EXHIBIT 99
Thomas & Betts Corporation Reports 2006 Earnings
Full Year and Fourth Quarter Sales Up 10 Percent;
Diluted E.P.S. $2.85 for Full Year and $0.84 for Fourth Quarter;
E.P.S. Includes Special Tax-Related Items
MEMPHIS, Tenn.--(BUSINESS WIRE)--Feb. 5, 2007--Thomas & Betts
Corporation (NYSE: TNB) today reported full year 2006 net sales of
$1.9 billion, up 10.2 percent over 2005. Earnings from operations were
$245.8 million or 13.2 percent of sales compared to $204.0 million or
12.0 percent of sales in 2005. 2006 net earnings were $175.1 million
or $2.85 per diluted share compared to $113.4 million or $1.86 per
diluted share in the prior year.
"Thomas & Betts had a great year in 2006. We delivered outstanding
operating results for the year, which were driven by strong
performance in all of our businesses," said Dominic J. Pileggi,
chairman and chief executive officer. "Operating cash flow was also
excellent and we finished the year with what we believe is the
strongest financial position in the company's history. We look forward
to continuing our positive momentum in 2007 and further strengthening
our leadership position in our key markets."
Stronger demand in industrial, commercial and utility markets as
well as the impact of price increases that offset higher material and
energy costs drove the year over year increase in sales. Notably,
sales in the company's Steel Structures segment were up nearly 20
percent driven by continued investment by utilities in high-voltage
transmission projects. Foreign currency benefited consolidated sales
by approximately $23 million for the full year.
Both gross margin and selling, general and administrative expense
improved as a percent of sales for the year 2006. Gross margin was
30.5 percent compared to 29.5 percent in 2005, reflecting higher sales
volumes and the company's continued ability to offset higher material
and energy costs. SG&A was 17.3 percent of sales in 2006, down from
17.5 percent in 2005. Net interest expense decreased by approximately
$10 million in 2006 as a result of lower average debt levels and
higher interest income.
2006 net earnings include a fourth quarter non-cash income tax
benefit of $36.5 million related to the release of valuation
allowances on state deferred tax assets. This benefit was partially
offset by a fourth quarter income tax charge of $31.9 million due to
the distribution of approximately $100 million from a foreign
subsidiary. 2005 net earnings included a fourth quarter income tax
charge of $16.4 million related to the repatriation of foreign
earnings pursuant to the American Jobs Creation Act of 2004.
FOURTH QUARTER 2006 RESULTS
Fourth quarter 2006 sales were $485.6 million, up 9.6 percent from
the fourth quarter 2005. Price increases that offset higher costs and
increased volume in the Steel Structures segment contributed
significantly to the sales improvement. Foreign currency benefited
consolidated sales by approximately $9 million in the quarter.
Fourth quarter 2006 gross margin was 29.7 percent of sales and
earnings from operations were $61.7 million or 12.7 percent of sales.
This compares to gross margin of 30.4 percent and earnings from
operations of $59.2 million or 13.4 percent of sales in the prior year
period. The effect of higher costs offset by higher selling prices
diluted both gross margin and earnings from operations as a percent of
sales.
2006 fourth quarter net earnings were $50.9 million or $0.84 per
diluted share compared to $25.8 million or $0.42 per diluted share in
the fourth quarter 2005. 2006 results include the previously mentioned
non-cash income tax benefit of $36.5 million ($0.60 per share) related
to the release of valuation allowances on state deferred tax assets.
This benefit was partially offset by a fourth quarter income tax
charge of $31.9 million ($0.53 per share) due to the distribution of
approximately $100 million from a foreign subsidiary. 2005 fourth
quarter net earnings included an income tax charge of $16.4 million
($0.27 per share) related to the repatriation of foreign earnings
pursuant to the American Jobs Creation Act of 2004.
Income tax expense also reflected favorable year-end adjustments
of $4.7 million ($0.08 per share) in the fourth quarter 2006 compared
to approximately $3.9 million ($0.06 per share) in the prior year
period.
SEGMENT RESULTS
Electrical segment fourth quarter sales were $381.0 million, an
8.1 percent increase over the fourth quarter 2005. For the full year,
Electrical segment sales were up approximately 10 percent to $1.5
billion compared to $1.4 billion in 2005. For the quarter, higher
selling prices that offset increased material and energy costs
contributed significantly to the sales growth while foreign currency
benefited sales by approximately $7 million. Higher selling prices
that offset increased costs and improved volume contributed to the
sales increase for the full year. Foreign currency benefited sales by
approximately $21 million.
Electrical segment earnings were $47.2 million in the fourth
quarter, or 12.4 percent of sales. This compares to $44.9 million or
12.7 percent of sales in the fourth quarter 2005. Full year 2006
segment earnings were $201.6 million or 13.3 percent of sales compared
to $161.8 million or 11.7 percent of sales in 2005. The fourth quarter
earnings improvement reflects the company's continued ability to
offset increased material and energy costs through higher selling
prices as well as improved operating efficiencies. The effect of
higher costs offset by higher selling prices diluted segment earnings
as a percent of sales in the fourth quarter 2006. For the full year
2006, the earnings improvement reflects higher selling prices to
offset increased costs, increased sales volume and improved operating
efficiencies.
Sales in the Steel Structures segment were $64.0 million in the
quarter, up nearly 30 percent compared to the prior year period.
Fourth quarter 2006 sales include $10.7 million of lattice tower sales
sourced from a third party compared to $0.7 million of lattice tower
sales in the prior year period. For the full year, segment sales were
$221.7 million, including $23.1 million in lattice tower sales. This
compares to 2005 segment sales of $186.0 million including $2.5
million in lattice tower sales. The sale of lattice towers sourced
from a third party and increased manufacturing capacity to support
sales of highly engineered poles contributed to the year-over-year
sales improvement.
Steel Structures segment earnings were $8.8 million or 13.7
percent of sales in the fourth quarter and $28.8 million or 13.0
percent of sales for the full year 2006. This compares to $8.2 million
or 16.6 percent of sales in the prior year quarter and $29.0 million
or 15.6 percent of sales for the full year 2005. This segment
benefited from an exceptionally favorable project mix in the second
half of 2005.
Fourth quarter 2006 HVAC segment sales of $40.6 million and
earnings of $6.2 million were essentially flat with the prior year
period. For the full-year 2006, HVAC sales were $135.5 million
compared to $132.1 million in 2005. Full year segment earnings
increased to $16.3 million compared to $14.6 million in 2005,
reflecting higher sales and disciplined cost control.
CASH FLOW AND DEBT HIGHLIGHTS
Thomas & Betts continued to generate strong operating cash flow in
2006 with cash from operations of $221 million. The company ended the
year with approximately $371 million in cash and marketable securities
and $388 million in total debt. Total debt was 26.6 percent of total
capitalization at year end, compared to 33.8 percent at the end of
2005.
Major uses of cash during 2006 included: the repurchase of 3.7
million shares at a cost of $201 million (including 0.7 million shares
for $34 million in the fourth quarter); a $150 million scheduled debt
repayment; and $34 million for acquisition costs in the company's
Electrical segment. Improved profitability and a continued emphasis on
working capital management contributed to the strong cash performance.
The share repurchase activity in the fourth quarter had no net effect
on earnings per share in the quarter.
2007 DIRECTIONAL GUIDANCE
"2006 was a very successful year for Thomas & Betts and we enter
2007 well positioned to continue to deliver excellent performance,"
said Pileggi. "Looking forward, we expect continued growth in
industrial, non-residential construction and utility markets in 2007.
Given this, we are targeting top line growth in the mid-single digit
range driven primarily by volume improvements and earnings per diluted
share in the range of $3.05 to $3.15 for the full year 2007. We also
expect cash flow to continue to be very strong. Our earnings guidance
assumes a tax rate of approximately 31 percent for 2007."
CORPORATE OVERVIEW
Thomas & Betts Corporation (www.tnb.com) is a leading designer and
manufacturer of electrical components used in industrial, commercial,
communications and utility markets. The company is also a leading
producer of commercial heating and ventilation units and highly
engineered steel structures used, among other things, for utility
transmission. Headquartered in Memphis, Tenn., the company has
manufacturing, distribution and office facilities worldwide.
NOTE: The attached financial tables support the information in
this news release:
Consolidated Statements of Operations
Segment Information
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
CAUTIONARY STATEMENT
This press release includes forward-looking statements that are
identified by terms such as "optimistic," "trend," "will," and
"believe." These statements discuss business strategies, economic
outlook and future performance. These forward-looking statements make
assumptions regarding the company's operations, business, economic and
political environment, including, without limitation, customer demand,
government regulation, terrorist acts and acts of war. The actual
results may be materially different from any future results expressed
or implied by such forward-looking statements. Please see the
"Business Risks" section of the company's Form 10-K for the fiscal
year ended December 31, 2005 for further information related to these
uncertainties. The company undertakes no obligation to publicly
release any revisions to any forward-looking statements contained in
this press release to reflect events or circumstances occurring after
the date of this release or to reflect the occurrence of unanticipated
events.
CONFERENCE CALL AND WEBCAST INFORMATION
Thomas & Betts will hold a conference call and webcast to discuss
the company's 2006 results on Tuesday, February 6, 2007 at 11:00 a.m.
Eastern (10:00 a.m. Central). To access the call, please call
201-689-8341. The call can also be accessed via the Thomas & Betts
corporate website at www.tnb.com . The conference call will be
recorded and available for replay through 12:00 midnight Eastern on
Monday, February 12, 2007. To access the replay, please call
201-612-7415, account number 9517, pass code 228653.
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year to Date
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales $ 485,607 $ 443,036 $ 1,868,689 $ 1,695,383
Cost of sales 341,377 308,486 1,299,299 1,195,256
------------ ------------ ------------ ------------
Gross profit 144,230 134,550 569,390 500,127
Gross profit -
% of net
sales 29.7% 30.4% 30.5% 29.5%
Selling, general
and
administrative 82,497 75,400 323,577 296,132
Selling, general
and
administrative
- % of net
sales 17.0% 17.0% 17.3% 17.5%
------------ ------------ ------------ ------------
Earnings from
operations 61,733 59,150 245,813 203,995
Earnings from
operations - %
of net sales 12.7% 13.4% 13.2% 12.0%
Income from
unconsolidated
companies 382 408 952 1,377
Interest expense,
net (3,543) (4,890) (14,840) (25,214)
Other (expense)
income, net (130) (798) 1,517 (4,298)
------------ ------------ ------------ ------------
Earnings before
income taxes 58,442 53,870 233,442 175,860
Income tax
provision 7,562 28,101 58,312 62,452
------------ ------------ ------------ ------------
Net earnings $ 50,880 $ 25,769 $ 175,130 $ 113,408
============ ============ ============ ============
Net earnings per
share:
Basic earnings
per share $ 0.85 $ 0.42 $ 2.90 $ 1.89
============ ============ ============ ============
Diluted
earnings per
share $ 0.84 $ 0.42 $ 2.85 $ 1.86
============ ============ ============ ============
Average shares
outstanding:
Basic 59,597 60,686 60,434 60,054
Diluted 60,530 61,758 61,447 61,065
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
Quarter Ended Year to Date
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales:
Electrical $ 381,002 $ 352,539 $ 1,511,557 $ 1,377,338
Steel Structures 63,970 49,494 221,671 185,995
HVAC 40,635 41,003 135,461 132,050
------------ ------------ ------------ ------------
Total net sales $ 485,607 $ 443,036 $ 1,868,689 $ 1,695,383
============ ============ ============ ============
Segment earnings:
Electrical $ 47,169 $ 44,932 $ 201,648 $ 161,823
Steel Structures 8,769 8,239 28,780 28,998
HVAC 6,177 6,387 16,337 14,551
------------ ------------ ------------ ------------
Total reportable
segment
earnings 62,115 59,558 246,765 205,372
Interest expense,
net (3,543) (4,890) (14,840) (25,214)
Other (130) (798) 1,517 (4,298)
------------ ------------ ------------ ------------
Earnings before
income taxes $ 58,442 $ 53,870 $ 233,442 $ 175,860
============ ============ ============ ============
Segment earnings -
% of net sales:
Electrical 12.4% 12.7% 13.3% 11.7%
Steel Structures 13.7% 16.6% 13.0% 15.6%
HVAC 15.2% 15.6% 12.1% 11.0%
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and marketable securities $ 371,339 $ 508,896
Receivables, net 204,270 185,391
Inventories 218,536 198,107
Other current assets 74,225 57,748
------------ ------------
Total current assets 868,370 950,142
Net property, plant and equipment 267,200 267,026
Goodwill 490,210 462,810
Investments in unconsolidated companies 115,726 115,665
Other assets 88,717 124,753
------------ ------------
Total assets $ 1,830,223 $ 1,920,396
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 719 $ 150,804
Accounts payable 144,844 138,060
Accrued liabilities 102,966 115,547
------------ ------------
Total current liabilities 248,529 404,411
Long-term debt 386,912 387,155
Other long-term liabilities 126,423 76,240
Shareholders' equity 1,068,359 1,052,590
------------ ------------
Total liabilities and shareholders'
equity $ 1,830,223 $ 1,920,396
============ ============
THOMAS & BETTS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Year to Date
-------------------------
December 31, December 31,
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $175,130 $113,408
Adjustments:
Depreciation and amortization 47,842 50,327
Share-based compensation expense 11,919 -
Deferred income taxes 18,129 28,159
Incremental tax benefits from share-based
payments (11,320) -
Changes in operating assets and
liabilities, net:
Receivables (11,441) (15,440)
Inventories (15,927) 11,756
Accounts payable 3,534 17,837
Accrued liabilities (14,776) 2,704
Funding to qualified pension plans (1,585) (28,693)
Other 19,663 13,039
------------ ------------
Net cash provided by (used in) operating
activities 221,168 193,097
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (44,345) (36,455)
Purchases of businesses (34,031) (16,526)
Marketable securities 291,773 (105,664)
Other 659 720
------------ ------------
Net cash provided by (used in) investing
activities 214,056 (157,925)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt and other
borrowings (150,896) (7,291)
Stock options exercised 57,119 34,650
Incremental tax benefits from share-based
payments 11,320 -
Repurchase of common shares (200,796) -
------------ ------------
Net cash provided by (used in) financing
activities (283,253) 27,359
------------ ------------
EFFECT OF EXCHANGE RATE ON CASH 2,255 3,022
------------ ------------
Net increase (decrease) in cash and cash
equivalents 154,226 65,553
Cash and cash equivalents at beginning of
period 216,742 151,189
------------ ------------
Cash and cash equivalents at end of period $370,968 $216,742
============ ============
Cash payments for interest $33,016 $37,896
Cash payments for income taxes $44,896 $36,470
CONTACT: Thomas & Betts Corporation
Tricia Bergeron, 901-252-8266
tricia.bergeron@tnb.com