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(Mark One) | ||
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2004. | ||
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
Tennessee | 22-1326940 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
8155 T&B Boulevard Memphis, Tennessee | 38125 | |
(Address of principal executive offices) | (Zip Code) |
Name of Each Exchange | ||
Title of Each Class | on which Registered | |
Common Stock, $.10 par value | New York Stock Exchange |
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Item 1. | BUSINESS |
• | through electrical, telephone, cable, and heating, ventilation and air-conditioning distributors; | |
• | directly to original equipment manufacturers, utilities and certain end-users; and | |
• | through mass merchandisers, catalog merchandisers and home improvement centers. |
• | Electrical, | |
• | Steel Structures, and | |
• | Heating, Ventilation and Air-Conditioning (“HVAC”). |
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2004 | 2003 | 2002 | ||||||||||
Segment Sales(in millions) | $ | 1,254.0 | $ | 1,114.9 | $ | 1,113.6 | ||||||
Percent of Consolidated Net Sales | 82.7 | % | 84.3 | % | 82.8 | % |
• | fittings and accessories for electrical raceways; | |
• | fastening products, such as plastic and metallic ties for bundling wire, and flexible tubing; | |
• | connectors, such as compression and mechanical connectors for high-current power and grounding applications; | |
• | indoor and outdoor switch and outlet boxes, covers and accessories; | |
• | floor boxes; | |
• | metal framing used as structural supports for conduits, cable tray and electrical enclosures; | |
• | emergency and hazardous lighting; | |
• | safety switches; | |
• | underground connectors and switchgear; | |
• | CATV drop hardware; | |
• | radio frequency RF connectors; | |
• | aerial, pole, pedestal and buried splice enclosures; | |
• | encapsulation and sheath repair systems; and | |
• | other products, including insulation products, wire markers, and application tooling products. |
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• | investor-owned utilities; | |
• | cooperatives, which purchase power from utilities and manage its distribution to end-users; | |
• | municipal utilities; and | |
• | telephone companies. |
2004 | 2003 | 2002 | ||||||||||
Segment Sales(in millions) | $ | 139.6 | $ | 93.5 | $ | 129.7 | ||||||
Percent of Consolidated Net Sales | 9.2 | % | 7.1 | % | 9.6 | % |
• | gas, oil and electric unit heaters; | |
• | gas-fired duct furnaces; | |
• | indirect and direct gas-fired make-up air heaters; | |
• | infrared heaters; and | |
• | evaporative cooling and heat recovery products. |
2004 | 2003 | 2002 | ||||||||||
Segment Sales(in millions) | $ | 122.7 | $ | 113.9 | $ | 102.5 | ||||||
Percent of Consolidated Net Sales | 8.1 | % | 8.6 | % | 7.6 | % |
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2004 | 2003 | 2002 | ||||||||||
R&D Expenditures(in millions) | $ | 21.6 | $ | 19.6 | $ | 18.8 | ||||||
Percent of Net Sales | 1.4 | % | 1.5 | % | 1.4 | % |
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Item 2. | PROPERTIES |
Approximate | ||||||||||||||
Area in Sq. Ft. | ||||||||||||||
(000s) | ||||||||||||||
No. of | ||||||||||||||
Segment | Location | Facilities | Leased | Owned | ||||||||||
Electrical | Arkansas | 1 | — | 286 | ||||||||||
Massachusetts | 1 | — | 116 | |||||||||||
Mississippi | 1 | — | 237 | |||||||||||
New Jersey | 1 | — | 134 | |||||||||||
New Mexico | 1 | — | 100 | |||||||||||
New York | 1 | — | 268 | |||||||||||
Puerto Rico | 4 | 116 | 28 | |||||||||||
Tennessee | 2 | — | 457 | |||||||||||
Texas | 1 | 36 | — | |||||||||||
Australia | 1 | 28 | 29 | |||||||||||
Canada | 11 | 112 | 705 | |||||||||||
France | 2 | 17 | 8 | |||||||||||
Germany | 1 | 30 | — | |||||||||||
Hungary | 1 | 88 | — | |||||||||||
Japan | 1 | 14 | — | |||||||||||
Mexico | 15 | 526 | — | |||||||||||
Netherlands | 2 | 8 | 39 | |||||||||||
United Kingdom | 4 | 16 | 125 | |||||||||||
Steel Structures | South Carolina | 1 | — | 105 | ||||||||||
Texas | 1 | — | 136 | |||||||||||
Wisconsin | 1 | — | 171 | |||||||||||
HVAC | Pennsylvania | 1 | — | 227 | ||||||||||
Belgium | 1 | 140 | — | |||||||||||
France | 2 | 117 | — | |||||||||||
Mexico | 1 | 239 | — |
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Item 3. | LEGAL PROCEEDINGS |
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Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
2004 | 2003 | ||||||||
First Quarter | |||||||||
Market price high | $ | 23 | 5/8 | $ | 18 | 7/16 | |||
Market price low | $ | 19 | 5/8 | $ | 13 | 1/4 | |||
Second Quarter | |||||||||
Market price high | $ | 27 | 3/8 | $ | 16 | 1/4 | |||
Market price low | $ | 21 | 13/16 | $ | 13 | 7/8 | |||
Third Quarter | |||||||||
Market price high | $ | 27 | 1/4 | $ | 17 | 11/16 | |||
Market price low | $ | 23 | 3/16 | $ | 14 | 1/8 | |||
Fourth Quarter | |||||||||
Market price high | $ | 32 | 1/2 | $ | 23 | 3/16 | |||
Market price low | $ | 25 | 7/8 | $ | 15 | 9/16 |
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Item 6. | SELECTED FINANCIAL DATA |
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(In millions, except per share data) | |||||||||||||||||||||
Net sales | $ | 1,516.3 | $ | 1,322.3 | $ | 1,345.9 | $ | 1,497.5 | $ | 1,756.1 | |||||||||||
Net earnings (loss) from continuing operations before cumulative effect of an accounting change | $ | 93.3 | $ | 42.8 | $ | (8.2 | ) | $ | (138.9 | ) | $ | (178.7 | ) | ||||||||
Long-term debt including current maturities | $ | 545.9 | $ | 685.3 | $ | 625.1 | $ | 672.0 | $ | 676.0 | |||||||||||
Total assets | $ | 1,755.8 | $ | 1,782.6 | $ | 1,619.8 | $ | 1,761.6 | $ | 2,085.7 | |||||||||||
Per share earnings (loss) from continuing operations before cumulative effect of an accounting change: | |||||||||||||||||||||
Basic | $ | 1.59 | $ | 0.73 | $ | (0.14 | ) | $ | (2.39 | ) | $ | (3.08 | ) | ||||||||
Diluted | $ | 1.57 | $ | 0.73 | $ | (0.14 | ) | $ | (2.39 | ) | $ | (3.08 | ) | ||||||||
Cash dividends declared per common share | $ | — | $ | — | $ | — | $ | 0.56 | $ | 1.12 |
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Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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2004 | 2003 | ||||||||||||||||
In | % of Net | In | % of Net | ||||||||||||||
Millions | Sales | Millions | Sales | ||||||||||||||
Net sales | $ | 1,516.3 | 100.0 | $ | 1,322.3 | 100.0 | |||||||||||
Cost of sales | 1,085.2 | 71.6 | 970.3 | 73.4 | |||||||||||||
Gross profit | 431.1 | 28.4 | 352.0 | 26.6 | |||||||||||||
Selling, general and administrative | 287.0 | 18.9 | 282.8 | 21.4 | |||||||||||||
Other operating expense (income), net | — | — | (12.4 | ) | (1.0 | ) | |||||||||||
Earnings from operations | 144.1 | 9.5 | 81.6 | 6.2 | |||||||||||||
Income from unconsolidated companies | 2.1 | 0.1 | 3.2 | 0.2 | |||||||||||||
Interest expense, net | (30.6 | ) | (2.0 | ) | (36.9 | ) | (2.8 | ) | |||||||||
Other (expense) income, net | (0.8 | ) | (0.1 | ) | (1.8 | ) | (0.1 | ) | |||||||||
Gain on sale of equity interest | 13.0 | 0.9 | 1.6 | 0.1 | |||||||||||||
Earnings before income taxes | 127.8 | 8.4 | 47.7 | 3.6 | |||||||||||||
Income tax provision | 34.5 | 2.2 | 4.9 | 0.4 | |||||||||||||
Net earnings | $ | 93.3 | 6.2 | $ | 42.8 | 3.2 | |||||||||||
Per share earnings: | |||||||||||||||||
Basic | $ | 1.59 | $ | 0.73 | |||||||||||||
Diluted | $ | 1.57 | $ | 0.73 | |||||||||||||
Overview |
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2003 | 2002 | ||||||||||||||||
In | % of Net | In | % of Net | ||||||||||||||
Millions | Sales | Millions | Sales | ||||||||||||||
Net sales | $ | 1,322.3 | 100.0 | $ | 1,345.9 | 100.0 | |||||||||||
Cost of sales | 970.3 | 73.4 | 1,014.3 | 75.4 | |||||||||||||
Gross profit | 352.0 | 26.6 | 331.6 | 24.6 | |||||||||||||
Selling, general and administrative | 282.8 | 21.4 | 282.3 | 21.0 | |||||||||||||
Other operating expense (income), net | (12.4 | ) | (1.0 | ) | 16.0 | 1.1 | |||||||||||
Impairment charges on long-lived assets | — | — | 1.2 | 0.1 | |||||||||||||
Provision, restructured operations | — | — | 1.6 | 0.1 | |||||||||||||
Earnings from operations | 81.6 | 6.2 | 30.5 | 2.3 | |||||||||||||
Income from unconsolidated companies | 3.2 | 0.2 | 2.6 | 0.2 | |||||||||||||
Interest expense, net | (36.9 | ) | (2.8 | ) | (35.2 | ) | (2.7 | ) | |||||||||
Other (expense) income, net | (1.8 | ) | (0.1 | ) | (0.1 | ) | — | ||||||||||
Gain on sale of equity interest | 1.6 | 0.1 | — | — | |||||||||||||
Earnings (loss) before income taxes | 47.7 | 3.6 | (2.2 | ) | (0.2 | ) | |||||||||||
Income tax provision | 4.9 | 0.4 | 6.0 | 0.4 | |||||||||||||
Net earnings (loss) before cumulative effect of an accounting change | 42.8 | 3.2 | (8.2 | ) | (0.6 | ) | |||||||||||
Cumulative effect of an accounting change | — | — | (44.8 | ) | (3.3 | ) | |||||||||||
Net earnings (loss) | $ | 42.8 | 3.2 | $ | (53.0 | ) | (3.9 | ) | |||||||||
Per share earnings (loss) before cumulative effect of an accounting change: | |||||||||||||||||
Basic | $ | 0.73 | $ | (0.14 | ) | ||||||||||||
Diluted | $ | 0.73 | $ | (0.14 | ) | ||||||||||||
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2004 | 2003 | 2002 | ||||||||||||||||||||||
In | % of Net | In | % of Net | In | % of Net | |||||||||||||||||||
Net Sales | Millions | Sales | Millions | Sales | Millions | Sales | ||||||||||||||||||
Electrical | $ | 1,254.0 | 82.7 | $ | 1,114.9 | 84.3 | $ | 1,113.7 | 82.8 | |||||||||||||||
Steel Structures | 139.6 | 9.2 | 93.5 | 7.1 | 129.7 | 9.6 | ||||||||||||||||||
HVAC | 122.7 | 8.1 | 113.9 | 8.6 | 102.5 | 7.6 | ||||||||||||||||||
$ | 1,516.3 | 100.0 | $ | 1,322.3 | 100.0 | $ | 1,345.9 | 100.0 | ||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
In | % of Net | In | % of Net | In | % of Net | |||||||||||||||||||
Segment Earnings | Millions | Sales | Millions | Sales | Millions | Sales | ||||||||||||||||||
Electrical | $ | 120.3 | 9.6 | $ | 65.4 | 5.9 | $ | 30.3 | 2.7 | |||||||||||||||
Steel Structures | 15.7 | 11.2 | 6.4 | 6.8 | 15.3 | 11.8 | ||||||||||||||||||
HVAC | 10.3 | 8.4 | 8.2 | 7.2 | 6.3 | 6.1 | ||||||||||||||||||
$ | 146.3 | 9.6 | $ | 80.0 | 6.1 | $ | 51.9 | 3.9 | ||||||||||||||||
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• | Revenue Recognition: We recognize revenue when finished products are shipped to unaffiliated customers and both title and risks of ownership are transferred. Sales discounts, quantity and price rebates, and allowances are estimated based on contractual commitments and experience and recorded in the period as a reduction of revenue in which the sale is recognized. Quantity rebates are in the form of volume incentive discount plans, which include specific sales volume targets or year-over-year sales volume growth targets for specific customers. Certain distributors can take advantage of price rebates by subsequently reselling the Corporation’s 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. The Corporation provides additional allowances for bad debts when circumstances dictate. A number of distributors, primarily in the 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. Management analyzes historical returns and allowances, current economic trends and specific customer circumstances when evaluating the adequacy of accounts receivable related reserves and accruals. | |
• | Inventory Valuation: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. To ensure inventories are carried at the lower of cost or market, the Corporation periodically evaluates the carrying value of its inventories. The Corporation also periodically performs 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 forecasts for particular product groupings, planned dispositions of product lines and overall industry trends. | |
• | Goodwill and Other Intangible Assets: We follow the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires a transitional and annual test of goodwill and indefinite lived assets associated with reporting units for indications of impairment. The Corporation performs its annual impairment assessment in the fourth quarter of each year, unless circumstances dictate more frequent assessments. Under the provisions of SFAS No. 142, each test of goodwill requires the Corporation to determine the fair value of each reporting unit, and compare the fair value to the reporting unit’s carrying amount. 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 the Corporation 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. See Note 3 in the Notes to the |
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Consolidated Financial Statements for information regarding the impairment charge of $44.8 million recorded in 2002 as a result of the adoption of SFAS No. 142 and other transitional disclosure information. | ||
• | Long-Lived Assets: We follow the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 establishes accounting standards for the impairment of long-lived assets such as property, plant and equipment and intangible assets subject to amortization. For purposes of recognizing and measuring impairment of long-lived assets, the Corporation evaluates assets for associated product groups. The Corporation reviews long-lived assets to be held-and-used for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. 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, the Corporation estimates fair value 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 sell. | |
• | 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 provides a valuation allowance based on a more-likely-than-not criteria. The Corporation has valuation allowances for deferred tax assets primarily associated with operating loss carryforwards, tax credit carryforwards and deferred state income tax assets. Realization of the deferred tax assets is dependent upon the Corporation’s ability to generate sufficient future taxable income and, if necessary, execution of its tax planning strategies. Management believes that it is more-likely-than-not that future taxable income, based on enacted tax law in effect as of December 31, 2004, will be sufficient to realize the recorded deferred tax assets net of existing valuation allowances. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies, which involve estimates and uncertainties, in making this assessment. Tax planning strategies include primarily sales of non-core assets. Projected future taxable income is based on management’s forecast of the operating results of the Corporation. Management periodically reviews such forecasts in comparison with actual results and expected trends. In the event management determines that sufficient future taxable income, in light of tax planning strategies, may not be generated to fully realize net deferred tax assets, the Corporation will increase valuation allowances by a charge to income tax expense in the period of such determination. | |
• | 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 current available facts related to each site. |
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2004 | 2003 | 2002 | ||||||||||
(In millions) | ||||||||||||
Net cash provided by (used in) operating activities | $ | 63.9 | $ | 96.8 | $ | 80.4 | ||||||
Net cash provided by (used in) investing activities | 1.5 | 43.5 | (84.0 | ) | ||||||||
Net cash provided by (used in) financing activities | (124.5 | ) | 59.2 | (57.2 | ) | |||||||
Effect of exchange-rate changes on cash | 7.7 | 9.9 | 4.0 | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | (51.4 | ) | $ | 209.4 | $ | (56.8 | ) | ||||
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Issue Date | Amount | Interest Rate | Interest Payable | Maturity Date | ||||||||||
January 1996 | $150 million | 6.50% | January 15 and July 15 | January 2006 | ||||||||||
May 1998 | $115 million | 6.63% | (a) | May 1 and November 1 | May 2008 | |||||||||
February 1999 | $150 million | 6.39% | (a) | March 1 and September 1 | February 2009 | |||||||||
May 2003 | $125 million | 7.25% | (a) | June 1 and December 1 | June 2013 |
(a) | We have entered into interest rate swaps associated with only portions of these underlying debt instruments. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk. |
• | incur indebtedness or issue preferred stock of our subsidiaries; | |
• | make restricted payments (as defined), including dividends, repurchase of common stock, or other distributions and investments; | |
• | sell assets or subsidiary stock. |
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2006 | 2008 | |||||||||||||||||||
through | through | |||||||||||||||||||
Total | 2005(a) | 2007 | 2009 | Thereafter | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Long-Term Debt Including Current Maturities | $ | 545.9 | $ | 2.8 | $ | 151.4 | $ | 269.2 | $ | 122.5 | ||||||||||
Operating Lease Obligations | 54.5 | 11.6 | 14.8 | 8.7 | 19.4 | |||||||||||||||
Total Contractual Cash Obligations | $ | 600.4 | $ | 14.4 | $ | 166.2 | $ | 277.9 | $ | 141.9 | ||||||||||
(a) | In addition to the amounts above, we expect contributions to our qualified pension plans to be minimal in 2005. |
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December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(In millions) | ||||||||
Projected benefit obligation | $ | 317 | $ | 2 | ||||
Accumulated benefit obligation | $ | 293 | $ | 2 | ||||
Fair value of plan assets | $ | 295 | $ | 3 |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(In millions) | ||||||||
Projected benefit obligation | $ | 8 | $ | 289 | ||||
Accumulated benefit obligation | $ | 7 | $ | 268 | ||||
Fair value of plan assets | $ | 5 | $ | 209 |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(In millions) | ||||||||
Projected benefit obligation | $ | 325 | $ | 291 | ||||
Accumulated benefit obligation | $ | 300 | $ | 270 | ||||
Fair value of plan assets | $ | 300 | $ | 212 |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(In millions) | ||||||||
Net projected benefit obligation in excess of plan assets | $ | 25 | $ | 79 | ||||
Unrecognized actuarial losses | (84 | ) | (70 | ) | ||||
Recognized net (asset) liability | $ | (59 | ) | $ | 9 | |||
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Plan Assets | ||||||||
At December 31, | At December 31, | |||||||
2004 | 2003 | |||||||
Asset Category | ||||||||
Short-term investments | 9% | —% | ||||||
Domestic equity securities | 33% | 41% | ||||||
International equity securities | 14% | 14% | ||||||
Debt securities | 35% | 40% | ||||||
Other | 9% | 5% | ||||||
Total | 100% | 100% | ||||||
Allocation Targets | ||||||||
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
Asset Category | ||||||||
Domestic equity securities | 40% | 41% | ||||||
International equity securities | 15% | 8% | ||||||
Debt securities | 24% | 46% | ||||||
Other | 21% | 5% | ||||||
Total | 100% | 100% | ||||||
2004 | 2003 | 2002 | ||||||||||
Weighted-average long-term rates of return used to determine net periodic pension cost | 8.61% | 8.66% | 8.67% |
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2004 | 2003 | 2002 | ||||||||||
Discount rates used to determine net periodic pension cost | 5.96% | 6.66% | 7.14% |
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Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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Weighted Average | ||||||||||||||
Notional | Expected | Fixed Rates | Variable Rates Paid | |||||||||||
Amount | Maturity Date | Received | During 2004 | |||||||||||
(In thousands) | ||||||||||||||
$ | 42,000 | May 7, 2008 | 6.63 | % | 4.62 | % | ||||||||
39,917 | February 10, 2009 | 6.39 | % | 4.17 | % | |||||||||
2,083 | February 10, 2009 | 6.39 | % | 5.03 | % | |||||||||
81,250 | June 1, 2013 | 7.25 | % | 4.92 | % |
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Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Consolidated Financial Statements | |||||
Management’s Responsibility for Financial Statements | 41 | ||||
Management’s Report on Internal Control Over Financial Reporting | 41 | ||||
Reports of Independent Registered Public Accounting Firm | 42 | ||||
Consolidated Statements of Operations for 2004, 2003 and 2002 | 45 | ||||
Consolidated Balance Sheets as of December 31, 2004 and 2003 | 46 | ||||
Consolidated Statements of Cash Flows for 2004, 2003 and 2002 | 47 | ||||
Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for 2004, 2003 and 2002 | 48 | ||||
Notes to Consolidated Financial Statements | 49 | ||||
Supplementary Financial Data (Unaudited) | 81 |
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2004 | 2003 | 2002 | |||||||||||
Net sales | $ | 1,516,292 | $ | 1,322,297 | $ | 1,345,857 | |||||||
Cost of sales | 1,085,150 | 970,248 | 1,014,242 | ||||||||||
Gross profit | 431,142 | 352,049 | 331,615 | ||||||||||
Other expenses: | |||||||||||||
Selling, general and administrative | 287,024 | 282,779 | 282,332 | ||||||||||
Other operating expense (income), net | — | (12,325 | ) | 15,850 | |||||||||
Provision, restructured operations | — | — | 1,656 | ||||||||||
Impairment charges on long-lived assets | — | — | 1,236 | ||||||||||
Earnings from operations | 144,118 | 81,595 | 30,541 | ||||||||||
Income from unconsolidated companies | 2,167 | 3,214 | 2,593 | ||||||||||
Interest expense, net | (30,608 | ) | (36,879 | ) | (35,225 | ) | |||||||
Other (expense) income, net | (825 | ) | (1,772 | ) | (119 | ) | |||||||
Gain on sale of equity interest | 12,978 | 1,587 | — | ||||||||||
Earnings (loss) before income taxes | 127,830 | 47,745 | (2,210 | ) | |||||||||
Income tax provision (benefit) | 34,575 | 4,932 | 6,002 | ||||||||||
Net earnings (loss) before cumulative effect of an accounting change | 93,255 | 42,813 | (8,212 | ) | |||||||||
Cumulative effect of an accounting change | — | — | (44,815 | ) | |||||||||
Net earnings (loss) | $ | 93,255 | $ | 42,813 | $ | (53,027 | ) | ||||||
Basic earnings (loss) per share: | |||||||||||||
Earnings (loss) before cumulative effect of an accounting change | $ | 1.59 | $ | 0.73 | $ | (0.14 | ) | ||||||
Cumulative effect of an accounting change | — | — | (0.77 | ) | |||||||||
Net earnings (loss) | $ | 1.59 | $ | 0.73 | $ | (0.91 | ) | ||||||
Diluted earnings (loss) per share: | |||||||||||||
Earnings (loss) before cumulative effect of an accounting change | $ | 1.57 | $ | 0.73 | $ | (0.14 | ) | ||||||
Cumulative effect of an accounting change | — | — | (0.77 | ) | |||||||||
Net earnings (loss) | $ | 1.57 | $ | 0.73 | $ | (0.91 | ) | ||||||
Average shares outstanding: | |||||||||||||
Basic | 58,610 | 58,438 | 58,273 | ||||||||||
Diluted | 59,357 | 58,447 | 58,273 |
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December 31, 2004 | December 31, 2003 | |||||||||
ASSETS | ||||||||||
Current Assets | ||||||||||
Cash and cash equivalents | $ | 336,059 | $ | 387,425 | ||||||
Marketable securities | 1,658 | 1,704 | ||||||||
Receivables, net of allowances of $68,647 and $55,599 | 172,745 | 168,542 | ||||||||
Inventories: | ||||||||||
Finished goods | 106,402 | 95,993 | ||||||||
Work-in-process | 28,947 | 30,904 | ||||||||
Raw materials | 71,809 | 63,346 | ||||||||
Total inventories | 207,158 | 190,243 | ||||||||
Deferred income taxes | 46,874 | 50,016 | ||||||||
Prepaid expenses | 14,401 | 14,349 | ||||||||
Total Current Assets | 778,895 | 812,279 | ||||||||
Property, plant and equipment | ||||||||||
Land | 15,261 | 15,927 | ||||||||
Buildings | 171,683 | 173,985 | ||||||||
Machinery and equipment | 608,482 | 604,791 | ||||||||
Construction-in-progress | 10,219 | 9,163 | ||||||||
805,645 | 803,866 | |||||||||
Less accumulated depreciation | (529,501 | ) | (500,156 | ) | ||||||
Net property, plant and equipment | 276,144 | 303,710 | ||||||||
Goodwill | 463,264 | 455,113 | ||||||||
Investments in unconsolidated companies | 114,922 | 121,732 | ||||||||
Deferred income taxes | 33,481 | 52,707 | ||||||||
Prepaid pension plan costs | 59,261 | 4,064 | ||||||||
Other assets | 29,785 | 33,020 | ||||||||
Total Assets | $ | 1,755,752 | $ | 1,782,625 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current Liabilities | ||||||||||
Current maturities of long-term debt | $ | 2,830 | $ | 133,344 | ||||||
Accounts payable | 120,336 | 113,724 | ||||||||
Accrued liabilities | 100,692 | 111,478 | ||||||||
Income taxes payable | 14,551 | 6,414 | ||||||||
Total Current Liabilities | 238,409 | 364,960 | ||||||||
Long-Term Liabilities | ||||||||||
Long-term debt | 543,085 | 551,972 | ||||||||
Accrued pension plan liability | 20,571 | 81,076 | ||||||||
Other long-term liabilities | 51,968 | 53,190 | ||||||||
Contingencies (Note 17) | — | — | ||||||||
Shareholders’ Equity | ||||||||||
Common stock | 5,935 | 5,848 | ||||||||
Additional paid-in capital | 366,811 | 345,646 | ||||||||
Retained earnings | 530,243 | 436,988 | ||||||||
Unearned compensation, restricted stock | (1,811 | ) | (2,014 | ) | ||||||
Accumulated other comprehensive income | 541 | (55,041 | ) | |||||||
Total Shareholders’ Equity | 901,719 | 731,427 | ||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,755,752 | $ | 1,782,625 | ||||||
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2004 | 2003 | 2002 | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||
Net earnings (loss) | $ | 93,255 | $ | 42,813 | $ | (53,027 | ) | |||||||
Cumulative effect of an accounting change | — | — | 44,815 | |||||||||||
Income (loss) before cumulative effect of an accounting change | 93,255 | 42,813 | (8,212 | ) | ||||||||||
Adjustments: | ||||||||||||||
Depreciation and amortization | 51,805 | 50,327 | 47,978 | |||||||||||
Amortization of restricted stock | 2,331 | 3,761 | 2,266 | |||||||||||
Provision, restructured operations | — | — | 1,656 | |||||||||||
Impairment charge on long-lived assets | — | — | 1,236 | |||||||||||
Undistributed earnings from unconsolidated companies | (2,167 | ) | (3,214 | ) | (2,593 | ) | ||||||||
Mark-to-market adjustment for derivative instruments | (691 | ) | (1,116 | ) | (617 | ) | ||||||||
(Gain) loss on sale of property, plant and equipment | (721 | ) | 1,465 | (194 | ) | |||||||||
Gain on sale of equity interest | (12,978 | ) | (1,587 | ) | — | |||||||||
Deferred income taxes | 12,523 | (10,840 | ) | 43,017 | ||||||||||
Changes in operating assets and liabilities, net: | ||||||||||||||
Receivables | 1,282 | 4,527 | 35,673 | |||||||||||
Inventories | (12,682 | ) | 14,493 | 16,428 | ||||||||||
Held for sale assets | — | — | 8,186 | |||||||||||
Accounts payable | 3,250 | (2,176 | ) | (15,016 | ) | |||||||||
Accrued liabilities | (10,885 | ) | (4,075 | ) | (68,547 | ) | ||||||||
Income taxes payable | 7,395 | (3,680 | ) | 10,615 | ||||||||||
Funding to qualified pension plans | (78,187 | ) | (5,525 | ) | (8,275 | ) | ||||||||
Other | 10,381 | 11,620 | 16,784 | |||||||||||
Net cash provided by (used in) operating activities | 63,911 | 96,793 | 80,385 | |||||||||||
Cash Flows from Investing Activities: | ||||||||||||||
Purchases of property, plant and equipment | (25,419 | ) | (28,681 | ) | (23,811 | ) | ||||||||
Purchases of and investment in businesses | — | — | (5,079 | ) | ||||||||||
Proceeds from sale of property, plant and equipment | 5,948 | 1,347 | 3,697 | |||||||||||
Proceeds from sale of equity interest | 20,929 | 2,338 | — | |||||||||||
Proceeds from divestitures of businesses | — | — | 373 | |||||||||||
Marketable securities acquired | (525 | ) | (30,941 | ) | (84,624 | ) | ||||||||
Proceeds from matured marketable securities | 541 | 99,485 | 25,463 | |||||||||||
Net cash provided by (used in) investing activities | 1,474 | 43,548 | (83,981 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||
Proceeds from long-term debt and other borrowings | — | 130,628 | 4,434 | |||||||||||
Repayment of long-term debt and other borrowings | (139,096 | ) | (67,790 | ) | (61,886 | ) | ||||||||
Debt issuance costs on recapitalization | — | (3,861 | ) | — | ||||||||||
Stock options exercised | 14,666 | 175 | 248 | |||||||||||
Net cash provided by (used in) financing activities | (124,430 | ) | 59,152 | (57,204 | ) | |||||||||
Effect of exchange-rate changes on cash | 7,679 | 9,938 | 3,951 | |||||||||||
Net increase (decrease) in cash and cash equivalents | (51,366 | ) | 209,431 | (56,849 | ) | |||||||||
Cash and cash equivalents, beginning of year | 387,425 | 177,994 | 234,843 | |||||||||||
Cash and cash equivalents, end of year | $ | 336,059 | $ | 387,425 | $ | 177,994 | ||||||||
Cash payments for interest | $ | 44,203 | $ | 48,008 | $ | 45,277 | ||||||||
Cash payments (refunds) for income taxes | $ | 12,219 | $ | 14,816 | $ | (48,517 | ) |
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Accumulated | ||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||
Common Stock | Additional | Comprehensive | Comprehensive | |||||||||||||||||||||||||||||||
Paid-In | Retained | Restricted | Income | Income | ||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Stock | (Loss) | (Loss) | Total | |||||||||||||||||||||||||||
Balance at December 30, 2001 | 58,158 | $ | 5,816 | $ | 340,265 | $ | 447,202 | $ | (2,831 | ) | $ | (107,167 | ) | $ | — | $ | 683,285 | |||||||||||||||||
Net income (loss) | — | — | — | (53,027 | ) | — | — | (53,027 | ) | (53,027 | ) | |||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||
Unrealized gain (loss) adjustment on securities net of taxes of $(20) | — | — | — | — | — | — | (38 | ) | (38 | ) | ||||||||||||||||||||||||
Minimum pension liability net of taxes of $(14,110) | — | — | — | — | — | — | (23,021 | ) | (23,021 | ) | ||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | — | — | 14,360 | 14,360 | ||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (8,699 | ) | (8,699 | ) | — | ||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | — | — | (61,726 | ) | — | |||||||||||||||||||||||||
Stock options and incentive awards | 138 | 14 | 2,646 | — | (2,349 | ) | — | — | 311 | |||||||||||||||||||||||||
Amortization of restricted stock | — | — | — | — | 2,266 | — | — | 2,266 | ||||||||||||||||||||||||||
Balance at December 29, 2002 | 58,296 | $ | 5,830 | $ | 342,911 | $ | 394,175 | $ | (2,914 | ) | $ | (115,866 | ) | $ | — | $ | 624,136 | |||||||||||||||||
Net income (loss) | — | — | — | 42,813 | — | — | 42,813 | 42,813 | ||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||
Unrealized gain (loss) adjustment on securities net of taxes of $(112) | — | — | — | — | — | — | (208 | ) | (208 | ) | ||||||||||||||||||||||||
Minimum pension liability net of taxes of $7,695 | — | — | — | — | — | — | 12,556 | 12,556 | ||||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | — | — | 48,477 | 48,477 | ||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | 60,825 | 60,825 | — | ||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | — | — | 103,638 | — | ||||||||||||||||||||||||||
Stock options and incentive awards | 179 | 18 | 3,027 | — | (2,861 | ) | — | — | 184 | |||||||||||||||||||||||||
Redemption of Shareholder Rights Plan | — | — | (292 | ) | — | — | — | — | (292 | ) | ||||||||||||||||||||||||
Amortization of restricted stock | — | — | — | — | 3,761 | — | — | 3,761 | ||||||||||||||||||||||||||
Balance at December 31, 2003 | 58,475 | $ | 5,848 | $ | 345,646 | $ | 436,988 | $ | (2,014 | ) | $ | (55,041 | ) | $ | — | $ | 731,427 | |||||||||||||||||
Net income (loss) | — | — | — | 93,255 | — | — | 93,255 | 93,255 | ||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||
Unrealized gain (loss) adjustment on securities net of taxes of $(23) | — | — | — | — | — | — | (42 | ) | (42 | ) | ||||||||||||||||||||||||
Minimum pension liability net of taxes of $15,216 | — | — | — | — | — | — | 27,302 | 27,302 | ||||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | — | — | 28,322 | 28,322 | ||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | 55,582 | 55,582 | — | ||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | — | — | 148,837 | — | ||||||||||||||||||||||||||
Stock options and incentive awards | 878 | 87 | 21,165 | — | (2,128 | ) | — | — | 19,124 | |||||||||||||||||||||||||
Amortization of restricted stock | — | — | — | — | 2,331 | — | — | 2,331 | ||||||||||||||||||||||||||
Balance at December 31, 2004 | 59,353 | $ | 5,935 | $ | 366,811 | $ | 530,243 | $ | (1,811 | ) | $ | 541 | $ | — | $ | 901,719 | ||||||||||||||||||
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1. | Nature of Operations |
2. | Summary of Significant Accounting Policies |
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2. | Summary of Significant Accounting Policies (Continued) |
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2. | Summary of Significant Accounting Policies (Continued) |
Other — | ||||||||||||||||||||
Balance at | Primarily | Balance at | ||||||||||||||||||
Beginning | Goodwill | Impairment | Currency | End of | ||||||||||||||||
of Year | Additions | Losses | Translation | Year | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
2004 | ||||||||||||||||||||
Electrical | 394,168 | $ | — | $ | — | $ | 7,890 | $ | 402,058 | |||||||||||
Steel Structures | 60,533 | — | — | — | 60,533 | |||||||||||||||
HVAC | 412 | 197 | — | 64 | 673 | |||||||||||||||
$ | 455,113 | $ | 197 | $ | — | $ | 7,954 | $ | 463,264 | |||||||||||
2003 | ||||||||||||||||||||
Electrical | $ | 376,598 | $ | — | $ | — | $ | 17,570 | $ | 394,168 | ||||||||||
Steel Structures | 60,533 | — | — | — | 60,533 | |||||||||||||||
HVAC | 44 | 309 | — | 59 | 412 | |||||||||||||||
$ | 437,175 | $ | 309 | $ | — | $ | 17,629 | $ | 455,113 | |||||||||||
2002 | ||||||||||||||||||||
Electrical | $ | 369,367 | $ | — | $ | — | $ | 7,231 | $ | 376,598 | ||||||||||
Steel Structures | 60,533 | — | — | — | 60,533 | |||||||||||||||
HVAC | 44,815 | 44 | (44,815 | ) | — | $ | 44 | |||||||||||||
$ | 474,715 | $ | 44 | $ | (44,815 | ) | $ | 7,231 | $ | 437,175 | ||||||||||
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2. | Summary of Significant Accounting Policies (Continued) |
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2. | Summary of Significant Accounting Policies (Continued) |
2004 | 2003 | 2002 | ||||||||||||
(In thousands, except per share data) | ||||||||||||||
Net earnings (loss), as reported | $ | 93,255 | $ | 42,813 | $ | (53,027 | ) | |||||||
Deduct total incremental stock-based compensation expense determined under fair-value-based method for all awards, net of related tax effects(a) | (4,297 | ) | (4,991 | ) | (4,466 | ) | ||||||||
Proforma net earnings (loss) | $ | 88,958 | $ | 37,822 | $ | (57,493 | ) | |||||||
Earnings (loss) per share: | ||||||||||||||
Basic — as reported | $ | 1.59 | $ | 0.73 | $ | (0.91 | ) | |||||||
Basic — proforma | $ | 1.52 | $ | 0.65 | $ | (0.99 | ) | |||||||
Diluted — as reported | $ | 1.57 | $ | 0.73 | $ | (0.91 | ) | |||||||
Diluted — proforma | $ | 1.50 | $ | 0.65 | $ | (0.99 | ) | |||||||
(a) | Does not include restricted stock expense that is already reported in net earnings. See Note 11. |
2004 | 2003 | 2002 | ||||||||||
Risk-free interest rate on issuance date | 3.00 | % | 3.00 | % | 4.25 | % | ||||||
Dividend yield | — | % | — | % | — | % | ||||||
Volatility | 35 | % | 35 | % | 35 | % | ||||||
Average expected option life | 4 years | 5 years | 5 years |
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2. | Summary of Significant Accounting Policies (Continued) |
3. | Accounting Change |
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3. | Accounting Change (Continued) |
4. | Acquisitions and Divestitures |
5. | Restructuring and Asset Impairments |
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5. | Restructuring and Asset Impairments (Continued) |
2002 | ||||||||||||
Property, | ||||||||||||
Plant and | Accrued | Total | ||||||||||
Equipment | Liabilities | Charges | ||||||||||
(In thousands) | ||||||||||||
Restructuring charges | $ | — | $ | 1,656 | $ | 1,656 | ||||||
Impairment charges on long-lived assets | 1,236 | — | 1,236 | |||||||||
Cost of Sales | — | 32,781 | 32,781 | |||||||||
$ | 1,236 | $ | 34,437 | $ | 35,673 | |||||||
6. | Basic and Diluted Earnings Per Share |
2004 | 2003 | 2002 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Net earnings (loss) before cumulative effect of an accounting change | $ | 93,255 | $ | 42,813 | $ | (8,212 | ) | ||||||
Cumulative effect of an accounting change | — | — | (44,815 | ) | |||||||||
Net earnings (loss) | $ | 93,255 | $ | 42,813 | $ | (53,027 | ) | ||||||
Basic shares: | |||||||||||||
Average shares outstanding | 58,610 | 58,438 | 58,273 | ||||||||||
Basic earnings (loss) per share: | |||||||||||||
Net earnings (loss) before cumulative effect of an accounting change | $ | 1.59 | $ | 0.73 | $ | (0.14 | ) | ||||||
Cumulative effect of an accounting change | — | — | (0.77 | ) | |||||||||
Net earnings (loss) | $ | 1.59 | $ | 0.73 | $ | (0.91 | ) | ||||||
Diluted shares: | |||||||||||||
Average shares outstanding | 58,610 | 58,438 | 58,273 | ||||||||||
Additional shares from the assumed exercise of stock options and vesting of restricted stock | 747 | 9 | — | ||||||||||
59,357 | 58,447 | 58,273 | |||||||||||
Diluted earnings (loss) per share: | |||||||||||||
Net earnings (loss) before cumulative effect of an accounting change | $ | 1.57 | $ | 0.73 | $ | (0.14 | ) | ||||||
Cumulative effect of an accounting change | — | — | (0.77 | ) | |||||||||
Net earnings (loss) | $ | 1.57 | $ | 0.73 | $ | (0.91 | ) | ||||||
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6. | Basic and Diluted Earnings Per Share (Continued) |
7. | Income Taxes |
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Domestic | $ | 72,370 | $ | (6,334 | ) | $ | (49,713 | ) | ||||
Foreign | 55,460 | 54,079 | 47,503 | |||||||||
$ | 127,830 | $ | 47,745 | $ | (2,210 | ) | ||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Current | |||||||||||||
Federal | $ | 3,873 | $ | 1,344 | $ | (55,551 | ) | ||||||
Foreign | 17,406 | 13,270 | 18,274 | ||||||||||
State and local | 30 | (214 | ) | 37 | |||||||||
Total current provision (benefit) | 21,309 | 14,400 | (37,240 | ) | |||||||||
Deferred | |||||||||||||
Domestic | 15,415 | (16,451 | ) | 45,912 | |||||||||
Foreign | (2,149 | ) | 6,983 | (2,670 | ) | ||||||||
Total deferred provision (benefit) | 13,266 | (9,468 | ) | 43,242 | |||||||||
$ | 34,575 | $ | 4,932 | $ | 6,002 | ||||||||
2004 | 2003 | 2002(a) | |||||||||||
Federal statutory tax rate | 35.0 | % | 35.0 | % | (35.0 | )% | |||||||
Increase (reduction) resulting from: | |||||||||||||
State tax — net of federal tax benefit | (1.1 | ) | (4.7 | ) | (613.3 | ) | |||||||
Taxes on foreign earnings | (2.4 | ) | 3.8 | 33.0 | |||||||||
Non-taxable income from Puerto Rico operations | (5.6 | ) | (13.3 | ) | (319.2 | ) | |||||||
Expiration of foreign tax credits | — | 15.4 | — | ||||||||||
Foreign tax credit conversion | — | — | 1,034.4 | (b) | |||||||||
Change in valuation allowance | 0.5 | (9.7 | ) | 78.0 |
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7. | Income Taxes (Continued) |
2004 | 2003 | 2002(a) | |||||||||||
Tax audits and reassessment of tax exposures | (1.2 | )(e) | (9.4 | )(d) | (99.6 | )(c) | |||||||
Other | 1.8 | (6.8 | ) | 193.3 | |||||||||
Effective tax rate | 27.0 | % | 10.3 | % | 271.6 | % | |||||||
(a) | The near break-even loss before income taxes of the Corporation in 2002 has the effect of exaggerating the relative percentages for components of the 2002 effective tax rate. | |
(b) | The conversion of foreign tax credits to a foreign tax deduction was attributable to the passage of the “Job Creation and Worker Assistance Act of 2002.” This Act allowed U.S. corporate taxpayers that had a net operating loss for any taxable year ending in 2001 or 2002 to carryback the loss to each of five taxable years preceding the taxable year of such loss. The preceding law had limited the carryback provision to two taxable years preceding the taxable year of such loss. The change in the tax law allowed Thomas & Betts to carryback its 2001 U.S. net operating loss to 1996 and then forward to 1997 and 1998. By carrying back the 2001 net operating loss, the Corporation effectively eliminated all taxable income in 1996 and 1997 and substantially reduced taxable income in 1998. This reduction in taxable income eliminated tax in 1996 and 1997, which resulted in a reversal of foreign tax credits that were previously recognized in those two years. Management elected to convert these previously recognized foreign tax credits to deductions in order to insure their use before expiration. The effect of converting these foreign tax credits to deductions resulted in a $22.9 million charge to income tax expense. As required by SFAS No. 109, this charge was recognized in the first quarter of 2002 contemporaneous with management’s decision and the change in tax law. | |
(c) | During 2002, the Corporation reduced tax accruals related to specific tax exposure items and recorded a tax benefit of $2.2 million as a result of completing several tax audits and the reduction of worldwide tax exposures. | |
(d) | During 2003, the Corporation recorded a tax benefit of $4.5 million related to specific tax exposure items as a result of completing several tax audits and the reduction of worldwide tax exposures. | |
(e) | During 2004, the Corporation recorded a tax benefit of $1.5 million as a result of completing tax audits. |
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7. | Income Taxes (Continued) |
December 31, | December 31, | ||||||||
2004 | 2003 | ||||||||
(In thousands) | |||||||||
Deferred tax assets | |||||||||
Asset impairments | $ | 644 | $ | 6,174 | |||||
Accrued employee benefits | 10,433 | 10,557 | |||||||
Accounts receivable | 7,611 | 6,472 | |||||||
Self insurance liability | 4,647 | 4,546 | |||||||
Environmental liabilities | 4,373 | 4,729 | |||||||
Inventory | 5,164 | 5,708 | |||||||
Tax credit and loss carryforwards | 184,711 | 180,999 | |||||||
�� | Pension benefits and SEIP | — | 6,612 | ||||||
Minimum pension liability | 2,175 | 18,332 | |||||||
Other | 2,210 | 5,733 | |||||||
Total deferred tax assets | 221,968 | 249,862 | |||||||
Valuation allowance | (83,935 | ) | (86,999 | ) | |||||
Net deferred tax assets | 138,033 | 162,863 | |||||||
Deferred tax liabilities | |||||||||
Property, plant and equipment | (12,409 | ) | (24,517 | ) | |||||
Investments and foreign liabilities | (36,367 | ) | (35,623 | ) | |||||
Pension benefits and SEIP | (8,902 | ) | — | ||||||
Total deferred tax liabilities | (57,678 | ) | (60,140 | ) | |||||
Net deferred tax assets | $ | 80,355 | $ | 102,723 | |||||
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7. | Income Taxes (Continued) |
8. | Fair Value of Financial Instruments |
Amortized | Gross | Gross | Fair | ||||||||||||||
Cost | Unrealized | Unrealized | Market | ||||||||||||||
Basis | Gains | Losses | Value | ||||||||||||||
(In thousands) | |||||||||||||||||
As of December 31, 2004 | |||||||||||||||||
Mortgage-backed securities | $ | 1,597 | $ | 61 | $ | — | $ | 1,658 | |||||||||
As of December 31, 2003 | |||||||||||||||||
Mortgage-backed securities | $ | 1,579 | $ | 125 | $ | — | $ | 1,704 | |||||||||
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9. | Derivative Instruments |
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9. | Derivative Instruments (Continued) |
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10. | Debt |
December 31, | December 31, | ||||||||
2004 | 2003 | ||||||||
(In thousands) | |||||||||
Unsecured notes | |||||||||
8.25% Notes due 2004 | $ | — | $ | 124,997 | |||||
6.50% Notes due 2006 | 150,980 | 151,927 | |||||||
7.25% Notes due 2013(a) | 121,303 | 120,062 | |||||||
Unsecured medium-term notes | |||||||||
6.63% Notes due 2008(a) | 114,787 | 115,216 | |||||||
6.39% Notes due 2009(a) | 149,919 | 150,276 | |||||||
Non-U.S. borrowings due through 2005 | — | 5,751 | |||||||
Industrial revenue bonds due through 2008 | 4,880 | 7,055 | |||||||
Other, including capital leases | 4,046 | 10,032 | |||||||
Long-term debt (including current maturities) | 545,915 | 685,316 | |||||||
Less current portion | 2,830 | 133,344 | |||||||
Long-term debt | $ | 543,085 | $ | 551,972 | |||||
(a) | See Note 9 regarding interest rate swap agreements. |
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10. | Debt (Continued) |
11. | Stock Option and Incentive Plans |
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11. | Stock Option and Incentive Plans (Continued) |
Options Outstanding | ||||||||||||||||||||
Options Exercisable | ||||||||||||||||||||
Weighted- | ||||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||
Number | Contractual | Exercise | Number | Exercise | ||||||||||||||||
Range of Exercise Prices | Outstanding | Life | Price | Exercisable | Price | |||||||||||||||
$14.31 - $18.70 | 1,099,892 | 7.44 Years | $ | 17.33 | 528,228 | $ | 17.32 | |||||||||||||
18.72 - 21.68 | 2,398,347 | 6.69 Years | 20.48 | 1,130,639 | 20.22 | |||||||||||||||
22.00 - 33.75 | 752,956 | 4.62 Years | 27.89 | 703,149 | 28.18 | |||||||||||||||
38.59 - 59.56 | 1,002,385 | 2.58 Years | 45.01 | 1,002,385 | 45.01 | |||||||||||||||
14.31 - 59.56 | 5,253,580 | 5.77 Years | $ | 25.56 | 3,364,401 | $ | 28.81 | |||||||||||||
Average | ||||||||
Per Share | ||||||||
Shares | Option Price | |||||||
Balance at December 30, 2001 | 4,860,586 | $ | 29.09 | |||||
Granted | 707,383 | 18.99 | ||||||
Exercised | (12,919 | ) | 19.22 | |||||
Terminated | (344,148 | ) | 27.77 | |||||
Balance at December 29, 2002 | 5,210,902 | $ | 27.83 | |||||
Granted | 811,816 | 16.74 | ||||||
Exercised | (9,153 | ) | 19.14 | |||||
Terminated | (499,351 | ) | 29.69 | |||||
Balance at December 31, 2003 | 5,514,214 | $ | 26.03 | |||||
Granted | 965,437 | 20.55 | ||||||
Exercised | (745,725 | ) | 19.67 | |||||
Terminated | (480,346 | ) | 29.98 | |||||
Balance at December 31, 2004 | 5,253,580 | $ | 25.56 | |||||
Exercisable at December 29, 2002 | 2,813,573 | $ | 33.94 | |||||
Exercisable at December 31, 2003 | 3,127,566 | $ | 30.93 | |||||
Exercisable at December 31, 2004 | 3,364,401 | $ | 28.81 |
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11. | Stock Option and Incentive Plans (Continued) |
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12. | Pension and Post-retirement Benefits |
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12. | Pension and Post-retirement Benefits (Continued) |
Post-retirement | |||||||||||||||||
Pension Benefits | Benefits | ||||||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||||||
(In thousands) | |||||||||||||||||
Change in benefit obligation | |||||||||||||||||
Benefit obligation at beginning of year | $ | 315,430 | $ | 309,178 | $ | 16,698 | $ | 15,997 | |||||||||
Service cost | 9,268 | 7,916 | 18 | 17 | |||||||||||||
Interest cost | 18,442 | 17,847 | 986 | 1,025 | |||||||||||||
Plan participant’s contributions | 118 | 113 | — | — | |||||||||||||
Plan amendments | 513 | 2,586 | — | — | |||||||||||||
Actuarial loss (gain) | 22,488 | (9,646 | ) | 1,312 | 1,217 | ||||||||||||
Foreign-exchange impact | 3,853 | 3,208 | — | — | |||||||||||||
Acquisitions and other | 3,211 | — | — | — | |||||||||||||
Benefits paid | (25,460 | ) | (15,772 | ) | (1,773 | ) | (1,558 | ) | |||||||||
Benefit obligation — end of year | 347,863 | 315,430 | 17,241 | 16,698 | |||||||||||||
Change in plan assets | |||||||||||||||||
Fair value of plan assets at beginning of year | 212,396 | 192,764 | — | — | |||||||||||||
Actual return on plan assets | 21,198 | 27,046 | — | — | |||||||||||||
Employer contributions: | |||||||||||||||||
Qualified pension plans | 78,187 | 5,525 | — | — | |||||||||||||
Non-qualified pension plans | 9,889 | 617 | — | — | |||||||||||||
Post-retirement benefit plans | — | — | 1,773 | 1,558 | |||||||||||||
Plan participants’ contributions | 118 | 113 | — | — | |||||||||||||
Foreign-exchange impact | 3,181 | 2,103 | — | — | |||||||||||||
Acquisitions and other | 684 | — | — | — | |||||||||||||
Benefits paid | (25,460 | ) | (15,772 | ) | (1,773 | ) | (1,558 | ) | |||||||||
Fair value of plan assets — end of year | 300,193 | 212,396 | — | — | |||||||||||||
Funded status: | |||||||||||||||||
Benefit obligation in excess of plan assets | 47,670 | 103,034 | 17,241 | 16,698 | |||||||||||||
Unrecognized: | |||||||||||||||||
Net transition asset (obligation) | 121 | 7 | (6,131 | ) | (6,898 | ) | |||||||||||
Prior service gain (cost) | (10,175 | ) | (9,874 | ) | 1,454 | 1,687 | |||||||||||
Plan net gain (loss) | (87,873 | ) | (73,486 | ) | (533 | ) | 806 | ||||||||||
Net amount recognized | $ | (50,257 | ) | $ | 19,681 | $ | 12,031 | $ | 12,293 | ||||||||
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12. | Pension and Post-retirement Benefits (Continued) |
Post-retirement | ||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
(In thousands) | ||||||||||||||||
Prepaid benefit cost | $ | (59,261 | ) | $ | (4,064 | ) | $ | — | $ | — | ||||||
Accrued benefit liability | 20,571 | 81,076 | 12,031 | 12,293 | ||||||||||||
Accumulated other comprehensive income | (5,725 | ) | (48,223 | ) | — | — | ||||||||||
Intangible asset | (5,842 | ) | (9,108 | ) | — | — | ||||||||||
Net amount recognized | $ | (50,257 | ) | $ | 19,681 | $ | 12,031 | $ | 12,293 | |||||||
Pension Benefits | Post-retirement Benefits | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Discount rate | 5.71 | % | 5.96 | % | 5.75 | % | 6.00 | % | ||||||||
Rate of increase in compensation level | 4.39 | % | 4.40 | % | — | % | — | % |
December 31, 2004 | December 31, 2003 | |||||||
(In thousands) | ||||||||
Projected benefit obligation | $ | 316,841 | $ | 2,200 | ||||
Accumulated benefit obligation | 292,447 | 2,200 | ||||||
Fair value of plan assets | 295,497 | 2,733 |
December 31, 2004 | December 31, 2003 | |||||||
(In thousands) | ||||||||
Projected benefit obligation | $ | 31,022 | $ | 313,230 | ||||
Accumulated benefit obligation | 24,347 | 287,257 | ||||||
Fair value of plan assets | 4,696 | 209,663 |
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12. | Pension and Post-retirement Benefits (Continued) |
Pension Benefits | Post-retirement Benefits | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Service cost — benefits earned during the period | $ | 9,268 | $ | 7,916 | $ | 6,315 | $ | 18 | $ | 17 | $ | 15 | |||||||||||||
Interest cost on projected benefit obligation | 18,442 | 17,847 | 19,567 | 986 | 1,025 | 1,107 | |||||||||||||||||||
Expected return on plan assets | (17,933 | ) | (16,332 | ) | (17,916 | ) | — | — | — | ||||||||||||||||
Net amortization of unrecognized: | |||||||||||||||||||||||||
Transition obligation (asset) | (14 | ) | (32 | ) | (31 | ) | 767 | 766 | 766 | ||||||||||||||||
Prior service cost (gain) | 1,036 | 1,087 | 764 | (233 | ) | (233 | ) | (233 | ) | ||||||||||||||||
Plan net loss (gain) | 3,874 | 2,902 | 2,293 | (27 | ) | (481 | ) | (718 | ) | ||||||||||||||||
Curtailment and settlement loss(a) | 1,916 | 2,163 | 168 | — | — | — | |||||||||||||||||||
Net periodic pension cost | $ | 16,589 | $ | 15,551 | $ | 11,160 | $ | 1,511 | $ | 1,094 | $ | 937 | |||||||||||||
(a) | The loss of $1.9 million in 2004 following settlement accounting, is primarily associated with the planned retirement of a former executive officer. The loss of $2.2 million in 2003, following settlement accounting, is primarily associated with the planned retirement of the Corporation’s former chief executive officer. |
Post-retirement | ||||||||||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Increase (decrease) in minimum liability included in other comprehensive income, net of taxes of $(15.2) million for 2004, $(7.7) million for 2003 and $14.1 million for 2002 | $ | (27,302 | ) | $ | (12,556 | ) | $ | 23,021 | $ | — | $ | — | $ | — | ||||||||||
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12. | Pension and Post-retirement Benefits (Continued) |
Post- | ||||||||
Pension | retirement | |||||||
Benefits | Benefits | |||||||
(In millions) | ||||||||
2005 | $ | 16.4 | $ | 1.8 | ||||
2006 | 17.1 | 1.8 | ||||||
2007 | 18.7 | 1.7 | ||||||
2008 | 18.3 | 1.6 | ||||||
2009 | 18.8 | 1.6 | ||||||
2010 — 2014 | 120.1 | 6.8 | ||||||
Total expected benefit payments | $ | 209.4 | $ | 15.3 | ||||
Post-retirement | ||||||||||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
Discount rate | 5.96 | % | 6.66 | % | 7.14 | % | 6.00 | % | 6.75 | % | 7.25 | % | ||||||||||||
Rate of increase in compensation level | 4.40 | % | 4.40 | % | 4.41 | % | — | % | — | % | — | % | ||||||||||||
Expected long-term rate of return on plan assets | 8.61 | % | 8.66 | % | 8.67 | % | — | % | — | % | — | % |
2004 | 2003 | |||||||
Health care cost trend rate assumed for next year | 10.0 | % | 11.0 | % | ||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.0 | % | 5.0 | % | ||||
Year that the rate reaches the ultimate trend rate | 2010 | 2010 |
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12. | Pension and Post-retirement Benefits (Continued) |
1-Percentage-Point | 1-Percentage-Point | |||||||
Increase | Decrease | |||||||
(In thousands) | ||||||||
Effect on total of service and interest cost | $ | 61 | $ | (53 | ) | |||
Effect on post-retirement benefit obligation | 983 | (850 | ) |
Plan Assets | ||||||||
At December 31, | At December 31, | |||||||
2004 | 2003 | |||||||
Asset Category | ||||||||
Short-term investments | 9 | % | — | % | ||||
U.S. domestic equity securities | 33 | % | 41 | % | ||||
International equity securities | 14 | % | 14 | % | ||||
Debt securities | 35 | % | 40 | % | ||||
Other | 9 | % | 5 | % | ||||
Total | 100 | % | 100 | % | ||||
13. | Leases |
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13. | Leases (Continued) |
Operating | ||||
Leases | ||||
(In thousands) | ||||
2005 | $ | 11,570 | ||
2006 | 8,945 | |||
2007 | 5,900 | |||
2008 | 4,914 | |||
2009 | 3,777 | |||
Thereafter | 19,363 | |||
Total minimum operating lease payments | $ | 54,469 | ||
14. | Other Financial Data |
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14. | Other Financial Data (Continued) |
Balance at | Balance at | |||||||||||||||
beginning | end of | |||||||||||||||
of year | Provisions | Deductions | year | |||||||||||||
(In thousands) | ||||||||||||||||
2002 | $ | 83,245 | $ | 163,234 | $ | (186,336 | ) | $ | 60,143 | |||||||
2003 | $ | 60,143 | $ | 146,799 | $ | (151,343 | ) | $ | 55,599 | |||||||
2004 | $ | 55,599 | $ | 185,644 | $ | (172,596 | ) | $ | 68,647 |
(In millions) | 2004(a) | 2003(b) | 2002 | |||||||||
Net sales | $ | 47 | $ | 60 | $ | 61 | ||||||
Gross profit | 14 | 19 | 18 | |||||||||
Net earnings | 4 | 6 | 6 | |||||||||
Current assets | 7 | 30 | 27 | |||||||||
Non-current assets | 3 | 15 | 12 | |||||||||
Current liabilities | 1 | 15 | 13 | |||||||||
Non-current liabilities | — | 4 | 3 |
(a) | The Corporation sold its 49.9% interest in Euromold NV in September 2004. The information reflected above includes results for the nine months ended September 30, 2004. | |
(b) | The Corporation sold its 50% interest in Fujimold Ltd. in December 2003. The information reflected above includes a full year of results for 2003. |
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14. | Other Financial Data (Continued) |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(In thousands) | ||||||||
Cumulative translation adjustment | $ | 15,027 | $ | (13,295 | ) | |||
Minimum pension liability | (14,525 | ) | (41,827 | ) | ||||
Valuation allowance — marketable securities | 39 | 81 | ||||||
Accumulated other comprehensive income | $ | 541 | $ | (55,041 | ) | |||
15. | Segment and Other Related Disclosures |
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15. | Segment and Other Related Disclosures (Continued) |
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Net Sales | ||||||||||||
Electrical | $ | 1,253,990 | $ | 1,114,852 | $ | 1,113,646 | ||||||
Steel Structures | 139,633 | 93,534 | 129,730 | |||||||||
HVAC | 122,669 | 113,911 | 102,481 | |||||||||
Total | $ | 1,516,292 | $ | 1,322,297 | $ | 1,345,857 | ||||||
Segment Earnings | ||||||||||||
Electrical(a) | $ | 120,289 | $ | 65,433 | $ | 30,285 | ||||||
Steel Structures | 15,704 | 6,354 | 15,289 | |||||||||
HVAC | 10,292 | 8,226 | 6,302 | |||||||||
Total | $ | 146,285 | $ | 80,013 | $ | 51,876 | ||||||
Capital Expenditures | ||||||||||||
Electrical | $ | 22,263 | $ | 25,929 | $ | 19,367 | ||||||
Steel Structures | 858 | 1,009 | 771 | |||||||||
HVAC | 2,298 | 1,743 | 3,673 | |||||||||
Total | $ | 25,419 | $ | 28,681 | $ | 23,811 | ||||||
Depreciation and Amortization | ||||||||||||
Electrical(a) | $ | 45,183 | $ | 44,149 | $ | 41,032 | ||||||
Steel Structures | 2,951 | 2,458 | 3,785 | |||||||||
HVAC | 3,671 | 3,720 | 3,161 | |||||||||
Total | $ | 51,805 | $ | 50,327 | $ | 47,978 | ||||||
Total Assets | ||||||||||||
Electrical | $ | 1,101,641 | $ | 1,070,747 | $ | 1,062,476 | ||||||
Steel Structures | 126,465 | 112,623 | 119,993 | |||||||||
HVAC | 71,426 | 70,580 | 67,917 | |||||||||
Total | $ | 1,299,532 | $ | 1,253,950 | $ | 1,250,386 | ||||||
(a) | Reflects the discontinuation of depreciation on assets held for sale which totaled $1.8 million in 2003 and $7.3 million in 2002. |
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15. | Segment and Other Related Disclosures (Continued) |
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Earnings Before Income Taxes | ||||||||||||
Total reportable segment earnings | $ | 146,285 | $ | 80,013 | $ | 51,876 | ||||||
Interest expense, net | (30,608 | ) | (36,879 | ) | (35,225 | ) | ||||||
Restructuring and impairment charges | — | — | (2,892 | ) | ||||||||
Other operating expense/income, net | — | 12,325 | (15,850 | ) | ||||||||
Other expense/income, net | (825 | ) | (1,772 | ) | (119 | ) | ||||||
Gain on sale of equity interest | 12,978 | 1,587 | — | |||||||||
Certain other adjustments(a) | — | (7,529 | ) | — | ||||||||
Earnings (loss) before income taxes | $ | 127,830 | $ | 47,745 | $ | (2,210 | ) | |||||
Total Assets | ||||||||||||
Total from reportable segments | $ | 1,299,532 | $ | 1,253,950 | $ | 1,250,386 | ||||||
General corporate | 456,220 | 528,675 | 369,370 | |||||||||
Total | $ | 1,755,752 | $ | 1,782,625 | $ | 1,619,756 | ||||||
(a) | 2003 includes $3.7 million of expenses associated with the closing of a U.S. satellite distribution center and $3.9 million of expenses related to the planned retirement of the Corporation’s former CEO. |
16. | Financial Information Relating to Operations in Different Geographic Areas |
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Net Sales | ||||||||||||
U.S. | $ | 1,024,232 | $ | 904,450 | $ | 975,708 | ||||||
Canada | 263,090 | 216,073 | 192,140 | |||||||||
Europe | 186,111 | 165,587 | 142,015 | |||||||||
Other foreign countries | 42,859 | 36,187 | 35,994 | |||||||||
Total | $ | 1,516,292 | $ | 1,322,297 | $ | 1,345,857 | ||||||
Long-lived Assets | ||||||||||||
U.S. | $ | 651,261 | $ | 651,655 | $ | 648,793 | ||||||
Canada | 113,896 | 110,157 | 94,672 | |||||||||
Europe | 131,823 | 108,906 | 98,539 | |||||||||
Other foreign countries | 32,579 | 34,688 | 27,162 | |||||||||
Total | $ | 929,559 | $ | 905,406 | $ | 869,166 | ||||||
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17. | Contingencies |
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17. | Contingencies (Continued) |
Other Legal Matters |
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17. | Contingencies (Continued) |
2004 | 2003 | |||||||
(In thousands) | ||||||||
Balance at beginning of year | $ | 1,543 | $ | 2,316 | ||||
Liabilities accrued for warranties issued during the year | 842 | 881 | ||||||
Deductions for warranty claims paid during the period | (1,424 | ) | (1,260 | ) | ||||
Changes in liability for pre-existing warranties during the year, including expirations | 627 | (394 | ) | |||||
Balance at end of year | $ | 1,588 | $ | 1,543 | ||||
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2004 | 2003 | ||||||||
(In thousands, except per share data) | |||||||||
(Unaudited) | |||||||||
First Quarter | |||||||||
Net sales | $ | 352,988 | $ | 311,482 | |||||
Gross profit | 99,699 | 85,076 | |||||||
Net earnings | 15,612 | 5,004 | |||||||
Per share net earnings(a) | |||||||||
Basic | 0.27 | 0.09 | |||||||
Diluted | 0.27 | 0.09 | |||||||
Second Quarter | |||||||||
Net sales | $ | 368,973 | $ | 322,661 | |||||
Gross profit | 107,254 | 83,479 | |||||||
Net earnings | 19,969 | 6,754 | |||||||
Per share net earnings(a) | |||||||||
Basic | 0.34 | 0.12 | |||||||
Diluted | 0.34 | 0.12 | |||||||
Third Quarter | |||||||||
Net sales | $ | 394,211 | $ | 338,691 | |||||
Gross profit | 109,974 | 84,519 | |||||||
Net earnings | 33,428 | (b) | 11,752 | (c) | |||||
Per share net earnings(a) | |||||||||
Basic | 0.57 | (b) | 0.20 | (c) | |||||
Diluted | 0.56 | (b) | 0.20 | (c) | |||||
Fourth Quarter | |||||||||
Net sales | $ | 400,120 | $ | 349,463 | |||||
Gross profit | 114,215 | 98,975 | |||||||
Net earnings | 24,246 | 19,303 | |||||||
Per share net earnings(a) | |||||||||
Basic | 0.41 | 0.33 | |||||||
Diluted | 0.40 | 0.33 | |||||||
(a) | Basic per share amounts are based on average shares outstanding in each quarter. Diluted per share amounts reflect potential dilution from stock options and vesting of restricted stock, when applicable. | |
(b) | The third quarter 2004 includes a $13.0 million pre-tax gain ($0.14 per share) from the sale of a minority interest in an European joint venture (see Note 4). | |
(c) | The third quarter 2003 includes a pre-tax benefit of $8.9 million from the favorable settlement of a commercial lawsuit (see Note 14). |
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Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Item 9A. | CONTROLS AND PROCEDURES |
Item 9B. | OTHER INFORMATION |
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Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
EXECUTIVE OFFICERS | DIRECTORS | |||
Dominic J. Pileggi President and Chief Executive Officer Kenneth W. Fluke Senior Vice President and Chief Financial Officer Christopher P. Hartmann President — Electrical Division Connie C. Muscarella Vice President — Human Resources and Administration J.N. Raines Vice President — General Counsel and Secretary | T. Kevin Dunnigan Chairman of the Board Director since 1975 Ernest H. Drew Former Chief Executive Officer Industries and Technology Group Westinghouse Electric Corporation Director since 1989(2)(*) Jeananne K. Hauswald Managing Director Solo Management Group, LLC Director since 1993(1) Dean Jernigan President of Jernigan Property Group, LLC Director since 1999(3) Ronald B. Kalich, Sr. President and Chief Executive Officer FastenTech, Inc. Director since 1998(3) Robert A. Kenkel Former Chairman of the Board, Chief Executive Officer and Chief Operating Officer The Pullman Co. Director since 1994(3)(*) | Kenneth R. Masterson Executive Vice President, General Counsel and Secretary FedEx Corporation Director since 1993(1)(2) Dominic J. Pileggi President and Chief Executive Officer of the Corporation Director since 2004 Jean-Paul Richard Chairman of the Board PRO MACH, Inc. Director since 1996(1)(*) David D. Stevens Chairman and Chief Executive Officer Accredo Health, Incorporated Director since 2004(1)(2) William H. Waltrip Chairman of Technology Solutions Company Director since 1983(3) |
(1) | Audit Committee |
(2) | Nominating and Governance Committee |
(3) | Compensation Committee |
(*) | Committee Chair |
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Item 11. | EXECUTIVE COMPENSATION |
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS |
Number of securities | |||||||||||||
remaining available | |||||||||||||
for future issuance | |||||||||||||
Number of securities | under equity | ||||||||||||
to be issued upon | Weighted-average | compensation plans | |||||||||||
exercise of | exercise price of | (excluding securities | |||||||||||
outstanding options, | outstanding options, | reflected in | |||||||||||
warrants and rights | warrants and rights | column(a)) | |||||||||||
Plan Category | (a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | |||||||||||||
Equity Compensation Plan | 8,271 | 24.54 | 3,488,225 | ||||||||||
Non-employee Directors Equity Compensation Plan | 31,536 | 23.28 | 1,659,014 | ||||||||||
1993 Management Stock Ownership Plan | 3,507,097 | $ | 28.44 | — | |||||||||
Equity compensation plans not approved by security holders | |||||||||||||
Deferred Fee Plan for Non-employee Directors | 44,170 | — | — | ||||||||||
Non-employee Directors Stock Option Plan | 133,934 | 21.47 | — | ||||||||||
2001 Stock Incentive Plan | 1,572,742 | 19.54 | — | ||||||||||
Total | 5,297,750 | 25.56 | 5,147,239 | ||||||||||
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Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
The following financial statements, related notes and report of the independent auditor are filed with this Annual Report in Part II, Item 8: |
Reports of Independent Registered Public Accounting Firm | |
Consolidated Statements of Operations for 2004, 2003 and 2002 | |
Consolidated Balance Sheets as of December 31, 2004 and 2003 | |
Consolidated Statements of Cash Flows for 2004, 2003 and 2002 | |
Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for 2004, 2003 and 2002 | |
Notes to Consolidated Financial Statements |
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All financial statement schedules have been omitted because they are not applicable, not material, or the required information is included in the financial statements listed above or the notes. |
The Exhibit Index on pages E-1 through E-3 is incorporated by reference. |
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Thomas & Betts Corporation | |
(Registrant) |
By: | /s/Dominic J. Pileggi |
Dominic J. Pileggi | |
President & Chief Executive Officer |
Signature | Title | Date | ||
/s/Dominic J. Pileggi | President, Chief Executive Officer and Director(Principal Executive Officer) | March 4, 2005 | ||
/s/Ernest H. Drew | Director | March 4, 2005 | ||
/s/T. Kevin Dunnigan | Chairman of the Board and Director | March 4, 2005 | ||
/s/Jeananne K. Hauswald | Director | March 4, 2005 | ||
/s/Dean Jernigan | Director | March 4, 2005 | ||
/s/Ronald B. Kalich, Sr. | Director | March 4, 2005 | ||
/s/Robert A. Kenkel | Director | March 4, 2005 | ||
/s/Kenneth R. Masterson | Director | March 4, 2005 | ||
/s/Jean-Paul Richard | Director | March 4, 2005 |
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Signature | Title | Date | ||
/s/David D. Stevens | Director | March 4, 2005 | ||
/s/William H. Waltrip | Director | March 4, 2005 | ||
/s/Kenneth W. Fluke | Senior Vice President and Chief Financial Officer(Principal Financial Officer) | March 4, 2005 | ||
/s/Stanley P. Locke | Vice President — Corporate Controller | March 4, 2005 |
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Exhibit No. | Description of Exhibit | |||
3.1 | Amended and Restated Charter of Thomas & Betts Corporation (Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 1999). | |||
3.2 | Amended and Restated Bylaws of Thomas & Betts Corporation (Incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
4.1 | Indenture dated as of January 15, 1992, between Thomas & Betts Corporation and First Trust of New York, as Trustee (Incorporated by reference to Exhibit 4(a) to our Annual Report on Form 10-K for the fiscal year ended December 31, 1991). | |||
4.2 | Supplemental Indenture dated as of May 2, 1996, between Thomas & Betts Corporation and First Trust of New York, as Trustee (Incorporated by reference to Exhibit 4.3 to the Registration Statement on Form 8-B filed May 2, 1996). | |||
4.3 | Third Supplemental Indenture dated May 7, 1998 between the Corporation and The Chase Manhattan Bank, as Trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated May 4, 1998). | |||
4.4 | Indenture dated as of August 1, 1998 between Thomas & Betts Corporation and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated February 3, 1999). | |||
4.5 | Supplemental Indenture No. 1 dated February 10, 1999, between Thomas & Betts Corporation and The Bank of New York, a Trustee (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K dated February 3, 1999). | |||
4.10 | Supplemental Indenture No. 2 dated May 27, 2003, between Thomas & Betts Corporation and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated May 27, 2003). | |||
10.1† | Thomas & Betts Corporation 1993 Management Stock Ownership Plan, as amended through June 5, 2001, and Forms of Grant Agreement (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended July 1, 2001). | |||
10.2† | Pension Restoration Plan as amended, effective December 31, 2000 (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002.). | |||
10.3† | Retirement Plan for Non-employee Directors dated September 6, 1989, as amended December 3, 1997 (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K for the fiscal year ended December 28, 1997). | |||
10.4† | Deferred Fee Plan for Non-employee Directors as amended and restated effective May 6, 1998 (Incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K for the fiscal year ended January 3, 1999). |
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Exhibit No. | Description of Exhibit | |||
10.5† | Supplemental Executive Investment Plan (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). | |||
10.6† | Restricted Stock Plan for Non-employee Directors as amended March 7, 2003 (Incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
10.7† | Non-employee Directors Stock Option Plan and Form of Stock Option Agreement, as amended March 9, 2001 (Incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2000). | |||
10.8† | Thomas & Betts Corporation 2001 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Registration Statement on Form S-8, No. 333-60074, filed May 2, 2001). | |||
10.9† | Form of Termination Protection Agreement (Incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
10.10† | Form of Termination Protection Agreement (Incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
10.11† | Executive Retirement Plan, as amended February 4, 2004 (Incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
10.12 | Credit Agreement, dated June 25, 2003, among Thomas & Betts Corporation, as borrower, certain of its subsidiaries, as guarantors, the lenders listed therein, Wachovia Bank, National Association, as issuing bank, Wachovia Securities, Inc., as arranger, and Wachovia Bank, National Association, as administrative agent (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended June 29, 2003). | |||
10.13 | Security Agreement, dated June 25, 2003, among Thomas & Betts Corporation and certain of its subsidiaries, as grantors, and Wachovia Bank, National Association, as administrative agent. (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2003). | |||
10.14† | Retirement Agreement of T. Kevin Dunnigan dated December 2, 2003 (Incorporated by reference to Exhibit 10 to our Current Report on Form 8-K dated December 4, 2003). | |||
10.15† | Letter Agreement amending the Retirement Agreement of T. Kevin Dunnigan (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004). | |||
10.16† | Nonemployee Directors Equity Compensation Plan (Incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
10.17† | Form of Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10 to our Current Report on Form 8-K dated August 31, 2004). |
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Exhibit No. | Description of Exhibit | |||
10.18† | Equity Compensation Plan (Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||
10.19† | Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated February 2, 2005). | |||
10.20† | Form of Executive Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated February 2, 2005). | |||
10.21† | Form of Executive Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K dated February 2, 2005). | |||
10.22† | Management Incentive Plan (Incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.). | |||
10.23 | Settlement Agreement and Release dated February 21, 2002, between Tyco Group S.A.R.L. and Thomas & Betts Corporation. (Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for the fiscal year ended December 30, 2001). | |||
10.24† | Form of Indemnity Agreement (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004). | |||
10.25† | Health Benefits Continuation Agreement dated February 2, 2005 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 2, 2005). | |||
12 | Statement re Computation of Ratio of Earnings to Fixed Charges. | |||
21 | Subsidiaries of the Registrant. | |||
23 | Consent of KPMG LLP. | |||
31.1 | Certification of Principal Executive Officer under Securities Exchange Act Rules 13a-14(a) or 15d-14(a). | |||
31.2 | Certification of Principal Financial Officer under Securities Exchange Act Rules 13a-14(a) or 15d-14(a). | |||
32 | Section 1350 Certifications. |
† | Management contract or compensatory plan or arrangement. |
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