| Earnings (loss) before income taxes | $ | 6,512 | $ | (2,654 | ) | $ | 10,627 | $ | (3,692 | ) | |||||||||
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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 29, | December 29, | |||||||||
| 2003 | 2002 | |||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| ASSETS | ||||||||||
Current assets: | ||||||||||
| Cash and cash equivalents | $ | 275,506 | $ | 177,994 | ||||||
| Marketable securities | 22,299 | 65,863 | ||||||||
| Receivables — net | 185,537 | 161,091 | ||||||||
| Inventories — net | 204,047 | 182,282 | ||||||||
| Other current assets | 73,344 | 117,701 | ||||||||
Total current assets | 760,733 | 704,931 | ||||||||
| Property, plant and equipment — net | 312,796 | 287,415 | ||||||||
| Goodwill — net | 447,645 | 437,175 | ||||||||
| Investments in unconsolidated companies | 122,421 | 121,575 | ||||||||
| Other assets | 86,142 | 68,660 | ||||||||
Total assets | $ | 1,729,737 | $ | 1,619,756 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
| Current maturities of long-term debt | $ | 127,872 | $ | 65,126 | ||||||
| Accounts payable | 110,604 | 109,479 | ||||||||
| Accrued liabilities | 107,940 | 113,406 | ||||||||
| Income taxes payable | 4,692 | 9,148 | ||||||||
Total current liabilities | 351,108 | 297,159 | ||||||||
| Long-term debt | 565,610 | 559,982 | ||||||||
| Other long-term liabilities | 143,495 | 138,479 | ||||||||
Shareholders’ equity | 669,524 | 624,136 | ||||||||
Total liabilities and shareholders’ equity | $ | 1,729,737 | $ | 1,619,756 | ||||||
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THOMAS & BETTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Quarter Ended | Year to Date | |||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| (In thousands) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||
| Net earnings (loss) | $ | 6,754 | $ | 369 | $ | 11,758 | $ | (56,093 | ) | |||||||||
| Cumulative effect of an accounting change | — | — | — | 44,815 | ||||||||||||||
| Net earnings (loss) before cumulative effect of an accounting change | 6,754 | 369 | 11,758 | (11,278 | ) | |||||||||||||
| Adjustments: | ||||||||||||||||||
| Depreciation and amortization | 13,613 | 12,585 | 25,523 | 26,269 | ||||||||||||||
| Provision — restructured operations | — | 361 | — | 1,626 | ||||||||||||||
| Changes in operating assets and liabilities — net: | ||||||||||||||||||
| Receivables | (12,945 | ) | (1,587 | ) | (16,611 | ) | (2,060 | ) | ||||||||||
| Inventories | 7,913 | 10,734 | (2,493 | ) | 9,469 | |||||||||||||
| Accounts payable | (12,870 | ) | 5,867 | (2,956 | ) | 2,707 | ||||||||||||
| Other | 939 | 37,804 | (21,673 | ) | (252 | ) | ||||||||||||
| Net cash provided by (used in) operating activities | 3,404 | 66,133 | (6,452 | ) | 26,481 | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||
| Purchases of property, plant and equipment | (7,956 | ) | (8,131 | ) | (14,289 | ) | (11,903 | ) | ||||||||||
| Proceeds from (investments in) marketable securities | 33,352 | (41,856 | ) | 48,126 | (41,299 | ) | ||||||||||||
| Other | 186 | 1,726 | 234 | 1,726 | ||||||||||||||
| Net cash provided by (used in) investing activities | 25,582 | (48,261 | ) | 34,071 | (51,476 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||
| Net proceeds (repayment) from long-term debt and other borrowings | 123,139 | (1,920 | ) | 61,656 | (7,976 | ) | ||||||||||||
| Other | — | 244 | — | 248 | ||||||||||||||
| Net cash provided by (used in) financing activities | 123,139 | (1,676 | ) | 61,656 | (7,728 | ) | ||||||||||||
EFFECT OF EXCHANGE RATE ON CASH: | 6,341 | 3,437 | 8,237 | 3,454 | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 158,466 | 19,633 | 97,512 | (29,269 | ) | |||||||||||||
| Cash and cash equivalents at beginning of period | 117,040 | 185,941 | 177,994 | 234,843 | ||||||||||||||
| Cash and cash equivalents at end of period | $ | 275,506 | $ | 205,574 | $ | 275,506 | $ | 205,574 | ||||||||||
| Cash payments for interest | $ | 3,687 | $ | 5,408 | $ | 20,066 | $ | 23,488 | ||||||||||
| Cash payments for income taxes | $ | 3,204 | $ | (42,886 | ) | $ | 10,710 | $ | (39,400 | ) | ||||||||
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