Thomas & Betts 10Q 2008 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2008

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission file number 1-4682

Thomas & Betts Corporation

(Exact name of registrant as specified in its charter)


Tennessee		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)

(901) 252-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):


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

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes o Noþ

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


		Outstanding Shares
Title of Each Class		at April 30, 2008

Common Stock, $.10 par value		58,137,802

Thomas & Betts Corporation and Subsidiaries

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements — Unaudited:		3
	Consolidated Statements of Operations for the Quarters Ended March 31, 2008 and March 31, 2007		3
	Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007		4
	Consolidated Statements of Cash Flows for the Quarters Ended March 31, 2008 and March 31, 2007		5
	Notes to Consolidated Financial Statements		6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		29

ITEM 4.	Controls and Procedures		30

PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings		31
ITEM 1A.	Risk Factors		31
ITEM 2.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		31
ITEM 5.	Other Information		31
ITEM 6.	Exhibits		31
SIGNATURE			32
EXHIBIT INDEX			33
Statement re: Computation of Ratio of Earnings to Fixed Charges
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) or Rule 15d-14(b)
Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) or Rule 15d-14(b)

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Report includes “forward-looking comments and statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts regarding Thomas & Betts Corporation and are subject to risks and uncertainties in our operations, business, economic and political environment.^(a) Forward-looking statements contain words such as:


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

Many factors could affect our future financial condition or results of operations. Accordingly, actual results, performance or achievements may differ materially from those expressed or implied by the forward-looking statements contained in this Report. We undertake no obligation to revise any forward-looking statement included in the Report to reflect any future events or circumstances.


^(a)		These risks and uncertainties, which are further explained in Item 1A. Risk Factors in ourForm 10-K for the year ended December 31, 2007, include:


	•	negative economic conditions could have a material adverse effect on our operating results and financial condition;

	•	a significant reduction in the supply of commodity raw materials could materially disrupt our business and rising and volatile costs for commodity raw materials and energy could have a material adverse effect on our profitability;

	•	significant changes in customer demand due to increased competition could have a material adverse effect on our operating results and financial condition.

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

PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

Thomas & Betts Corporation and Subsidiaries

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


	Quarter Ended
	March 31,
	2008			2007

Net sales	$	595,504		$	474,552
Cost of sales		409,243			329,687

Gross profit		186,261			144,865
Selling, general and administrative		116,285			87,329

Earnings from operations		69,976			57,536
Interest expense, net		(12,332	)		(3,551	)
Other (expense) income, net		(1,277	)		(160	)

Earnings before income taxes		56,367			53,825
Income tax provision		18,206			16,685

Net earnings from continuing operations		38,161			37,140
Earnings from discontinued operations, net		91			—

Net earnings	$	38,252		$	37,140

Basic earnings per share:
Continuing operations	$	0.66		$	0.63
Discontinued operations		—			—

Net earnings	$	0.66		$	0.63

Diluted earnings per share:
Continuing operations	$	0.66		$	0.63
Discontinued operations		—			—

Net earnings	$	0.66		$	0.63

Average shares outstanding:
Basic		57,759			58,593
Diluted		58,192			59,393

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

Thomas & Betts Corporation and Subsidiaries

Consolidated Balance Sheets
(In thousands)
(Unaudited)


	March 31,			December 31,
	2008			2007
ASSETS
Current Assets
Cash and cash equivalents	$	110,180		$	149,926
Restricted cash		16,569			16,683
Marketable securities		211			221
Receivables, net		318,838			280,948
Inventories		321,314			271,989
Deferred income taxes		47,910			57,278
Prepaid expenses		15,699			22,392
Assets of discontinued operations		99,906			106,478

Total Current Assets		930,627			905,915

Gross property, plant and equipment		938,002			915,944
Less accumulated depreciation		(621,132	)		(609,985	)

Net property, plant and equipment		316,870			305,959

Goodwill		925,927			873,574
Other intangible assets:
Amortizable		216,962			202,335
Indefinite lived		112,131			101,643

Total other intangible assets		329,093			303,978
Investments in unconsolidated companies		115,670			115,300
Other assets		66,417			63,060

Total Assets	$	2,684,604		$	2,567,786

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term debt	$	267,629		$	116,157
Accounts payable		193,580			180,333
Accrued liabilities		155,020			143,606
Income taxes payable		11,217			10,731
Liabilities of discontinued operations		23,436			18,146

Total Current Liabilities		650,882			468,973

Long-Term Liabilities
Long-term debt		590,123			695,048
Deferred income taxes		37,189			48,888
Other long-term liabilities		138,261			125,943
Contingencies (Note 12)
Shareholders’ Equity
Common stock		5,779			5,770
Additional paid-in capital		215,607			207,690
Retained earnings		1,040,249			1,001,997
Accumulated other comprehensive income		6,514			13,477

Total Shareholders’ Equity		1,268,149			1,228,934

Total Liabilities and Shareholders’ Equity	$	2,684,604		$	2,567,786

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

Thomas & Betts Corporation and Subsidiaries

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


	Quarter Ended
	March 31,
	2008			2007

Cash Flows from Operating Activities:
Net earnings	$	38,252		$	37,140
Adjustments:
Depreciation and amortization		22,040			12,344
Share-based compensation expense		6,520			5,201
Deferred income taxes		729			5,042
Incremental tax benefits from share-based payment arrangements		(489	)		(1,003	)
Changes in operating assets and liabilities, net:
Receivables		(30,605	)		(32,100	)
Inventories		(32,606	)		(1,895	)
Accounts payable		14,114			7,100
Accrued liabilities		(10,873	)		(4,172	)
Income taxes payable		711			927
Other		3,901			4,589

Net cash provided by (used in) operating activities		11,694			33,173

Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(8,139	)		(6,392	)
Purchases of businesses, net of cash acquired		(90,583	)		—
Other		191			149

Net cash provided by (used in) investing activities		(98,531	)		(6,243	)

Cash Flows from Financing Activities:
Proceeds from long-term debt and other borrowings		76,510			—
Repayment of long-term debt and other borrowings		(30,162	)		(137	)
Stock options exercised		467			4,604
Incremental tax benefits from share-based payment arrangements		489			1,003
Repurchase of common shares		—			(93,541	)

Net cash provided by (used in) financing activities		47,304			(88,071	)

Effect of exchange-rate changes on cash		(213	)		39

Net increase (decrease) in cash and cash equivalents		(39,746	)		(61,102	)
Cash and cash equivalents, beginning of period		149,926			370,968

Cash and cash equivalents, end of period	$	110,180		$	309,866

Cash payments for interest	$	11,346		$	4,994
Cash payments for income taxes	$	8,871		$	10,739

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

Thomas & Betts Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)


1.	Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary for the fair presentation of the Corporation’s financial position as of March 31, 2008 and December 31, 2007 and the results of operations and cash flows for the periods ended March 31, 2008 and 2007.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Corporation’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007. The results of operations for the periods ended March 31, 2008 and 2007 are not necessarily indicative of the operating results for the full year.

Certain reclassifications have been made to the prior-year period to conform to the current year presentation of segment disclosures.


2.	Basic and Diluted Earnings Per Share

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


	Quarter Ended
	March 31,
	2008		2007

(In thousands, except per share data)
Net earnings from continuing operations	$	38,161	$	37,140
Earnings from discontinued operations, net of tax		91		—

Net earnings	$	38,252	$	37,140

Basic shares:
Average shares outstanding		57,759		58,593

Basic earnings per share:
Net earnings from continuing operations	$	0.66	$	0.63
Earnings from discontinued operations, net of tax		—		—

Net earnings	$	0.66	$	0.63

Diluted shares:
Average shares outstanding		57,759		58,593
Additional shares on the potential dilution from stock options and nonvested restricted stock		433		800

		58,192		59,393

Diluted earnings per share:
Net earnings from continuing operations	$	0.66	$	0.63
Earnings from discontinued operations, net of tax		—		—

Net earnings	$	0.66	$	0.63

The Corporation had stock options that were out-of-the-money which were excluded because of their anti-dilutive effect. Such out-of-the money options were 1.5 million shares of common stock for the first quarter of 2008 and 0.7 million shares of common stock for the first quarter of 2007.


3.	Acquisitions

The Lamson & Sessions Co.

The merger of The Lamson & Sessions Co. (“LMS”) into Thomas & Betts Corporation was completed in November 2007 for approximately $450 million. LMS is a North American supplier of non-metallic electrical boxes, fittings, flexible conduit and industrial PVC pipe. The LMS acquisition broadens the Corporation’s existing product portfolio and enhances its market position with distributors and end users of electrical products. As a result of the merger, LMS became awholly-owned subsidiary of Thomas & Betts Corporation. Thomas & Betts Corporation funded the LMS acquisition through the use of its $750 million senior credit facility. The results of these operations have been included in the consolidated financial statements of the Corporation since the acquisition date.

The following table summarizes preliminary estimates and assumptions of fair values for the assets acquired and liabilities assumed at the date of acquisition (November 2007):


(In millions)
Current assets (primarily receivables and inventories)	$	151
Property, plant and equipment		69
Long-term assets		16
Goodwill and other intangible assets		409

Total assets acquired		645
Current liabilities		(93	)
Long-term liabilities		(97	)

Net assets acquired	$	455

The final purchase price allocation may result in different allocations for tangible and intangible assets and different depreciation and amortization expense than that reflected in the consolidated financial statements of the Corporation.

Of the $409 million of goodwill and other intangible assets, approximately $60 million has been assigned to intangible assets with infinite lives (consisting of trade/brand names) and approximately $123 million has been assigned to intangible assets with estimated lives ranging up to 11 years (consisting primarily of customer relations). Goodwill and other intangible assets are not deductible for tax purposes. All of the goodwill and other intangible assets have been assigned to the Corporation’s Electrical segment. Amortization of other intangible assets are included in selling, general and administrative expenses in the Corporation’s consolidated statement of operations.

The Corporation announced that it has decided to divest its portfolio of rigid polyvinyl chloride (PVC) and high-density polyethylene (HDPE) conduit, duct and pressure pipe used in construction, industrial, municipal, utility and telecommunications markets, which was acquired as part of The Lamson & Sessions Co. The Corporation has retained a financial advisor to assist with the sale of these operations. The operations associated with this business have been reflected as discontinued operations in the accompanying statement of operations and the assets and liabilities associated with this business have been reflected as held-for-sale in the accompanying balance sheet as of March 31, 2008 and December 31, 2007. Results from discontinued operations in the first quarter of 2008

reflected net sales of approximately $49 million, earnings before income taxes of $0.2 million, an income tax provision of $0.1 million and net earnings of $0.1 million.

The Corporation’s senior management began assessing and formulating a restructuring and integration plan as of the acquisition date of LMS. As of December 31, 2007, the Corporation had not finalized its plans to consolidate activities or to involuntarily terminate employees. Approval of the plan by the Corporation’s senior management and Board of Directors occurred during the first quarter of 2008. The objective of the restructuring and integration plan is to achieve operational efficiencies and eliminate duplicative operating costs resulting from the LMS acquisition. The Corporation also intends to achieve greater efficiency in sales, marketing, administration and other operational activities. The Corporation identified certain liabilities and other costs totaling approximately $26 million for restructuring and integration actions. Included in this amount are approximately $11 million of planned severance costs for involuntary termination of approximately 290 employees of LMS and approximately $8 million of lease cancellation costs associated with the planned closure of LMS distribution centers, which have been recorded as part of the Corporation’s preliminary purchase price allocation of LMS. Severance and lease cancellation costs have been reflected in the Corporation’s balance sheet in accrued liabilities and reflect cash paid or to be paid for these actions. Integration costs will be recognized as incurred, either as expense or capital, as appropriate. The amount recognized as integration expense during the first quarter of 2008 totaled approximately $2 million. The actions required by the plan began soon after the plan was approved, including the communication to affected employees of the Corporation’s intent to terminate as soon as possible. The Corporation expects to substantially complete implementation of these plans before the end of the second quarter of 2008, although payments associated with certain restructuring and integration actions will extend beyond 2008. Funds necessary for the plan are expected to come from operations or available cash resources.

Activities related to LMS restructuring during the quarter ended March 31, 2008 are as follows:


	Work Force			Facility
	Reductions			Closures		Total

(In millions)
Balance at December 31, 2007	$	—		$	—	$	—
Restructuring accrual additions		10.6			8.1		18.7
Costs/payments charged against reserves		(0.2	)		—		(0.2	)

Balance at March 31, 2008	$	10.4		$	8.1	$	18.5

The Homac Manufacturing Company

In mid-January 2008, the Corporation acquired The Homac Manufacturing Company, a privately held manufacturer of components used in utility distribution and substation markets, as well as industrial and telecommunications markets, for approximately $75 million. The preliminary purchase price allocation resulted in goodwill of approximately $26 million and other intangible assets of approximately $25 million, all of which was assigned to the Corporation’s Electrical segment. The results of these operations have been included in the consolidated financial statements of the Corporation since the acquisition date.

Boreal Braidings Inc.

In mid-January 2008, the Corporation acquired Boreal Braidings Inc., a privately held Canadian manufacturer of high quality flexible connectors for approximately $16 million. The preliminary purchase price allocation resulted in goodwill of approximately $7 million and other intangible

assets of approximately $8 million, all of which was assigned to the Corporation’s Electrical segment. The results of these operations have been included in the consolidated financial statements of the Corporation since the acquisition date.


4.	Share-Based Payment Arrangements

Share-based compensation expense, net of tax, of $4.0 million was charged against income during the first quarter of 2008 and $3.2 million was charged against income during the first quarter of 2007. The net of tax share-based compensation expense reflected accelerated amortization over periods shorter than the stated service periods of approximately $3 million during the first quarter of 2008 and approximately $2 million during the first quarter of 2007. The accelerated amortization relates to share award grants to certain employees who are retirement eligible.

During the first quarter of 2008, the Corporation granted 720,845 stock options with a weighted average exercise price of $44.31 per share and an average grant date fair value of $13.48 per share, had 20,464 stock options exercised at a weighted average exercise price of $22.92 per share and had 53,079 stock options forfeited or expired. Also, during the first quarter of 2008, the Corporation granted 122,909 shares of nonvested restricted stock with a weighted average grant date fair value of $44.31 per share.


5.	Income Taxes

The Corporation’s income tax provision for the first quarter of 2008 was $18.2 million, or an effective rate of 32.3% of pre-tax income, compared to a tax provision in the first quarter of 2007 of $16.7 million, or an effective rate of 31.0% of pre-tax income. The increase in the effective rate over the prior-year period reflects the net increase in U.S. taxable income, particularly as a result of the recent acquisitions. The effective rate for both years reflects benefits from our Puerto Rican manufacturing operations which has a significantly lower effective tax rate than the Corporation’s overall blended tax rate.

The Corporation had net deferred tax assets totaling $10.4 million as of March 31, 2008 and $8.4 million as of December 31, 2007. Realization of the deferred tax assets is dependent upon the Corporation’s ability to generate sufficient future taxable income. Management believes that it is more-likely-than-not that future taxable income, based on tax laws in effect as of March 31, 2008, will be sufficient to realize the recorded deferred tax assets, net of any valuation allowance.


6.	Comprehensive Income

Total comprehensive income and its components are as follows:


	Quarter Ended
	March 31,
	2008			2007

(In thousands)
Net earnings	$	38,252		$	37,140
Unrealized gain (loss) on interest rate swap		(9,119	)		—
Cumulative translation adjustment		1,707			2,647
Defined benefit pension and other postretirement plans		449			1,000
Unrealized gain (loss) on marketable securities		—			(1	)

Comprehensive income	$	31,289		$	40,786


7.	Derivative Instruments

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

Interest Rate Swap Agreements

During the fourth quarter of 2007, the Corporation entered into a forward-starting interest rate swap for a notional amount of $390 million. The notional amount reduces to $325 million on December 15, 2010, $200 million on December 15, 2011 and $0 on October 1, 2012. The interest rate swap hedges $390 million of the Corporation’s exposure to changes in interest rates on borrowings of its $750 million credit facility. The Corporation has designated the interest rate swap as a cash flow hedge for accounting purposes. Under the interest rate swap, the Corporation receives variable one-month LIBOR and pays an underlying fixed rate of 4.86%.

On January 1, 2008, the Corporation adopted Financial Accounting Standard (SFAS) No. 157, “Fair Value Measurements,” for measuring “financial” assets and liabilities. SFAS 157 defines fair value as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a framework for measuring fair value by creating a hierarchy of valuation inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly; and, Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring a company to develop its own valuation assumptions.

The Corporation’s interest rate swap has been reflected at its fair value liability of $28.3 million as of March 31, 2008. This swap is measured at fair value on a recurring basis each reporting period. The Corporation’s fair value estimate was determined using significant unobservable inputs (Level 3) and, in addition, the liability valuation reflects the Corporation’s credit standing. The valuation technique utilized by the Corporation to calculate the swap fair value was the income approach. This approach represents the present value of future cash flows based upon current market expectations. The credit valuation adjustment (reduction in the liability) was determined to be $0.1 million as of March 31, 2008.

The following is a reconciliation of the fair value activity associated with the interest rate swap liability during the first quarter of 2008:


	Fair Value Measures
	Using Significant
	Unobservable Inputs
	(Level 3)

(In millions)
Asset (liability) at December 31, 2007	$	(13.6	)
Total realized/unrealized gains or losses:
Included in earnings		—
Reduction in fair value included in other comprehensive income		(14.7	)

Asset (liability) at March 31, 2008	$	(28.3	)

As of March 31, 2008, the Corporation’s balance of accumulated other comprehensive income has been reduced by $17.3 million, net of tax, to reflect the above interest rate swap liability.

During the first quarter of 2007, the Corporation had no outstanding interest rate swap agreements.

Forward Foreign Exchange Contracts

During the fourth quarter of 2007, the Corporation entered into currency forward exchange contracts that are not designated as a hedge for accounting purposes. These contracts are intended to reduce cash flow volatility from exchange rate risk related to a short-term intercompany financing transaction. As of March 31, 2008, there were eight individual outstanding contracts for a notional amount of approximately $27 million, which amortize monthly through November 2008. Under the terms of the contracts, the Corporation sells U.S. dollars at current spot rates and purchases Canadian dollars at a fixed forward exchange rate. During the first quarter of 2008, the Corporation recognized a mark-to-market loss on these contracts of $1.2 million that effectively matched foreign exchange gains on the short-term intercompany financing transaction. The currency forward exchange contracts have been reflected in the balance sheet at a fair value liability of $0.5 million as of March 31, 2008. The Corporation’s fair value estimate was determined using quoted prices for instruments with similar underlying terms (Level 2).

During the first quarter of 2007, the Corporation had no outstanding forward sale or purchase contracts.

Commodities Futures Contracts

During the first quarter of 2008 and 2007, the Corporation had no outstanding commodities futures contracts. The Corporation is exposed to risk from fluctuating prices for certain materials used to manufacture its products, such as: steel, aluminum, copper, zinc, resins and rubber compounds. At times, some of the risk associated with usage of aluminum, copper and zinc has been mitigated through the use of futures contracts that fixed the price the Corporation paid for a commodity.


8.	Inventories

The Corporation’s inventories at March 31, 2008 and December 31, 2007 were:


	March 31,		December 31,
	2008		2007

(In thousands)
Finished goods	$	157,157	$	133,445
Work-in-process		40,062		34,564
Raw materials		124,095		103,980

Total inventories	$	321,314	$	271,989


9.	Debt

The Corporation’s long-term debt at March 31, 2008 and December 31, 2007 was:


	March 31,		December 31,
	2008		2007

(In thousands)
Revolving credit facility(a)	$	465,000	$	420,000
Unsecured notes
6.63% Notes due 2008(b)(c)		114,989		114,956
6.39% Notes due 2009(b)		149,952		149,939
7.25% Notes due 2013(b)		121,116		120,931
Other, including capital leases		6,695		5,379

Long-term debt (including current maturities)		857,752		811,205
Less current portion		267,629		116,157

Long-term debt	$	590,123	$	695,048


(a)		Interest is paid monthly.

(b)		Interest is paid semi-annually.

(c)		Notes are due May 7, 2008.

The indentures underlying the unsecured notes contain standard covenants such as restrictions on mergers, liens on certain property, sale-leaseback of certain property and funded debt for certain subsidiaries. The indentures also include standard events of default such as covenant default and cross-acceleration.

The Corporation’s revolving credit facility has total availability of $750 million, through a five year term expiring in October 2012. All borrowings and other extensions of credit under the Corporation’s revolving credit facility are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties. The proceeds of any loans under the revolving credit facility may be used for general operating needs and for other general corporate purposes in compliance with the terms of the facility. The Corporation pays an annual commitment fee to maintain this facility of 10 basis points. Outstanding borrowings under this facility at March 31, 2008 were $465 million and at December 31, 2007 were $420 million.

Under the revolving credit facility agreement, the Corporation selected an interest rate on its initial draw of the revolver based on the one-month LIBOR plus a margin based on the Corporation’s debt rating. Fees to access the facility and letters of credit under the facility are based on a pricing grid related to the Corporation’s debt ratings with Moody’s, S&P, and Fitch during the term of the facility.

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


	•	a maximum leverage ratio of 4.00 to 1.00 through December 31, 2008, then a ratio of 3.75 to 1.00 thereafter; and

	•	a minimum interest coverage ratio of 3.00 to 1.00.

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

repurchase company stock. The Corporation does not expect these covenants to restrict its liquidity, financial condition, or access to capital resources in the foreseeable future.

Outstanding letters of credit which reduced availability under the credit facility, amounted to $21.6 million at March 31, 2008. The letters of credit relate primarily to third-party insurance claims processing.

The Corporation has a EUR 10.0 million (approximately US$15.8 million) committed revolving credit facility with a European bank. The Corporation pays an annual commitment fee of 20 basis points on the undrawn balance to maintain this facility. This credit facility contains standard covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default. This facility has an indefinite maturity and no borrowings were outstanding as of March 31, 2008 and December 31, 2007.

Outstanding letters of credit which reduced availability under the European facility amounted to EUR 0.1 million (approximately US$0.2 million) at March 31, 2008.

As of March 31, 2008, the Corporation’s aggregate availability of funds under its credit facilities is approximately $279.0 million, after deducting outstanding letters of credit. The Corporation has the option, at the time of drawing funds under any of the credit facilities, of selecting an interest rate based on a number of benchmarks including LIBOR, the federal funds rate, or the prime rate of the agent bank.

The Corporation is in compliance with all covenants or other requirements set forth in its credit facilities.

As of March 31, 2008, the Corporation also had letters of credit in addition to those discussed above that do not reduce availability under the Corporation’s credit facilities. The Corporation had $29.8 million of such additional letters of credit that relate primarily to third-party insurance claims processing, performance guarantees and acquisition obligations.


10.	Pension and Other Postretirement Benefits

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


	Quarter Ended
							Other
							Postretirement
	Pension Benefits						Benefits
	March 31,			March 31,			March 31,			March 31,
	2008			2007			2008			2007

(In thousands)
Service cost	$	3,000		$	2,970		$	31		$	61
Interest cost		7,373			5,316			361			244
Expected return on plan assets		(9,973	)		(7,074	)		—			—
Plan net loss (gain)		345			1,117			75			100
Prior service cost (gain)		263			259			(56	)		(56	)
Transition obligation (asset)		(4	)		(4	)		194			194

Net periodic benefit cost	$	1,004		$	2,584		$	605		$	543

Contributions to our qualified pension plans during the quarters ended March 31, 2008 and 2007 were not significant. We expect required contributions during the remainder of 2008 to our qualified pension plans to be minimal.

Effective January 1, 2008, entry into the Thomas & Betts Pension Plan is precluded to newly hired salaried employees. Also effective January 1, 2008, the Corporation amended the Thomas & Betts Employees’ Investment Plan to provide a 3% non-elective company contribution to new salaried employees in addition to the existing company match.


11.	Segment Disclosures

The Corporation has three reportable segments: Electrical, Steel Structures and HVAC. During the first quarter of 2008, the Corporation began to report segment earnings before depreciation, amortization and share-based compensation expenses. Management believes this change provides improved visibility into the underlying operating trends in the business segments and the contributions from the Corporation’s recent acquisitions. This change is also in line with how the Corporation measures performance internally. Segment information for the prior-year period has been revised to conform to the current presentation.

The Electrical segment designs, manufactures and markets thousands of different electrical connectors, components and other products for electrical, utility and communications applications. The Steel Structures segment designs, manufactures and markets highly engineered tubular steel transmission and distribution poles. The Steel Structures segment also markets lattice steel transmission towers for North American power and telecommunications companies which are currently sourced from third parties. The HVAC segment designs, manufactures and markets heating and ventilation products for commercial and industrial buildings.

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

As a result of the Corporation’s decision to divest the PVC and HDPE pipe operations acquired as part of Lamson & Sessions Co., operating results for the pipe business are reported as “discontinued operations” and are shown on a net basis on the consolidated financial statements. These results are not included in segment reporting.


	Quarter Ended
	March 31,
	2008			2007

(In thousands)
Net Sales
Electrical	$	508,770		$	389,166
Steel Structures		51,960			53,030
HVAC		34,774			32,356

Total	$	595,504		$	474,552

Segment Earnings
Electrical	$	96,121		$	76,844
Steel Structures		10,042			9,990
HVAC		5,635			5,689

Segment earnings		111,798			92,523
Corporate expense		(13,262	)		(17,442	)
Depreciation and amortization expense		(22,040	)		(12,344	)
Share-based compensation expense		(6,520	)		(5,201	)
Interest expense, net and other expense		(13,609	)		(3,711	)

Earnings before income taxes	$	56,367		$	53,825


12.	Contingencies

Legal Proceedings

Kaiser Litigation

By July 2000, Kaiser Aluminum, its property insurers, 28 Kaiser injured workers, nearby businesses and a class of 18,000 residents near the Kaiser facility in Louisiana, filed product liability and business interruption cases against the Corporation and nine other defendants in Louisiana state court seeking damages in excess of $550 million. These cases alleged that a Thomas & Betts cable tie mounting base failed, thereby allowing bundled cables to come in contact with a 13.8 kV energized bus bar. This alleged electrical fault supposedly initiated a series of events culminating in an explosion, which leveled 600 acres of the Kaiser facility.

A trial in the fall 2001 resulted in a jury verdict in favor of the Corporation. However, 13 months later, the trial court overturned that verdict in granting plaintiffs’ motions for judgment notwithstanding the verdict. In December 2002, the trial court judge found the Thomas & Betts product, an adhesive backed mounting base, to be unreasonably dangerous and therefore assigned 25% fault to Thomas & Betts. The judge set the damages for an injured worker at $20 million and the damages for Kaiser at $335 million. The judgment did not address damages for nearby businesses or the class of 18,000 residents near the Kaiser facility. The Corporation’s 25% allocation was $88.8 million, plus legal interest. The Corporation appealed to the Louisiana Court of Appeals, an intermediate appellate court. The appeal required a bond in the amount of $104 million (the judgment plus legal interest). Plaintiffs successfully moved the trial court to increase the bond to $156 million. The Corporation’s liability insurers secured the $156 million bond. As a result of court decisions, such bonds have subsequently been released.

In 2004, the Corporation and the class of 18,000 residents reached a court-approved settlement. The settlement extinguished the claims of all class members and included indemnity of the Corporation against future potential claims asserted by class members or those class members who opted out of the settlement process. The $3.75 million class settlement amount was paid directly by an insurer of the Corporation.

In March 2006, the Louisiana Court of Appeals unanimously reversed the trial court’s decision and reinstated the jury verdict of no liability in favor of the Corporation. In April 2006, the Kaiser plaintiffs filed with the Louisiana Supreme Court an appeal of the Court of Appeals decision. In May 2006, the Louisiana Supreme Court refused to accept the plaintiffs’ appeal. The Louisiana Supreme Court let stand the appellate court decision to reinstate the jury verdict of no liability in favor of the Corporation. In August 2006, the plaintiffs initiated a new appeal of the original jury verdict. The Court of Appeals dismissed that appeal. The Kaiser plaintiffs filed an additional motion for a new trial at the trial court level.

The injured worker who was a separate plaintiff and whose earlier judgment against the Corporation was reversed sought relief from the trial court arguing that Thomas & Betts never appealed the $20 million award the injured worker received. The trial court agreed, but the Louisiana Court of Appeals immediately reversed that decision. The injured worker then appealed this ruling to the Louisiana Supreme Court, which refused to hear the appeal. In January 2007, the injured worker unsuccessfully petitioned the United States Supreme Court for a hearing on his claim. The injured worker then joined the Kaiser plaintiffs’ attempts to secure a new trial.

In late 2007, the trial court granted the Kaiser plaintiffs’ motion for a new trial. The Corporation immediately appealed, arguing that the March 2006 decision of the Court of Appeals had become final. In January 2008, the Court of Appeals agreed with the Corporation and reversed the trial court’s ruling. In February 2008, the Kaiser plaintiffs filed an application requesting review by the Louisiana Supreme Court. In May 2008, the Louisiana Supreme Court denied the Kaiser plaintiffs’ application for review. The Court of Appeals ruling in favor of the Corporation stands as the final judgment on this lawsuit.

Other Legal Matters

The Corporation is also involved in legal proceedings and litigation arising in the ordinary course of business. In those cases where the Corporation is the defendant, plaintiffs may seek to recover large and sometimes unspecified amounts or other types of relief and some matters may remain unresolved for several years. Such matters may be subject to many uncertainties and outcomes which are not predictable with assurance. The Corporation considers the gross probable liability when determining whether to accrue for a loss contingency for a legal matter. The Corporation has provided for losses to the extent probable and estimable. The legal matters that have been recorded in the Corporation’s consolidated financial statements are based on gross assessments of expected settlement or expected outcome. Additional losses, even though not anticipated, could have a material adverse effect on the Corporation’s financial position, results of operations or liquidity in any given period.

Guarantee and Indemnification Arrangements

The Corporation follows the provisions of FASB Interpretation No. 45,Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The Interpretation requires the Corporation to recognize the fair value of guarantee and indemnification arrangements issued or modified by the Corporation, if these arrangements are within the scope of that Interpretation. In addition, under previously existing generally accepted

accounting principles, the Corporation continues to monitor the conditions that are subject to the guarantees and indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses under the guarantees and indemnifications when those losses are estimable.

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

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


	Quarter Ended
	March 31,
	2008			2007

(In thousands)
Balance at beginning of period	$	3,894		$	1,737
Liabilities accrued for warranties issued during the period		475			283
Deductions for warranty claims paid during the period		(567	)		(845	)
Changes in liability for pre-existing warranties during the period, including expirations		255			166

Balance at end of period	$	4,057		$	1,341

In conjunction with the divestiture of the Corporation’s Electronics OEM business to Tyco Group S.A.R.L. in July 2000, the Corporation provided an indemnity to Tyco associated with environmental liabilities that were not known as of the sale date. Under this indemnity, the Corporation continues to be liable for certain subsequently identified environmental claims up to $2 million. To date, environmental claims by Tyco have been negligible.


13.	Recently Issued Accounting Standards

Effective January 1, 2008, the Corporation adopted SFAS No. 157, “Fair Value Measurements,” for measuring “financial” assets and liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The provisions of SFAS No. 157 related to certain “nonfinancial” assets and liabilities are effective for financial statements issued for fiscal years beginning after November 15, 2008. The Corporation has not yet evaluated the impact, if any, of this remaining requirement.

Effective December 31, 2006, the Corporation adopted the recognition and disclosure provisions of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” requiring recognition of the overfunded or underfunded status of benefit plans on its balance sheet. SFAS No. 158 also eliminates the use of “early measurement dates” to account for certain of the Corporation’s pension and other postretirement plans effective December 31, 2008. The Corporation has not yet evaluated the impact of eliminating the use of early measurement dates.

In February 2007, the Financial Accounting Standards Board issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities — Including an amendment of FASB Statement No. 115.” SFAS No. 159 gives companies the option to choose to measure many financial instruments and certain other items at fair value. The Corporation has adopted SFAS No. 159

effective January 1, 2008 and has elected not to measure any additional financial assets and liabilities at fair value.

In December 2007, the Financial Accounting Standards Board issued SFAS No. 141 (Revised), “Business Combinations.” SFAS No. 141R replaces SFAS No. 141 while retaining the fundamental requirements in SFAS No. 141 that the acquisition (purchase) method of accounting be used for all business combinations. SFAS No. 141R retains SFAS No. 141 guidance for identifying and recognizing intangible assets separately from goodwill and makes certain changes to how the acquisition (purchase) method is applied. SFAS No. 141R is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first fiscal reporting period beginning on or after December 15, 2008. The Corporation has not yet evaluated the impact, if any, of this requirement.

In December 2007, the Financial Accounting Standards Board issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements — an amendment of ARB No. 51.” SFAS No. 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest (sometimes called a minority interest) in a subsidiary and for the deconsolidation of a subsidiary and to provide consistency with SFAS No. 141. SFAS No. 160 is effective for financial statements for fiscal years beginning on or after December 15, 2008. The Corporation has not yet evaluated the impact, if any, of this requirement.

In March 2008, the Financial Accounting Standards Board issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133.” SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements for fiscal years beginning on or after November 15, 2008. The Corporation has not yet evaluated the impact, if any, of this requirement.

14. Subsequent Event

During April 2008, the Corporation settled certain legacy legal claims, which will result in the recognition of a $12 million pre-tax benefit ($0.13 per share) during the second quarter of 2008.


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

Executive Overview

Introduction

Thomas & Betts Corporation is a leading designer and manufacturer of electrical components used in industrial, commercial, communications and utility markets. We are also a leading producer of highly engineered steel structures, used primarily for utility transmission, and commercial heating units. We have operations in approximately 20 countries. Manufacturing, marketing and sales activities are concentrated primarily in North America and Europe.

Critical Accounting Policies

The preparation of financial statements contained in this report requires the use of estimates and assumptions to determine certain amounts reported as net sales, costs, expenses, assets or liabilities and certain amounts disclosed as contingent assets or liabilities. Actual results may differ from those estimates or assumptions. Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in our Annual Report onForm 10-K for the fiscal year ended December 31, 2007. We believe our critical accounting policies include the following:


	•	Revenue Recognition: The Corporation recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Corporation also recognizes revenue for service agreements associated with its Power Solutions business over the applicable service periods. 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 thefirst-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. Indications of impairment require significant judgment by management. Under the provisions of SFAS No. 142, each test of goodwill requires that we determine the fair value of each reporting unit, and compare the fair value to the reporting unit’s carrying amount. We determine the fair value of our reporting units using a combination of three valuation methods: market multiple approach; discounted cash flow approach; and comparable transactions approach. The market multiple approach provides indications of value based on market multiples for public companies involved in similar lines of business. The discounted cash flow approach calculates the present value of projected future cash flows using appropriate discount rates. The comparable transactions approach provides indications of value based on an examination of recent transactions in which companies in similar lines of business were acquired. 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.


	•	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 at the lowest level of identifiable cash flows for associated product groups. The Corporation reviews long-lived assets to beheld-and-used for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Indications of impairment require significant judgment by management. If the sum of the undiscounted expected future cash flows over the remaining useful life of the primary asset in the associated product groups is less than the carrying amount of the assets, the assets are considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. When fair values are not available, we estimate fair values using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

	•	Pension and Other Postretirement Benefit Plan Actuarial Assumptions: We follow the provisions of SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” SFAS No. 132 (Revised), “Employers’ Disclosures about Pensions and Other Postretirement Benefits” and SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” For purposes of calculating pension and postretirement medical benefit obligations and related costs, the Corporation uses certain actuarial assumptions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expenseand/or liability measurement. We evaluate these assumptions annually. Other assumptions include employee demographic factors (retirement patterns, mortality and turnover), rate of compensation increase and the healthcare


		cost trend rate. See additional information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Qualified Pension Plans.


	•	Income Taxes: We use the asset and liability method of accounting for income taxes. This method recognizes the expected future tax consequences of temporary differences between book and tax bases of assets and liabilities and provides a valuation allowance based on a more-likely-than-not criteria. The Corporation has valuation allowances for deferred tax assets primarily associated with foreign net operating loss carryforwards and foreign income tax credit carryforwards. Realization of the deferred tax assets is dependent upon the Corporation’s ability to generate sufficient future taxable income. Management believes that it is more-likely-than-not that future taxable income, based on enacted tax law in effect as of March 31, 2008, will be sufficient to realize the recorded deferred tax assets net of existing valuation allowances.

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

2008 Outlook

We expect sales growth of approximately 25% in 2008 when compared to 2007. Acquisitions completed in 2007 and January 2008 are expected to contribute approximately 20% to the sales growth, with the balance coming from existing businesses. The mid-single digit sales growth expected from existing businesses will primarily come from a balance of foreign currency and pricing actions taken to offset higher material, particularly steel, and energy costs.

We do not expect significant net volume growth for the full year 2008. In our Electrical segment, growth in industrial MRO (maintenance, repair, and operations), certain segments of commercial construction and international markets should offset the negative impact of markets affected by U.S. residential construction. We expect that the second half of the year will show very modest net volume improvements helped by our Steel Structures business.

We have increased our full year earnings guidance to reflect a $12 million pre-tax or $0.13 per diluted share legal settlement to be recognized in the second quarter. As a result, we are now expecting diluted earnings per share from continuing operations in the range of $3.93 to $4.08 up from our previous guidance of $3.80 to $3.95.

Our full year 2008 guidance includes an improvement over 2007 in segment earnings as a percent of sales inclusive of the impact of acquisitions. In addition, the 2008 guidance includes corporate expense of about $50 million, depreciation and amortization expense of slightly less than $90 million, and share-based compensation of approximately $15 million.

For the second quarter 2008, we are expecting a slightly higher year over year sales increase than the 25% growth experienced in the first quarter. This increase reflects recent pricing increases taken in response to higher material, particularly steel, and energy costs. This should result in year-

over-year earnings per share growth of approximately ten percent before considering the $12 million pre-tax legal settlement.

The key risk factors we may face in 2008 include the potential negative impact of market uncertainty and continued tightening in credit markets and volatility in commodity markets. Thomas & Betts has a relatively modest direct exposure to residential construction. Nevertheless, continued deteriorating conditions in that market could potentially have an impact on certain of our products sold into retail, utility distribution and light commercial construction markets.

Summary of Consolidated Results


	Quarter Ended March 31,
	2008						2007
				% of Net						% of Net
	In Thousands			Sales			In Thousands			Sales

Net sales	$	595,504			100.0		$	474,552			100.0
Cost of sales		409,243			68.7			329,687			69.5

Gross profit		186,261			31.3			144,865			30.5
Selling, general and administrative		116,285			19.5			87,329			18.4

Earnings from operations		69,976			11.8			57,536			12.1
Interest expense, net		(12,332	)		(2.1	)		(3,551	)		(0.8	)
Other (expense) income, net		(1,277	)		(0.2	)		(160	)		—

Earnings before income taxes		56,367			9.5			53,825			11.3
Income tax provision		18,206			3.1			16,685			3.5

Net earnings from continuing operations		38,161			6.4			37,140			7.8
Earnings from discontinued operations, net		91			—			—			—

Net earnings	$	38,252			6.4		$	37,140			7.8

Basis earnings per share:
Continuing operations	$	0.66					$	0.63
Discontinued operations		—						—

Net earnings	$	0.66					$	0.63

Diluted earnings per share:
Continuing operations	$	0.66					$	0.63
Discontinued operations		—						—

Net earnings	$	0.66					$	0.63

2008 Compared with 2007

Overview

Our first quarter was a solid start to 2008 with net sales increasing by 25.5% in the first quarter of 2008 compared to 2007. The 2007 and January 2008 acquisitions and growth in industrial MRO and international markets offset segment-specific softness in U.S. markets. During January 2008, we

completed two acquisitions, most notably the acquisition of The Homac Manufacturing Company. We believe the investment in recently acquired companies significantly strengthens our portfolio of market leading brands and products and improves our position in key end markets.

Earnings from operations as a percent of sales were in line with theprior-year period although the acquisitions had a negative impact due in part to duplicative operating costs. During the current year quarter, we experienced improved mix in our Electrical and Steel Structures segments. In the first quarter of 2008, certainone-time acquisition related charges reflected in earnings from operations were $4.1 million. Earnings from operations in the first quarter of 2007 reflected a $7 million legal charge.

Interest expense, net increased $8.8 million in 2008 primarily as a result of funding required for the acquisitions.

Net earnings for the first quarter of 2008 were $0.66 per diluted share compared to $0.63 per diluted share in the prior-year period. First quarter 2007 included a charge of $0.08 per share related to a legal settlement.

Net Sales and Gross Profit

Net sales in the first quarter of 2008 were $595.5 million, up $121.0 million, or 25.5%, from the prior-year period. Acquisitions completed in the first quarter of 2008 and second half of 2007 accounted for $108.6 million of the sales increase while favorable foreign currency exchange contributed approximately $22 million of the increase. Price was not a factor in the quarter. Net volume reflects modest increases in industrial and telecommunications products offset by weakness in U.S. markets influenced by the continued slow down in residential construction such as retail, utility distribution and some areas of commercial construction.

Gross profit in the first quarter of 2008 was $186.3 million, or 31.3% of net sales, compared to $144.9 million, or 30.5% of net sales, in the prior-year period. This improvement reflects favorable product mix in our Electrical and Steel Structures segments, as well as the addition of higher margin products from our acquisitions. Gross profit in the first quarter of 2008 reflected $2.5 million of certainone-time acquisition related charges.

Expenses

Selling, general and administrative (“SG&A”) expense in the first quarter of 2008 was $116.3 million, or 19.5% of net sales, compared to $87.3 million, or 18.4% of net sales in the prior-year period. The year-over-year increase in SG&A expense as a percent of sales reflects the impact of acquisitions inclusive of amortization and integration expenses as well as duplicative selling, distribution and administrative costs. SG&A in the first quarter of 2008 included approximately $1.6 million of certainone-time acquisition related charges. The first quarter of 2007 included a $7 million charge for a legal settlement.

Interest Expense, Net

Interest expense, net was $12.3 million in the first quarter of 2008, up $8.8 million from the prior-year period primarily as a result of funding required for acquisitions made in the first quarter of 2008 and the second half of 2007. Interest income included in interest expense, net was $1.4 million for the first quarter of 2008 compared to $3.6 million for the prior-year period. Interest expense was $13.7 million in the first quarter of 2008 and $7.2 million in the prior-year period.

Income Taxes

The effective tax rate for the first quarter of 2008 was 32.3% compared to 31.0% for the prior-year period. The increase in the effective rate reflects the effect of a net increase in U.S. taxable income on the Corporation’s overall blended tax rate. The effective rate for both years reflects benefits from our Puerto Rican manufacturing operations.

Net Earnings

Net earnings from continuing operations in the first quarter of 2008 were $38.2 million, or $0.66 per diluted share, compared to net earnings of $37.1 million, or $0.63 per diluted share in the prior-year period. Higher 2008 first quarter earnings reflect increased earnings from operations driven primarily by acquisitions and improved mix in existing businesses offset in part by higher interest expense, net and income taxes. Earnings from discontinued operations, net for the first quarter of 2008 were $0.1 million. Net earnings in the first quarter of 2008 including discontinued operations were $38.3 million, or $0.66 per diluted share. 2008 net earnings included $4.1 millionpre-tax, or $0.04 per share, ofone-time acquisition related charges, and 2007 net earnings included a $7 millionpre-tax, or $0.08 per share, legal charge.

Summary of Segment Results

Net Sales


	Quarter Ended March 31,
	2008				2007
	In		% of Net		In		% of Net
	Thousands		Sales		Thousands		Sales

Electrical	$	508,770		85.5	$	389,166		82.0
Steel Structures		51,960		8.7		53,030		11.2
HVAC		34,774		5.8		32,356		6.8

	$	595,504		100.0	$	474,552		100.0

Segment Earnings


	Quarter Ended March 31,
	2008					2007
	In			% of Net		In			% of Net
	Thousands			Sales		Thousands			Sales

Electrical	$	96,121			18.9	$	76,844			19.7
Steel Structures		10,042			19.3		9,990			18.8
HVAC		5,635			16.2		5,689			17.6

Segment earnings		111,798			18.8		92,523			19.5
Corporate expense		(13,262	)				(17,442	)
Depreciation and amortization expense		(22,040	)				(12,344	)
Share-based compensation expense		(6,520	)				(5,201	)
Interest expense, net and other expense		(13,609	)				(3,711	)

Earnings before income taxes	$	56,367				$	53,825

The Corporation has three reportable segments: Electrical, Steel Structures and HVAC. During the first quarter of 2008, we began to report segment earnings before depreciation, amortization and share-based compensation expenses. We believe this change provides improved visibility into the underlying operating trends in the business segments and the contributions from our recent acquisitions. This change is also in line with how we measure performance internally.

Segment information for the prior-year period has been revised to conform to the current presentation. We evaluate our business segments primarily on the basis of segment earnings, with segment earnings defined as earnings before corporate expense, depreciation and amortization expense, share-based compensation expense, interest, income taxes and certain other charges.

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

Electrical Segment

Electrical segment net sales in the first quarter of 2008 were $508.8 million, up $119.6 million, or 30.7%, from the prior-year period. This increase reflects the impact of acquisitions ($108.6 million) and approximately $21 million from favorable foreign currency exchange driven primarily by strong European and Canadian currencies against a weaker U.S. dollar. Price was not a factor in the quarter. Net volume declined modestly year over year in the Electrical segment as demand for industrial and telecommunications products did not fully offset weakness in U.S. markets influenced by the continued slow down in residential construction.

Electrical segment earnings in the first quarter of 2008 were $96.1 million, up $19.3 million, or 25.1%, from the prior-year period. The earnings improvement reflects a significant contribution from the recent acquisitions and improved product mix. Underlying earnings in the Electrical segment increased slightly year over year despite lower sales volumes. Electrical segment earnings in the first quarter of 2008 included $3.2 million in certain one-time acquisition related charges. Segment earnings as a percent of sales declined from theprior-year period as a result of the dilutive impact of the recent acquisitions.

Other Segments

Net sales in the first quarter of 2008 in our Steel Structures segment were $52.0 million, down $1.1 million, or 2.0%, from the prior-year period. Sales in 2008 reflect relatively flat volume from internally manufactured, highly engineered tubular steel poles and decreased shipments of lattice towers purchased from third party suppliers for resale of slightly less than $1 million. Steel Structures segment earnings in the first quarter of 2008 were $10.0 million, up $0.1 million compared to the prior-year period. Segment earnings as a percent of sales increased to 19.3 percent of sales, reflecting a more favorable project mix.

Net sales in the first quarter of 2008 in our HVAC segment were $34.8 million, up $2.4 million, or 7.5%, from the prior-year period. Sales increased primarily due to favorable foreign currency exchange and price increases. HVAC segment earnings in the first quarter of 2008 were $5.6 million, essentially flat when compared to the prior-year period.

Liquidity and Capital Resources

We had cash and cash equivalents of $110.2 million and $149.9 million at March 31, 2008 and December 31, 2007, respectively.

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


	Quarter Ended
	March 31,
	2008			2007

(In thousands)
Net cash provided by (used in) operating activities	$	11,694		$	33,173
Net cash provided by (used in) investing activities		(98,531	)		(6,243	)
Net cash provided by (used in) financing activities		47,304			(88,071	)
Effect of exchange-rate changes on cash		(213	)		39

Net increase (decrease) in cash and cash equivalents	$	(39,746	)	$	(61,102	)

Operating Activities

Cash provided by operating activities decreased in the first quarter of 2008 to $11.7 million from $33.2 million in 2007 primarily as a result of higher current year inventory levels. Cash used for inventory in the first quarter of 2008 was $32.6 million compared to cash used for inventory in the prior-year period of $1.9 million. The increase in inventory in the first quarter of 2008 includes an increase in raw materials to support the build required for the seasonal construction season and an increase in finished goods to ensure high service levels during the consolidation of the acquired LMS warehouses. We plan to reduce our March 31, 2008 inventory levels as the year progresses. Cash provided by operating activities during the first quarter of 2008 and 2007 was primarily attributable to net earnings of $38.3 million and $37.1 million, respectively, and the impact of changes in working capital. Depreciation and amortization increased during the first quarter of 2008 to $22.0 million from $12.3 million in 2007 reflecting recent acquisition activity.

Investing Activities

In January 2008, we acquired The Homac Manufacturing Company (Homac), a privately held manufacturer of components used in utility distribution and substation markets, as well as industrial and telecommunications markets, for approximately $75 million. Also, in January 2008, we acquired Boreal Braidings Inc. (Boreal), a privately held manufacturer of high quality flexible connectors used by industrial OEM and utility customers in Canada for approximately $16 million.

During the first quarter of 2008, we had capital expenditures for maintenance spending and the support of our ongoing business plans totaling $8.1 million compared to $6.4 million in 2007. We expect capital expenditures of up to $60 million in 2008.

Financing Activities

Financing activities for the first quarter of 2008 reflect increased borrowings on our revolving credit facility used to help fund the Homac acquisition. Financing activities in the prior-year period reflected cash used for the repurchase of approximately 1.8 million common shares for approximately $94 million.

In the second quarter of 2008, we intend to repay the $115 million senior unsecured debt securities due May 2008 through the use of borrowings under our $750 million credit facility.

$750 million Credit Facility

Our revolving credit facility has total availability of $750 million, through a five year term expiring in October 2012. All borrowings and other extensions of credit under our revolving credit facility are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties. The proceeds of any loans under the revolving credit facility may be used for general operating needs and for other general corporate purposes in compliance with the terms of the facility. We used the facility to help finance the transaction with Lamson & Sessions Co. in November 2007 and also for the Homac acquisition in January 2008. Outstanding borrowings under this facility at March 31, 2008 were $465 million and at December 31, 2007 were $420 million.

In the fourth quarter of 2007, the Corporation entered into an interest rate swap to hedge its exposure to changes in the LIBOR rate on $390 million of borrowings under this facility. See Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Under the revolving credit facility agreement, we selected an interest rate on our initial draw of the revolver based on the one-month London Interbank Offered Rate (“LIBOR”) plus a margin based on our debt rating. Fees to access the facility and letters of credit under the facility are based on a pricing grid related to the Corporation’s debt ratings with Moody’s, S&P, and Fitch during the term of the facility.

Our amended and restated revolving credit facility requires that we maintain:


	•	a maximum leverage ratio of 4.00 to 1.00 through December 31, 2008, then a ratio of 3.75 to 1.00 thereafter; and

	•	a minimum interest coverage ratio of 3.00 to 1.00.

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

At March 31, 2008, outstanding letters of credit, or similar financial instruments that reduce the amount available under the $750 million credit facility totaled $21.6 million. Letters of credit relate primarily to third-party insurance claims processing.

Other Credit Facilities

We have a EUR 10.0 million (approximately US$15.8 million) committed revolving credit facility with a European bank that has an indefinite maturity. Availability under this facility was EUR 9.9 million (approximately US$15.6 million) as of March 31, 2008. This credit facility contains standard covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default.

Outstanding letters of credit which reduced availability under the European facility amounted to EUR 0.1 million (approximately US$0.2 million) at March 31, 2008.

Other Letters of Credit

Compliance and Availability

We are in compliance with all covenants or other requirements set forth in our credit facilities. However, if we fail to be in compliance with the financial or other covenants of our credit agreements, then the credit agreements could be terminated, any outstanding borrowings under the agreements could be accelerated and immediately due, and we could have difficulty renewing or obtaining credit facilities in the future.

As of March 31, 2008, the aggregate availability of funds under our credit facilities was approximately $279.0 million, after deducting outstanding letters of credit. Availability is subject to the satisfaction of various covenants and conditions to borrowing.

Credit Ratings

As of March 31, 2008, we had investment grade credit ratings from Standard & Poor’s, Moody’s Investor Service and Fitch Ratings on our senior unsecured debt. Should these credit ratings drop, repayment under our credit facilities and securities will not be accelerated; however, our credit costs may increase. Similarly, if our credit ratings improve, we could potentially have a decrease in our credit costs. The maturity of any of our debt securities does not accelerate in the event of a credit downgrade.

Debt Securities

Thomas & Betts had the following senior unsecured debt securities outstanding as of March 31, 2008:

Issue Date

Amount

Interest Rate

Interest Payable

Maturity Date

May 1998

115 million

6.63%

May 1 and November 1

May 2008(a)

February 1999

150 million

6.39%

March 1 and September 1

February 2009

May 2003

125 million

7.25%

June 1 and December 1

June 2013


(a)		The Corporation currently intends to repay the $115 million senior unsecured debt securities due May 2008 through the use of borrowings under the Corporation’s $750 million credit facility.

The indentures underlying the unsecured debt securities contain standard covenants such as restrictions on mergers, liens on certain property, sale-leaseback of certain property and funded debt for certain subsidiaries. The indentures also include standard events of default such as covenant default and cross-acceleration. We are in compliance with all covenants and other requirements set forth in the indentures.

Other

The Corporation does not currently pay cash dividends. Future decisions concerning the payment of cash dividends on the common stock will depend upon our results of operations, financial condition, capital expenditure plans, continued compliance with credit facilities and other factors that the Board of Directors may consider relevant.

In the short-term, we expect to fund expenditures for capital requirements as well as other liquidity needs from a combination of cash generated from operations and available cash resources. These sources should be sufficient to meet our operating needs in the short-term.

Over the longer-term, we expect to meet our liquidity needs with a combination of cash generated from operations, existing cash balances, the use of our credit facilities, plus issuances of debt or equity

securities. From time to time, we may access the public capital markets if terms, rates and timing are acceptable. We have an effective shelf registration statement that will permit us to issue an aggregate of $325 million of senior unsecured debt securities, common stock and preferred stock.

The Lamson & Sessions Co. Restructuring and Integration Plan

The Corporation’s senior management began assessing and formulating a restructuring and integration plan as of the acquisition date of LMS. Approval by the Corporation’s senior management and Board of Directors occurred during the first quarter of 2008. The objective of the restructuring and integration plan is to achieve operational efficiencies and eliminate duplicative costs resulting from the LMS acquisition. The Corporation also intends to achieve greater efficiency in sales, marketing, administration and other operational activities. The Corporation identified certain liabilities and other costs totaling approximately $26 million for restructuring and integration actions. Included in this amount are approximately $11 million of planned severance costs for involuntary termination of approximately 290 employees of LMS and approximately $8 million of lease cancellation costs associated with the planned closure of LMS distribution centers, which have been recorded as part of the Corporation’s preliminary purchase price allocation of LMS. Severance and lease cancellation costs have been reflected in the Corporation’s balance sheet in accrued liabilities and reflect cash paid or to be paid for these actions. Integration costs will be recognized as incurred, and the amount recognized during the first quarter of 2008 totaled approximately $2 million. The actions required by the plan began soon after the plan was approved, including the communication to affected employees of the Corporation’s intent to terminate as soon as possible. The Corporation expects to substantially complete implementation of these plans before the end of the second quarter of 2008, although payments associated with certain restructuring and integration actions will extend beyond 2008. Funds necessary for the plan are expected to come from operations or available cash resources. Beginning in 2009, annual net savings from these actions are expected to approximate $18 million as a consequence of the reduction in total employment and the consolidation of distributions centers.

Off-Balance Sheet Arrangements

As of March 31, 2008, we did not have any off-balance sheet arrangements.

Refer to Note 12 in the Notes to Consolidated Financial Statements for information regarding our guarantee and indemnification arrangements.


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

Market Risk and Financial Instruments

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

For the period ended March 31, 2008, the Corporation has not experienced any material changes in market risk since December 31, 2007 that affect the quantitative and qualitative disclosures presented in our 2007 Annual Report onForm 10-K.

Interest Rate Swap

During the fourth quarter of 2007, the Corporation entered into a forward-starting interest rate swap for a notional amount of $390 million. The notional amount reduces to $325 million on

December 15, 2010, $200 million on December 15, 2011 and $0 on October 1, 2012. The interest rate swap hedges $390 million of the Corporation’s exposure to changes in interest rates on borrowings of its $750 million credit facility. The Corporation has designated the interest rate swap as a cash flow hedge for accounting purposes. Under the interest rate swap, the Corporation receives variable one-month LIBOR and pays an underlying fixed rate of 4.86%.


Item 4.	*Controls and Procedures*


(a)	Evaluation of Disclosure Controls and Procedures

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

Our Chief Executive Officer and Chief Financial Officer have evaluated the Corporation’s disclosure controls and procedures as of the end of the period covered by this report and they have concluded that, as of this date, these controls and procedures are effective to ensure that the information required to be disclosed under the Securities Exchange Act of 1934 is disclosed within the time periods specified by SEC rules.


(b)	Changes in Internal Control over Financial Reporting

The Corporation has experienced significant acquisition and integration activity in the past nine months, including the November 2007 acquisition of LMS for approximately $450 million. Other than the noted acquisitions, there have been no significant changes in internal control over financial reporting that occurred during the first quarter of 2008 that have materially affected or are reasonably likely to materially affect the Corporation’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	*Legal Proceedings*

See Note 12, “Contingencies,” in the Notes to Consolidated Financial Statements, which is incorporated herein by reference. See also Item 3. “Legal Proceedings,” in the Corporation’s 2007 Annual Report onForm 10-K, which is incorporated herein by reference.


Item 1A.	*Risk Factors*

There are many factors that could pose a material risk to the Corporation’s business, its operating results and financial condition and its ability to execute its business plan, some of which are beyond our control. There have been no material changes from the risk factors as previously set forth in our 2007 Annual Report onForm 10-K under Item 1A. “Risk Factors,” which is incorporated herein by reference.


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

The following table reflects activity related to equity securities purchased by the Corporation during the three months ended March 31, 2008:

Issuer Purchases of Equity Securities

Total Number

Maximum

of Common

Number

Shares

of Common

Total

Average

Purchased

Shares that

Number of

Price Paid

as Part of

May Yet Be

Common

per

Publicly

Purchased

Shares

Common

Announced

Under

Period

Purchased

Share

Plans

the Plans

March 2007 Plan

Total for the quarter ended March 31, 2008

—

2,799,300


Item 5.	*Other Information*

Shareholders who wish to present director nominations or other business at the Annual Meeting of Shareholders to be held in 2009 must give notice to the Secretary at our principal executive offices on or prior to January 2, 2009.


Item 6.	*Exhibits*

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

SIGNATURE

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

Thomas & Betts Corporation
(Registrant)


	By:	/s/ Kenneth W. Fluke

Kenneth W. Fluke

Senior Vice President and

Chief Financial Officer

(principal financial officer)

Date: May 5, 2008

EXHIBIT INDEX


Exhibit No.			Description of Exhibit

	12		Statement re Computation of Ratio of Earnings to Fixed Charges
	31	.1	Certification of Principal Executive Officer Under Securities Exchange ActRules 13a-14(a) or 15d-14(a)
	31	.2	Certification of Principal Financial Officer Under Securities Exchange ActRules 13a-14(a) or 15d-14(a)
	32	.1	Certification of Principal Executive Officer Pursuant toRule 13a-14(b) orRule 15d-14(b) of the Securities Exchange Act of 1934 and furnished solely pursuant to 18 U.S.C. § 1350 and not filed as part of the Report or as a separate disclosure document.
	32	.2	Certification of Principal Financial Officer Pursuant toRule 13a-14(b) orRule 15d-14(b) of the Securities Exchange Act of 1934 and furnished solely pursuant to 18 U.S.C. §1350 and not filed as part of the Report or as a separate disclosure document.

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	7th grade Avg

Thomas & Betts (TNB) Inactive 10-Q2008 Q1 Quarterly report

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