EXHIBIT 20.1
| NEWS |  |
For Immediate Release
THOMAS & BETTS CORPORATION
REPORTS FIRST QUARTER 2004 RESULTS
Sales Up 13 Percent; E.P.S. $0.27
MEMPHIS, Tenn. — April 26, 2004— Thomas & Betts Corporation (NYSE: TNB) today reported first quarter 2004 net earnings of $15.6 million, or $0.27 per basic and diluted share, more than triple the $5.0 million in net earnings, or $0.09 per basic and diluted share, reported in the first quarter 2003.
Sales in the quarter were $353.0 million, up $41.5 million, or 13.3 percent, from the prior-year period. Favorable foreign currency accounted for approximately $14 million of the sales increase.
“Sales in the quarter — particularly for our core electrical products — were stronger than we had anticipated as we saw strengthening demand across most markets,” said Dominic J. Pileggi, president and chief executive officer. “The result was a substantial increase in earnings as our factories benefited from better absorption, allowing the productivity improvements made over the past two years to drop through to the bottom line.”
The first quarter 2004 gross margin was 28.2 percent of sales, compared to 27.3 percent in the prior-year period. Selling, general and administrative (SG&A) expense was $73.0 million, or 20.7 percent of sales, compared to $72.9 million, or 23.4 percent of sales, in the prior-year period.
Earnings from operations were $26.7 million in the first quarter 2004, more than twice the $12.1 million reported in the first quarter 2003.
Net interest expense was $7.6 million, down from $8.3 million in the year-earlier period due primarily to lower average debt levels.
Both the 2004 and 2003 first quarter periods included tax benefits ($1.5 million and $2.0 million, respectively) resulting from the favorable completion of tax audits and a corresponding reduction in tax exposure.
SEGMENT RESULTS
First quarter sales in the company’s Electrical segment were $276.8 million, up $35.8 million, or 15 percent, on a year-over-year basis. Favorable foreign currency accounted for approximately $13 million of the increase in segment sales. Segment earnings of $20.9 million were significantly greater than the $8.0 million recorded in the first quarter 2003. These results reflect higher sales, productivity improvements and reduced expenses.
Sales in the Steel Structures segment were $26.1 million, up from $22.0 million in first quarter 2003. Higher levels of capital investment by U.S. electrical utilities drove the sales increase. Segment earnings were $0.6 million, basically flat compared to the first quarter 2003 primarily due to unfavorable project mix. However, the company expects improved performance year over year in the balance of 2004 due to higher volumes, a more favorable project mix and productivity improvements.
Sales in the Communications segment were $20.9 million in the quarter, down from $22.3 million in the first quarter 2003, reflecting continued weakness in CATV and telecom markets. The segment earned $3.3 million compared to $2.7 million last year. The increase in segment earnings reflects the company’s continued focus on tightly managing costs.
HVAC segment sales were $29.2 million in the first quarter 2004, compared to $26.2 million a year ago. Segment earnings were $2.6 million, up significantly, compared to $1.5 million in the first quarter last year. In addition to benefiting from higher sales, the segment’s earnings improvement is due to improved productivity and reduced expenses.
CASH FLOW AND DEBT HIGHLIGHTS
During the first quarter of 2004, the company repaid $125 million of debt. Total debt-to-total capitalization was 43.1 percent at March 31, 2004, compared to 48.4 percent at year-end 2003. Thomas & Betts continues to maintain a solid cash position and ended the first quarter 2004 with approximately $250 million in cash and cash equivalents.
2004 DIRECTIONAL GUIDANCE
Management noted that rising material costs and the possibility of limited supply — especially for steel — would be a challenge throughout the remainder of 2004, although the adverse impact on first-quarter results was minimal.
“We are aggressively managing this very important issue,” said Pileggi, “and believe that we will be largely successful in offsetting rising material costs through a combination of price increases and productivity improvements. We are fortunate to have very strong relationships with our steel suppliers and are working closely with them to avoid any serious disruption to our operations.”
Pileggi continued, “Based on what we’ve seen in the first few weeks of the second quarter and on our ability to continue to manage issues with raw material availability and costs, we currently expect second quarter sales and earnings to be as good as, or slightly better, than our first quarter results. We are also cautiously optimistic that we will beat the current analyst consensus of $0.97 per diluted share for the full year 2004.”
CORPORATE OVERVIEW
Thomas & Betts Corporation (www.tnb.com) is a leading designer and manufacturer of connectors and components for electrical and communication markets. The company is also a leading producer of steel structures used, among other things, for utility transmission and industrial heating units. Headquartered in Memphis, Tenn., the company has manufacturing, distribution and office facilities worldwide.
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NOTE:The following financial tables support the information in this news release:
Condensed Consolidated Statements of Operations
Segment Information
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flows
Capitalization Ratios
CONTACT:Tricia Bergeron (901) 252-8266
This press release includes forward-looking statements that are subject to many uncertainties in the company’s operations, business, and 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.
CONFERENCE CALL AND WEBCAST INFORMATION
Thomas & Betts will hold a conference call/webcast to discuss the company’s first quarter 2004 results on Monday, April 26, 2004 at 11:00 am EST (10:00 am CST). To access the call, please call 201-689-8037. 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 EST on Friday, April 30, 2004. To access the replay, please call 201-612-7415 (account number 9517, passcode 102184). The recorded webcast will be available at www.tnb.com.
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Quarter Ended | ||||||||
| March 31, | March 30, | |||||||
| 2004 | 2003 | |||||||
Net sales | $ | 352,988 | $ | 311,482 | ||||
| Cost of sales | 253,289 | 226,406 | ||||||
| Gross margin | 99,699 | 85,076 | ||||||
| Gross margin — % of net sales | 28.2 | % | 27.3 | % | ||||
| Selling, general and administrative | 73,014 | 72,932 | ||||||
| Selling, general and administrative — % of net sales | 20.7 | % | 23.4 | % | ||||
Earnings from operations | 26,685 | 12,144 | ||||||
| Income from unconsolidated companies | 664 | 854 | ||||||
| Interest expense, net | (7,614 | ) | (8,280 | ) | ||||
| Other (expense) income, net | (135 | ) | (603 | ) | ||||
| Earnings before income taxes | 19,600 | 4,115 | ||||||
| Income tax provision (benefit) | 3,988 | (889 | ) | |||||
Net earnings | $ | 15,612 | $ | 5,004 | ||||
Net earnings per share: | ||||||||
| Basic earnings per share | $ | 0.27 | $ | 0.09 | ||||
| Diluted earnings per share | $ | 0.27 | $ | 0.09 | ||||
Average shares outstanding: | ||||||||
| Basic | 58,289 | 58,373 | ||||||
| Diluted | 58,677 | 58,378 | ||||||
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
| Quarter Ended | ||||||||
| March 31, | March 30, | |||||||
| 2004 | 2003 | |||||||
Net sales: | ||||||||
| Electrical | $ | 276,807 | $ | 241,038 | ||||
| Steel Structures | 26,130 | 21,965 | ||||||
| Communications | 20,882 | 22,267 | ||||||
| HVAC | 29,169 | 26,212 | ||||||
Total net sales | $ | 352,988 | $ | 311,482 | ||||
Segment earnings: | ||||||||
| Electrical | $ | 20,872 | $ | 8,000 | ||||
| Steel Structures | 610 | 827 | ||||||
| Communications | 3,295 | 2,690 | ||||||
| HVAC | 2,572 | 1,481 | ||||||
Total reportable segment earnings | 27,349 | 12,998 | ||||||
| Total reportable segment earnings — % of net sales | 7.7 | % | 4.2 | % | ||||
| Interest expense, net | (7,614 | ) | (8,280 | ) | ||||
| Other | (135 | ) | (603 | ) | ||||
| Earnings before income taxes | $ | 19,600 | $ | 4,115 | ||||
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| March 31, | December 31, | |||||||
| 2004 | 2003 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
| Cash and cash equivalents | $ | 250,254 | $ | 387,425 | ||||
| Marketable securities | 1,559 | 1,704 | ||||||
| Receivables, net | 198,844 | 168,542 | ||||||
| Inventories | 192,775 | 190,243 | ||||||
| Other current assets | 63,829 | 64,365 | ||||||
Total current assets | 707,261 | 812,279 | ||||||
| Net property, plant and equipment | 295,543 | 303,710 | ||||||
| Goodwill | 455,749 | 455,113 | ||||||
| Investments in unconsolidated companies | 122,308 | 121,732 | ||||||
| Other assets | 90,568 | 89,791 | ||||||
Total assets | $ | 1,671,429 | $ | 1,782,625 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
| Current maturities of long-term debt | $ | 7,076 | $ | 133,344 | ||||
| Accounts payable | 120,772 | 113,724 | ||||||
| Accrued liabilities | 101,696 | 111,478 | ||||||
| Income taxes payable | 6,361 | 6,414 | ||||||
Total current liabilities | 235,905 | 364,960 | ||||||
| Long-term debt | 558,250 | 551,972 | ||||||
| Other long-term liabilities | 130,188 | 134,266 | ||||||
| Shareholders’ equity | 747,086 | 731,427 | ||||||
Total liabilities and shareholders’ equity | $ | 1,671,429 | $ | 1,782,625 | ||||
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Quarter Ended | ||||||||
| March 31, | March 30, | |||||||
| 2004 | 2003 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net earnings | $ | 15,612 | $ | 5,004 | ||||
| Adjustments: | ||||||||
| Depreciation and amortization | 13,004 | 11,229 | ||||||
| Amortization of restricted stock | 855 | 681 | ||||||
| Changes in operating assets and liabilities, net: | ||||||||
| Receivables | (31,617 | ) | (3,666 | ) | ||||
| Inventories | (3,350 | ) | (10,406 | ) | ||||
| Accounts payable | 7,646 | 9,914 | ||||||
| Accrued liabilities | (9,453 | ) | (14,495 | ) | ||||
| Income taxes payable | 24 | (4,080 | ) | |||||
| Other | 2,277 | (4,037 | ) | |||||
| Net cash provided by (used in) operating activities | (5,002 | ) | (9,856 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (5,527 | ) | (6,333 | ) | ||||
| Proceeds from sale of property, plant and equipment | — | 48 | ||||||
| Net proceeds from (investments in) marketable securities | 148 | 14,774 | ||||||
| Net cash provided by (used in) investing activities | (5,379 | ) | 8,489 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of long-term debt and other borrowings | (126,505 | ) | (61,483 | ) | ||||
| Other | 745 | — | ||||||
| Net cash provided by (used in) financing activities | (125,760 | ) | (61,483 | ) | ||||
EFFECT OF EXCHANGE RATE ON CASH | (1,030 | ) | 1,896 | |||||
| Net increase (decrease) in cash and cash equivalents | (137,171 | ) | (60,954 | ) | ||||
| Cash and cash equivalents at beginning of period | 387,425 | 177,994 | ||||||
| Cash and cash equivalents at end of period | $ | 250,254 | $ | 117,040 | ||||
| Cash payments for interest | $ | 15,693 | $ | 16,379 | ||||
| Cash payments for income taxes | $ | 2,826 | $ | 7,506 | ||||
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Capitalization Ratios
(In thousands, except ratios)
(Unaudited)
| March 31, | December 31, | |||||||
| 2004 | 2003 | |||||||
| Current maturities of long-term debt | $ | 7,076 | $ | 133,344 | ||||
| Long-term debt | 558,250 | 551,972 | ||||||
| Total debt | 565,326 | 685,316 | ||||||
| Shareholders’ equity | 747,086 | 731,427 | ||||||
| Total capitalization | $ | 1,312,412 | $ | 1,416,743 | ||||
| Total debt-to-total capitalization | 43.1 | % | 48.4 | % | ||||