Annual Reports

 
Quarterly Reports

  • 10-Q (May 7, 2012)
  • 10-Q (Oct 28, 2011)
  • 10-Q (Jul 29, 2011)
  • 10-Q (Apr 29, 2011)
  • 10-Q (Oct 29, 2010)
  • 10-Q (Jul 30, 2010)

 
8-K

 
Other

Thomas & Betts 10-Q 2010

Documents found in this filing:

  1. 10-Q
  2. Ex-12
  3. Ex-31.1
  4. Ex-31.2
  5. Ex-32.1
  6. Ex-32.2
  7. Ex-32.2
e10vq
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
     
(Mark One)
   
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended September 30, 2010
 
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
 
(Exact name of registrant as specified in its charter)
 
     
Tennessee
(State or other jurisdiction of
incorporation or organization)
  22-1326940
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  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 Rule 12b-2 of the Exchange Act.
 
     
Large accelerated filer þ
  Accelerated filer o
Non-accelerated filer o
  Smaller reporting company o
(Do not check if a smaller reporting company)
   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 
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 October 25, 2010
 
Common Stock, $.10 par value
  51,820,311
 


 

 
Thomas & Betts Corporation and Subsidiaries
 
 
             
        Page
 
       
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        4  
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      31  
      31  
 
PART II. OTHER INFORMATION
      32  
      32  
      32  
      32  
    33  
    34  
 Statement re Computation of Ratio of Earnings to Fixed Charges
 Certification of Principal Executive Officer Under Securities Exchange Act Rules 13a-14(a) or 15d-14(a)
 Certification of Principal Financial Officer Under Securities Exchange Act Rules 13a-14(a) or 15d-14(a)
 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)
 EX-101 INSTANCE DOCUMENT
 EX-101 SCHEMA DOCUMENT
 EX-101 CALCULATION LINKBASE DOCUMENT
 EX-101 LABELS LINKBASE DOCUMENT
 EX-101 PRESENTATION LINKBASE DOCUMENT


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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. For further explanation of these risks and uncertainties, see Item 1A. “Risk Factors” in our Form 10-K for the year ended December 31, 2009. Forward looking statements contain words such as:
 
         
• “achieve”   • “anticipates”   • “intends”
• “should”
  • “expects”   • “predict”
• “could”
  • “might”   • “will”
• “may”
  • “believes”  
•   other similar expressions
 
These forward-looking statements are not guarantees of future performance. 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 this Report to reflect any future events or circumstances.
 
A reference in this Report to “we”, “our”, “us”, “Thomas & Betts” or the “Corporation” refers to Thomas & Betts Corporation and its consolidated subsidiaries.


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Table of Contents

 
PART I. FINANCIAL INFORMATION
 
Item 1.   Financial Statements
 
 
                                 
    Quarter Ended
    Nine Months Ended
 
    September 30,     September 30,  
    2010     2009     2010     2009  
 
Net sales
  $ 532,966     $ 485,075     $ 1,517,074     $ 1,405,906  
Cost of sales
    363,276       337,485       1,047,743       988,965  
                                 
Gross profit
    169,690       147,590       469,331       416,941  
Selling, general and administrative
    98,772       91,957       293,797       277,605  
                                 
Earnings from operations
    70,918       55,633       175,534       139,336  
Interest expense, net
    (9,042 )     (8,478 )     (26,315 )     (26,317 )
Other (expense) income, net
    (975 )     (2,101 )     90       1,649  
                                 
Earnings before income taxes
    60,901       45,054       149,309       114,668  
Income tax provision
    16,797       12,943       43,652       33,827  
                                 
Net earnings
  $ 44,104     $ 32,111     $ 105,657     $ 80,841  
                                 
Earnings per share:
                               
Basic
  $ 0.85     $ 0.62     $ 2.04     $ 1.54  
                                 
Diluted
  $ 0.84     $ 0.61     $ 2.00     $ 1.53  
                                 
Average shares outstanding:
                               
Basic
    51,602       52,178       51,863       52,356  
Diluted
    52,641       52,858       52,912       52,987  
 
The accompanying Notes are an integral part of these Consolidated Financial Statements.


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Thomas & Betts Corporation and Subsidiaries

Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
                 
    September 30,
    December 31,
 
    2010     2009  
 
ASSETS
Current Assets
               
Cash and cash equivalents
  $ 435,221     $ 478,613  
Restricted cash
    2,919       2,918  
Receivables, net
    271,678       197,640  
Inventories
    243,201       209,268  
Deferred income taxes
    32,475       31,062  
Prepaid income taxes
    500       7,340  
Other current assets
    18,635       17,142  
                 
Total Current Assets
    1,004,629       943,983  
                 
Property, plant and equipment, net
    313,176       296,820  
Goodwill
    942,434       902,053  
Other intangible assets, net
    292,937       243,930  
Other assets
    64,798       66,621  
                 
Total Assets
  $ 2,617,974     $ 2,453,407  
                 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
               
Current maturities of long-term debt
  $ 718     $ 522  
Accounts payable
    171,702       149,556  
Accrued liabilities
    138,268       113,654  
Income taxes payable
    25,076       8,849  
                 
Total Current Liabilities
    335,764       272,581  
                 
Long-Term Liabilities
               
Long-term debt, net of current maturities
    639,103       638,014  
Long-term benefit plan liabilities
    123,410       122,573  
Deferred income taxes
    25,716       8,723  
Other long-term liabilities
    63,095       70,307  
Contingencies (Note 15)
               
Shareholders’ Equity
               
Common stock
    5,098       5,179  
Additional paid-in capital
    34,908       63,835  
Retained earnings
    1,480,862       1,375,205  
Accumulated other comprehensive income (loss)
    (89,982 )     (103,010 )
                 
Total Shareholders’ Equity
    1,430,886       1,341,209  
                 
Total Liabilities and Shareholders’ Equity
  $ 2,617,974     $ 2,453,407  
                 
 
The accompanying Notes are an integral part of these Consolidated Financial Statements.


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Thomas & Betts Corporation and Subsidiaries

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
                 
    Nine Months Ended
 
    September 30,  
    2010     2009  
 
Cash Flows from Operating Activities:
               
Net earnings
  $ 105,657     $ 80,841  
Adjustments:
               
Depreciation and amortization
    60,031       56,417  
Share-based compensation expense
    8,730       8,946  
Deferred income taxes
    (6,491 )     (1,658 )
Incremental tax benefits from share-based payment arrangements
    (942 )     (19 )
Changes in operating assets and liabilities, net:
               
Receivables
    (56,707 )     (7,863 )
Inventories
    (26,463 )     51,878  
Accounts payable
    12,258       (45,798 )
Accrued liabilities
    20,095       (24,857 )
Income taxes payable
    21,885       7,065  
Pension and other postretirement benefits
    8,914       22,376  
Other
    (2,047 )     (1,901 )
                 
Net cash provided by (used in) operating activities
    144,920       145,427  
                 
Cash Flows from Investing Activities:
               
Purchases of businesses, net of cash acquired
    (98,910 )      
Purchases of property, plant and equipment
    (22,253 )     (32,250 )
Restricted cash used for change in control payments
    (1 )     5,054  
Other
    38       953  
                 
Net cash provided by (used in) investing activities
    (121,126 )     (26,243 )
                 
Cash Flows from Financing Activities:
               
Stock options exercised
    5,162       451  
Repayment of debt and other borrowings
    (36,092 )     (148,288 )
Revolving credit facility proceeds (repayments), net
          95,000  
Repurchase of common shares
    (42,853 )     (24,907 )
Incremental tax benefits from share-based payment arrangements
    942       19  
                 
Net cash provided by (used in) financing activities
    (72,841 )     (77,725 )
                 
Effect of exchange-rate changes on cash and cash equivalents
    5,655       23,476  
                 
Net increase (decrease) in cash and cash equivalents
    (43,392 )     64,935  
Cash and cash equivalents, beginning of period
    478,613       292,494  
                 
Cash and cash equivalents, end of period
  $ 435,221     $ 357,429  
                 
Cash payments for interest
  $ 23,769     $ 26,527  
Cash payments for income taxes
  $ 27,031     $ 26,251  
 
The accompanying Notes are an integral part of these Consolidated Financial Statements.


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Thomas & Betts Corporation and Subsidiaries
 
(Unaudited)
 
1.   Basis of Presentation
 
The financial information presented as of any date other than December 31 has been prepared from the books and records without audit. Financial information as of December 31 has been derived from the Corporation’s audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. The results of operations for the periods ended September 30, 2010 and 2009 are not necessarily indicative of the operating results for the full year.
 
2.   Basic and Diluted Earnings Per Share
 
The following is a reconciliation of the basic and diluted earnings per share computations:
 
                                 
    Quarter Ended
    Nine Months Ended
 
    September 30,     September 30,  
    2010     2009     2010     2009  
 
(In thousands, except per share data)
                               
Net earnings
  $ 44,104     $ 32,111     $ 105,657     $ 80,841  
                                 
Basic shares:
                               
Average shares outstanding
    51,602       52,178       51,863       52,356  
                                 
Basic earnings per share
  $ 0.85     $ 0.62     $ 2.04     $ 1.54  
                                 
Diluted shares:
                               
Average shares outstanding
    51,602       52,178       51,863       52,356  
Additional shares on the potential dilution from stock options and nonvested restricted stock
    1,039       680       1,049       631  
                                 
      52,641       52,858       52,912       52,987  
                                 
Diluted earnings per share
  $ 0.84     $ 0.61     $ 2.00     $ 1.53  
                                 
 
The Corporation had stock options that were out-of-the-money that were excluded because of their anti-dilutive effect. Such out-of-the money options were associated with 1.8 million shares of common stock for the third quarters of 2010 and 2009. Out-of-the money options were associated with 1.8 million shares of common stock for the first nine months of 2010 and 1.9 million shares of common stock for the first nine months of 2009.
 
3.   Acquisitions
 
On April 1, 2010, the Corporation acquired PMA AG (“PMA”), a leading European manufacturer of technologically advanced cable protection systems, for approximately $114 million. The purchase price consisted of cash of approximately $78 million and debt assumed of approximately $36 million. The debt assumed by the Corporation as part of this transaction was retired following completion of the acquisition.


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PMA manufactures high-quality polyamide resin-based flexible conduit and fittings used in a broad variety of industrial applications to protect energy and data cables from external forces such as vibration, heat, fire, cold and tensile stress. The Corporation expects the PMA acquisition will broaden its existing product portfolio and enhance cross-selling of electrical products into markets served by PMA and the Corporation.
 
The results of PMA’s operations have been included in the consolidated financial statements of the Corporation since the April 1, 2010 acquisition date. Since the acquisition date, PMA’s net sales and net earnings, inclusive of purchase accounting adjustments, were not significant relative to the consolidated results.
 
Acquisition-related costs for the PMA acquisition (included in selling, general and administrative expenses) were not significant.
 
The following table summarizes fair values for the assets acquired and liabilities assumed at the date of acquisition:
 
         
(In millions)
       
Fair Value of Consideration:
       
Cash paid, net of cash acquired
  $ 78  
         
Recognized amounts of identifiable assets acquired and liabilities assumed:
       
Current assets (primarily receivables and inventories)
  $ 16  
Property, plant and equipment
    30  
Identifiable intangible assets
    60  
Current liabilities
    (6 )
Debt assumed (subsequently retired)
    (36 )
Other long-term liabilities
    (19 )
         
Total identifiable net assets
    45  
Goodwill
    33  
         
Net cash paid
  $ 78  
         
 
The purchase price allocation resulted in goodwill of approximately $33 million and other intangible assets of approximately $60 million, all of which was assigned to the Corporation’s Electrical segment. Of the $60 million of intangible assets, approximately $12 million has been assigned to intangible assets with indefinite lives (consisting of trade/brand names) and approximately $48 million has been assigned to intangible assets with estimated lives up to 13 years (consisting primarily of customer relationships). Goodwill is not deductible for tax purposes.
 
In late January 2010, the Corporation acquired JT Packard & Associates, Inc. (“JT Packard”), the nation’s largest independent service provider for critical power equipment used by industrial and commercial enterprises in a broad array of markets, for approximately $21 million. The purchase price allocation resulted in goodwill of approximately $6 million and other intangible assets of approximately $11 million, all of which was assigned to the Corporation’s Electrical segment.
 
Related to a 2007 acquisition, the Corporation recorded a restructuring accrual which included approximately $14 million of severance costs and approximately $8 million of lease cancellation costs. The accrual was recorded as part of the Corporation’s purchase price allocation of the acquired business. At December 31, 2009, there was $3.5 million of remaining accrual. The Corporation made payments against the accrual of $0.4 million during the third quarter of 2010 and


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$1.6 million during the first nine months of 2010. At September 30, 2010, the remaining restructuring accrual of $1.9 million consisted of $0.3 million associated with severance costs and $1.6 million related to lease cancellation costs.
 
4.   Inventories
 
The Corporation’s inventories at September 30, 2010 and December 31, 2009 were:
 
                 
    September 30,
    December 31,
 
    2010     2009  
 
(In thousands)
               
Finished goods
  $ 117,034     $ 94,184  
Work-in-process
    26,831       22,933  
Raw materials
    99,336       92,151  
                 
Total inventories
  $ 243,201     $ 209,268  
                 
 
5.   Property, Plant and Equipment
 
The Corporation’s property, plant and equipment at September 30, 2010 and December 31, 2009 were:
 
                 
    September 30,
    December 31,
 
    2010     2009  
 
(In thousands)
               
Land
  $ 32,076     $ 23,111  
Building
    218,949       205,941  
Machinery and equipment
    730,842       714,303  
Construction-in-progress
    14,386       11,311  
                 
Property, plant and equipment, gross
    996,253       954,666  
Less: Accumulated depreciation
    683,077       657,846  
                 
Property, plant and equipment, net
  $ 313,176     $ 296,820  
                 
 
6.   Goodwill and Other Intangible Assets
 
The following table reflects activity for goodwill by segment during the third quarter of 2010:
 
                                 
    Quarter Ended September 30, 2010  
                Other —
       
    Balance at
          Primarily
    Balance at
 
    Beginning of
          Currency
    End of
 
    Period     Additions     Translation     Period  
 
(In thousands)
                               
Electrical
  $ 867,713     $      —     $ 9,296     $ 877,009  
Steel Structures
    64,759                   64,759  
HVAC
    607             59       666  
                                 
    $ 933,079     $     $ 9,355     $ 942,434  
                                 


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The following table reflects activity for goodwill by segment during the first nine months of 2010:
 
                                 
    Nine Months Ended September 30, 2010  
                Other —
       
    Balance at
          Primarily
    Balance at
 
    Beginning of
          Currency
    End of
 
    Period     Additions     Translation     Period  
 
(In thousands)
                               
Electrical
  $ 836,582     $ 39,838     $ 589     $ 877,009  
Steel Structures
    64,759                   64,759  
HVAC
    712             (46 )     666  
                                 
    $ 902,053     $ 39,838     $ 543     $ 942,434  
                                 
 
The following table reflects activity for other intangible assets during the third quarter of 2010:
 
                                         
    Quarter Ended September 30, 2010  
                      Other —
       
    Balance at
                Primarily
    Balance at
 
    Beginning of
          Amortization
    Currency
    End of
 
    Period     Additions     Expense     Translation     Period  
 
(In thousands)
                                       
Intangible assets subject to amortization
  $ 277,755     $      —     $     $ 4,857     $ 282,612  
Accumulated amortization
    (75,102 )           (7,619 )     (405 )     (83,126 )
                                         
      202,653             (7,619 )     4,452       199,486  
Other intangible assets not subject to amortization
    91,910                   1,541       93,451  
                                         
Total
  $ 294,563     $     $ (7,619 )   $ 5,993     $ 292,937  
                                         
 
The following table reflects activity for other intangible assets during the first nine months of 2010:
 
                                         
    Nine Months Ended September 30, 2010  
                      Other —
       
    Balance at
                Primarily
    Balance at
 
    Beginning of
          Amortization
    Currency
    End of
 
    Period     Additions     Expense     Translation     Period  
 
(In thousands)
                                       
Intangible assets subject to amortization
  $ 227,920     $ 54,902     $     $ (210 )   $ 282,612  
Accumulated amortization
    (61,112 )           (21,962 )     (52 )     (83,126 )
                                         
      166,808       54,902       (21,962 )     (262 )     199,486  
Other intangible assets not subject to amortization
    77,122       16,727             (398 )     93,451  
                                         
Total
  $ 243,930     $ 71,629     $ (21,962 )   $ (660 )   $ 292,937  
                                         


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7.   Income Taxes
 
The Corporation’s income tax provision for the third quarter of 2010 was $16.8 million, or an effective rate of 27.6% of pre-tax income, compared to a tax provision in the third quarter of 2009 of $12.9 million, or an effective rate of 28.7% of pre-tax income. The Corporation’s income tax provision for the nine months ended September 30, 2010 was $43.7 million, or an effective rate of 29.2% of pre-tax income, compared to a tax provision for the nine months ended September 30, 2009 of $33.8 million, or an effective rate of 29.5% of pre-tax income. The effective rate for the third quarter and first nine months of 2010 reflects the favorable impact of the release of a $1.5 million tax reserve assumed with the 2007 acquisition of Lamson & Sessions. This benefit to the effective rate for the first nine months of 2010 was partially offset by the first quarter $0.3 million non-cash income tax charge recorded as a result of the Health Care and Education Reconciliation Act which was signed into law during the first quarter of 2010. The first quarter charge relates to a reversal of deferred tax assets due to the elimination, beginning in 2013, of the non-taxable treatment for retiree drug subsidies the Corporation expects to receive from the U.S. government. The effective rate for each period also reflects benefits from the Puerto Rican manufacturing operations, which have a significantly lower effective tax rate than the Corporation’s blended statutory tax rate in other jurisdictions.
 
The Corporation had net deferred tax assets totaling $35.5 million as of September 30, 2010 and $51.1 million as of December 31, 2009. 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 September 30, 2010, will be sufficient to realize the recorded deferred tax assets, net of any valuation allowance.
 
8.   Comprehensive Income
 
Total comprehensive income and its components are as follows:
 
                                 
    Quarter Ended
    Nine Months Ended
 
    September 30,     September 30,  
    2010     2009     2010     2009  
 
(In thousands)
                               
Net earnings
  $ 44,104     $ 32,111     $ 105,657     $ 80,841  
Net unrealized gains (losses) on cash flow hedge, net of tax
    1,100       (374 )     1,829       4,934  
Foreign currency translation adjustments
    34,027       30,675       4,433       53,453  
Amortization of net prior service costs and net actuarial losses, net of tax
    2,104       2,984       6,766       8,991  
                                 
Comprehensive income
  $ 81,335     $ 65,396     $ 118,685     $ 148,219  
                                 
 
9.   Fair Value of Financial Instruments
 
The Corporation’s financial instruments include cash and cash equivalents, restricted cash, short-term receivables and payables and debt. Financial instruments also include an interest rate swap agreement, which is discussed further in Note 10 below. The carrying amounts of the Corporation’s financial instruments generally approximated their fair values at September 30, 2010 and December 31, 2009, except that, based on the borrowing rates available to the Corporation under current market conditions, the fair value of long-term debt (including current maturities) was approximately $664 million at September 30, 2010 and approximately $630 million at December 31, 2009.


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10.   Derivative Instruments
 
The Corporation is exposed to market risk from changes in interest rates, foreign exchange rates and raw material prices, among others. 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 Agreement
 
During 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 under its $750 million credit facility. The Corporation has designated the receive variable/pay fixed interest rate swap as a cash flow hedge for accounting purposes. Under the interest rate swap, the Corporation receives one-month London Interbank Offered Rate (“LIBOR”) and pays an underlying fixed rate of 4.86%. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the applicable periods during which the hedged transaction affects earnings. Gains or losses on the derivative representing hedge ineffectiveness are recognized in current period earnings.
 
The Corporation values the interest rate swap at fair value. Fair value is the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Measuring fair value involves 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 was reflected in the Corporation’s consolidated balance sheet in other long-term liabilities at its fair value of $25.7 million as of September 30, 2010 and $28.7 million as of December 31, 2009. This swap is measured at fair value at the end of each reporting period. The Corporation’s fair value estimate was determined using significant unobservable inputs and assumptions (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 is the income approach. Using inputs for current market expectations of LIBOR rates, Eurodollar futures prices, treasury yields and interest rate swap spreads, this approach compares the present value of a constructed zero coupon yield curve and the present value of an extrapolated forecast of future interest rates. This determined value is then reduced by a credit valuation adjustment that takes into effect the current credit risk of the interest rate swap counterparty or the Corporation, as applicable. The credit valuation adjustment (which was a reduction in the liability) was $0.2 million as of September 30, 2010.
 
The Corporation’s balance of accumulated other comprehensive income has been reduced by $15.8 million, net of tax of $9.7 million, as of September 30, 2010 and $17.6 million, net of tax of $10.8 million, as of December 31, 2009 to reflect the above interest rate swap liability.


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The following is a reconciliation associated with the interest rate swap of the fair value activity using Level 3 inputs during the third quarter and first nine months of 2010 and 2009:
 
                                 
    Quarter Ended     Nine Months Ended  
    September 30,
    September 30,
    September 30,
    September 30,
 
    2010     2009     2010     2009  
 
(In millions)
                               
Asset (liability) at beginning of period
  $ (27.5 )   $ (31.1 )   $ (28.7 )   $ (39.7 )
Total gains or losses (realized/unrealized):
                               
Included in earnings
    (4.6 )     (4.6 )     (13.6 )     (13.2 )
Included in other comprehensive income
    1.9       (0.6 )     3.0       8.1  
Settlements
    4.5       4.6       13.6       13.1  
                                 
Asset (liability) at end of period
  $ (25.7 )   $ (31.7 )   $ (25.7 )   $ (31.7 )
                                 
 
The ineffective portion of the swap reflected in interest expense, net during the third quarter and the first nine months of 2010 and 2009 was immaterial.
 
 
The Corporation had no outstanding forward sale or purchase contracts as of September 30, 2010 or December 31, 2009. The Corporation is exposed to the effects of changes in exchange rates primarily from the Canadian dollar and European currencies. From time to time, the Corporation utilizes forward foreign exchange contracts for the sale or purchase of foreign currencies to mitigate this risk.
 
 
During the first nine months of 2010 and 2009, 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 mitigate the price exposure to these commodities.


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11.   Debt
 
The Corporation’s long-term debt at September 30, 2010 and December 31, 2009 was:
 
                 
    September 30,
    December 31,
 
    2010     2009  
 
(In thousands)
               
Senior credit facility(a)
  $ 390,000     $ 390,000  
Unsecured notes:
               
5.625% Senior Notes due 2021, net of discount(b)
    248,232       248,014  
Other, including capital leases
    1,589       522  
                 
Long-term debt (including current maturities)
    639,821       638,536  
Less current maturities
    718       522  
                 
Long-term debt, net of current maturities
  $ 639,103     $ 638,014  
                 
 
(a) Interest is paid monthly.
 
(b) Interest is paid semi-annually.
 
As of September 30, 2010 and December 31, 2009, the Corporation had outstanding $250 million of 5.625% Senior Notes due 2021. 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 has a revolving credit facility with total availability of $750 million and 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. At September 30, 2010 and December 31, 2009, $390 million was outstanding under this facility.
 
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 revolving credit facility requires that it maintain:
 
  •  a maximum leverage ratio of 3.75 to 1.00; 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.
 
Outstanding letters of credit, which reduced availability under the credit facility, amounted to $25.0 million at September 30, 2010. The letters of credit relate primarily to third-party insurance claims processing.
 
The Corporation has a EUR 10.0 million (approximately US$13.5 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


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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 September 30, 2010 and December 31, 2009. Outstanding letters of credit, which reduced availability under the European facility, amounted to EUR 0.6 million (approximately US$0.9 million) at September 30, 2010.
 
The Corporation has a CAN 30.0 million (approximately US$29.3 million) committed revolving credit facility with a Canadian bank. The Corporation pays an annual commitment fee of 12.5 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 matures in June 2011, and no borrowings were outstanding as of September 30, 2010 and December 31, 2009.
 
As of September 30, 2010, the Corporation’s aggregate availability of funds under its credit facilities is $376.9 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.
 
As of September 30, 2010, 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 $2.7 million of such additional letters of credit that relate primarily to environmental assurances, third-party insurance claims processing, performance guarantees and acquisition obligations.
 
12.   Share-Based Payment Arrangements
 
Share-based compensation expense, net of tax, of $1.4 million was charged against income during the third quarter of 2010 and $1.6 million was charged against income during the third quarter of 2009. The Corporation also had 35,744 stock options exercised at a weighted average exercise price of $21.50 per share and had 38,998 stock options forfeited or expired during the third quarter of 2010.
 
Share-based compensation expense, net of tax, of $5.4 million was charged against income during the first nine months of 2010 and $5.5 million was charged against income during the first nine months of 2009. During the first nine months of 2010, the Corporation granted 7,268 stock options with a weighted average exercise price of $39.84 per share and an average grant date fair value of $15.39 per share. The Corporation also had 253,074 stock options exercised at a weighted average exercise price of $20.39 per share and had 64,700 stock options forfeited or expired during the first nine months of 2010.
 
The first nine months of both 2010 and 2009 include compensation expense, net of tax, of $0.3 million, which was charged to selling, general and administrative expense as of the grant date for stock awards under the Corporation’s Non-Employee Directors Equity Compensation Plan. During the first nine months of 2010, the Corporation granted non-employee members of the Board of Directors a total of 11,061 shares of common stock with a weighted average grant date fair value of $40.68.


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13.   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  
    September 30,
    September 30,
    September 30,
    September 30,
 
    2010     2009     2010     2009  
 
(In thousands)
                               
Service cost
  $ 2,768     $ 3,062     $ 2     $ 1  
Interest cost
    7,315       7,457       229       310  
Expected return on plan assets
    (8,298 )     (6,595 )            
Plan net loss (gain)
    3,094       3,776       (31 )     (35 )
Prior service cost (gain)
    283       277       (63 )     (63 )
Transition obligation (asset)
    (4 )     (3 )     192       192  
Curtailment and settlement loss
                       
                                 
Net periodic benefit cost
  $ 5,158     $ 7,974     $ 329     $ 405  
                                 
 
                                 
    Nine Month Ended  
          Other
 
          Postretirement
 
    Pension Benefits     Benefits  
    September 30,
    September 30,
    September 30,
    September 30,
 
    2010     2009     2010     2009  
 
(In thousands)
                               
Service cost
  $ 8,045     $ 9,186     $ 4     $ 4  
Interest cost
    21,745       22,370       688       929  
Expected return on plan assets
    (24,692 )     (19,785 )            
Plan net loss (gain)
    9,248       11,327       (93 )     (104 )
Prior service cost (gain)
    847       830       (189 )     (189 )
Transition obligation (asset)
    (12 )     (8 )     575       575  
Curtailment and settlement loss
    1,213       1,300              
                                 
Net periodic benefit cost
  $ 16,394     $ 25,220     $ 985     $ 1,215  
                                 
 
Contributions to our qualified pension plans during the nine months ended September 30, 2010 and 2009 were not significant. We expect required contributions to our qualified pension plans during the remainder of 2010 to be minimal.
 
14.   Segment Disclosures
 
The Corporation has three reportable segments:  Electrical, Steel Structures and HVAC. 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 items. Corporate expense includes legal, finance and administrative costs. The Corporation has no material inter-segment sales.


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The Electrical segment designs, manufactures and markets thousands of essential components used to manage the connection, distribution, transmission and reliability of electrical products in industrial, construction and utility applications. The Steel Structures segment designs, manufactures and markets highly engineered tubular steel transmission structures. The HVAC segment designs, manufactures and markets heating and ventilation products for commercial and industrial buildings. The Corporation’s U.S. Electrical and International Electrical operating segments have been aggregated in the Electrical reporting segment since they have similar economic characteristics as well as similar products and services, production processes, types of customers and methods used for distributing their products.
 
                                 
    Quarter Ended
    Nine Months Ended
 
    September 30,     September 30,  
    2010     2009     2010     2009  
 
(In thousands)
                               
Net Sales
                               
Electrical
  $ 453,905     $ 410,872     $ 1,280,991     $ 1,163,062  
Steel Structures
    57,232       50,922       166,753       167,817  
HVAC
    21,829       23,281       69,330       75,027  
                                 
Total
  $ 532,966     $ 485,075     $ 1,517,074     $ 1,405,906  
                                 
Segment Earnings
                               
Electrical
  $ 92,259     $ 78,267     $ 246,007     $ 194,480  
Steel Structures
    11,092       10,082       29,027       36,630  
HVAC
    2,868       3,221       9,466       11,505  
                                 
Segment earnings
    106,219       91,570       284,500       242,615  
Corporate expense
    (12,615 )     (14,908 )     (40,205 )     (37,916 )
Depreciation, amortization expense and share-based compensation expense
    (22,686 )     (21,029 )     (68,761 )     (65,363 )
Interest expense, net
    (9,042 )     (8,478 )     (26,315 )     (26,317 )
Other (expense) income, net
    (975 )     (2,101 )     90       1,649  
                                 
Earnings before income taxes
  $ 60,901     $ 45,054     $ 149,309     $ 114,668  
                                 
 
15.   Contingencies
 
 
The Corporation is 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 or 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 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 and do not reflect possible recovery from insurance companies or other parties. 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.


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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
    Nine Months Ended
 
    September 30,     September 30,  
    2010     2009     2010     2009  
 
(In thousands)
                               
Balance at beginning of period
  $ 2,798     $ 3,032     $ 3,064     $ 3,112  
Liabilities accrued for warranties issued during the period
    404       270       1,141       1,027  
Deductions for warranty claims paid during the period
    (453 )     (325 )     (1,471 )     (1,076 )
Changes in liability for pre-existing warranties during the period, including expirations
    10       (35 )     25       (121 )
                                 
Balance at end of period
  $ 2,759     $ 2,942     $ 2,759     $ 2,942  
                                 
 
The Corporation also continues to monitor events that are subject to 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 at fair value when those losses are estimable.
 
16.   Share Repurchase Plan
 
In 2008, our Board of Directors approved a share repurchase plan that authorized us to buy up to 5,000,000 of our common shares. In 2008, the Corporation repurchased, with available cash resources, 2,425,000 common shares through open-market transactions. During 2009, the Corporation repurchased, with available cash resources, 1,000,000 common shares through open-market transactions, including 500,000 shares during the third quarter of 2009. The Corporation repurchased, with available cash resources, 500,000 common shares through open-market transactions during the third quarter of 2010 and 1,075,000 during the first nine months of 2010. This authorization expired on October 22, 2010.
 
In September 2010, the Corporation’s Board of Directors approved a share repurchase plan that authorizes the Corporation to buy up to 3,000,000 of its common shares. The Corporation has not repurchased any shares under this plan during the third quarter. The timing of future repurchases, if any, will depend upon a variety of factors, including market conditions. This authorization expires on December 31, 2012.


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17.   Subsequent Events
 
On October 1, 2010, the Corporation acquired Cable Management Group, Ltd. (“CMG”), a leading global manufacturer of cable protection systems specified in industrial, infrastructure, and construction applications, for £70 million (approximately $110 million). CMG manufactures a broad range of metallic and non-metallic flexible conduit and fitting systems used to protect critical power and data systems from fire, dust, moisture, vibration and corrosion.
 
Management performed an evaluation of the Corporation’s activities through the time of filing this Quarterly Report on Form 10-Q and has concluded that, other than the CMG acquisition discussed above, there are no significant subsequent events requiring recognition or disclosure in these consolidated financial statements.


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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
Thomas & Betts Corporation is a leading designer and manufacturer of essential components used to manage the connection, distribution, transmission and reliability of electrical products in industrial, construction and utility applications. We are also a leading producer of commercial heating and ventilation units used in commercial and industrial buildings and highly engineered steel structures used for utility transmission. We have operations in approximately 20 countries. Manufacturing, marketing and sales activities are concentrated primarily in North America and Europe.
 
 
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 on Form 10-K for the fiscal year ended December 31, 2009. We believe our critical accounting policies include the following:
 
  •  Revenue Recognition:  We recognize 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. We recognize revenue for service agreements over the applicable service periods. Sales discounts, quantity and price rebates, and allowances are estimated based on contractual commitments and experience and recorded as a reduction of revenue in the period 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 our 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. A number of distributors, primarily in our 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. We analyze historical returns and allowances, current economic trends and specific customer circumstances when evaluating the adequacy of accounts receivable related reserves and accruals. We provide allowances for doubtful accounts when credit losses are both probable and estimable.
 
  •  Inventory Valuation:  Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. To ensure inventories are carried at the lower of cost or market, we periodically evaluate the carrying value of our inventories. We also periodically perform 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 history and forecasts for particular product groupings, planned dispositions of product lines and overall industry trends.
 
  •  Goodwill and Other Intangible Assets:  We apply the acquisition (purchase) method of accounting for all business combinations. Under this method, all assets and liabilities acquired in a business combination, including goodwill, indefinite-lived intangibles and other intangibles, are recorded at fair value. The initial recording of goodwill and other intangibles


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  requires subjective judgments concerning estimates of the fair value of the acquired assets and liabilities. Goodwill consists principally of the excess of cost over the fair value of net assets acquired in business combinations and is not amortized. For each amortizable intangible asset, we use a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are consumed. If that pattern cannot be reliably determined, the straight-line amortization method is used. We perform an annual impairment test of goodwill and indefinite-lived intangible assets. We perform our annual impairment assessment as of the beginning of the fourth quarter of each year, unless circumstances dictate more frequent interim assessments. In evaluating when an interim assessment of goodwill is necessary, we consider, among other things, the trading level of our common stock, changes in expected future cash flows and mergers and acquisitions involving companies in our industry. In evaluating when an interim assessment of indefinite-lived intangible assets is necessary, we review for significant events or significant changes in circumstances. Our evaluation process did not result in an interim assessment of goodwill or long-lived intangible assets for recoverability for the quarter ended September 30, 2010.
 
In conjunction with each test of goodwill we determine the fair value of each reporting unit and compare the fair value to the reporting unit’s carrying amount. A reporting unit is defined as an operating segment or one level below an operating segment. 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. The fair values derived from these three valuation methods are then weighted to arrive at a single value for each reporting unit. Relative weights assigned to the three methods are based upon the availability, relevance and reliability of the underlying data. We then reconcile the total values for all reporting units to our market capitalization and evaluate the reasonableness of the implied control premium.
 
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 we 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.
 
Methods used to determine fair values for indefinite-lived intangible assets involve customary valuation techniques that are applicable to the particular class of intangible asset and apply inputs and assumptions that we believe a market participant would use.
 
  •  Long-Lived Assets:  We review long-lived assets to be held-and-used for impairment 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. For purposes of recognizing and measuring impairment of long-lived assets, we evaluate assets at the lowest level of identifiable cash flows for associated product groups. 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,


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  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 dispose.
 
  •  Pension and Other Postretirement Benefit Plan Actuarial Assumptions:  We recognize the overfunded or underfunded status of benefit plans in our consolidated balance sheets. For purposes of calculating pension and postretirement medical benefit obligations and related costs, we use certain actuarial assumptions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/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 requires an evaluation of asset realizability based on a more-likely-than-not criteria. We have 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 our ability to generate sufficient future taxable income. We believe that it is more-likely-than-not that future taxable income, based on enacted tax laws in effect as of September 30, 2010, 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 currently 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.


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Summary of Consolidated Results
 
                                 
    Quarter Ended September 30,  
    2010     2009  
          % of Net
          % of Net
 
    In Thousands     Sales     In Thousands     Sales  
 
Net sales
  $ 532,966       100.0     $ 485,075       100.0  
Cost of sales
    363,276       68.2       337,485       69.6  
                                 
Gross profit
    169,690       31.8       147,590       30.4  
Selling, general and administrative
    98,772       18.5       91,957       18.9  
                                 
Earnings from operations
    70,918       13.3       55,633       11.5  
Interest expense, net
    (9,042 )     (1.7 )     (8,478 )     (1.8 )
Other (expense) income, net
    (975 )     (0.2 )     (2,101 )     (0.4 )
                                 
Earnings before income taxes
    60,901       11.4       45,054       9.3  
Income tax provision
    16,797       3.1       12,943       2.7  
                                 
Net earnings
  $ 44,104       8.3     $ 32,111       6.6  
                                 
Earnings per share:
                               
Basic
  $ 0.85             $ 0.62          
                                 
Diluted
  $ 0.84             $ 0.61          
                                 
 
                                 
    Nine Months Ended September 30,  
    2010     2009  
          % of Net
          % of Net
 
    In Thousands     Sales     In Thousands     Sales  
 
Net sales
  $ 1,517,074       100.0     $ 1,405,906       100.0  
Cost of sales
    1,047,743       69.1       988,965       70.3  
                                 
Gross profit
    469,331       30.9       416,941       29.7  
Selling, general and administrative
    293,797       19.3       277,605       19.8  
                                 
Earnings from operations
    175,534       11.6       139,336       9.9  
Interest expense, net
    (26,315 )     (1.8 )     (26,317 )     (1.8 )
Other (expense) income, net
    90       0.0       1,649       0.1  
                                 
Earnings before income taxes
    149,309       9.8       114,668       8.2  
Income tax provision
    43,652       2.8       33,827       2.4  
                                 
Net earnings
  $ 105,657       7.0     $ 80,841       5.8  
                                 
Earnings per share:
                               
Basic
  $ 2.04             $ 1.54          
                                 
Diluted
  $ 2.00             $ 1.53          
                                 
 
2010 Compared with 2009
 
 
Net sales in the third quarter and the first nine months of 2010 increased from the respective prior-year periods reflecting the positive impact of first quarter and second quarter acquisitions of JT Packard & Associates, Inc. and PMA AG, respectively, and higher sales volumes in the Electrical segment and Steel Structures segment. The increased sales volumes for the Steel Structures segment


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were largely offset by lower selling prices reflecting lower steel commodity costs and more competitive market conditions.
 
Earnings from operations in the third quarter and first nine months of 2010 increased from the respective prior-year periods, both in dollars and as a percent of sales. These improvements reflect current year acquisitions, higher sales volumes, previous actions to manage costs, headcount and capacity as well as the impact of a weaker U.S. dollar. Results in the first nine months of 2010 included a pre-tax charge of $5.3 million ($0.06 per share) in the second quarter for environmental remediation and pre-tax charges of $3.2 million ($0.04 per share) in the first quarter for facility consolidations related to our Electrical segment. The third quarter and first nine months of 2009 included a pre-tax charge of $4.0 million ($0.05 per share) for environmental remediation.
 
Net earnings in the third quarter of 2010 were $44.1 million, or $0.84 per diluted share, compared to $32.1 million, or $0.61 per diluted share, in the prior-year period. Net earnings in the first nine months of 2010 were $105.7 million, or $2.00 per diluted share, compared to $80.8 million, or $1.53 per diluted share, in the prior-year period. The third quarter and first nine months of 2010 included the favorable impact of the release of a $1.5 million ($0.03 per share) tax reserve.
 
 
Net sales in the third quarter of 2010 were $533.0 million, up $47.9 million, or 9.9%, from the prior-year period and included approximately $28 million from acquisitions. For the first nine months of 2010, net sales were $1.5 billion, up $111.2 million, or 7.9%, from the prior-year period and included approximately $63 million from acquisitions. The year-over-year sales increases also reflect higher sales volumes in our Electrical and Steel Structures segments. The increased sales volumes for the Steel Structures segment were largely offset as a result of lower steel commodity costs and more competitive market conditions. Foreign currency exchange positively impacted sales by approximately $2 million in the third quarter of 2010 and approximately $35 million in the first nine months of 2010 when compared to the corresponding prior-year periods. This positive impact reflects a weaker U.S. dollar in the current year.
 
Gross profit in the third quarter of 2010 was $169.7 million, or 31.8% of net sales, compared to $147.6 million, or 30.4% of net sales, in the third quarter of 2009. Gross profit in the first nine months of 2010 was $469.3 million, or 30.9% of net sales, compared to $416.9 million, or 29.7% of net sales, in the first nine months of 2009. The year-over-year increases in gross margin for both the third quarter and first nine months of 2010 reflect the positive impact from the current year acquisitions, higher production volumes, continued pricing discipline, improved product mix and previous actions taken to manage costs, headcount and capacity.
 
 
Selling, general and administrative (“SG&A”) expense in the third quarter of 2010 was $98.8 million, or 18.5% of net sales, compared to $92.0 million, or 18.9% of net sales, in the prior-year period. SG&A expense in the first nine months of 2010 was $293.8 million, or 19.3% of net sales, compared to $277.6 million, or 19.8% of net sales, in the prior-year period. The first nine months of 2010 reflect a second quarter pre-tax $5.3 million environmental remediation charge. The third quarter and first nine months of 2009 reflect a pre-tax $4.0 million environmental remediation charge. SG&A as a percent of sales in the current year periods reflects our continued overall efforts to tightly manage expenses, lower year-over-year pension costs, and increased costs as a result of current year acquisitions.


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The effective tax rate in the third quarter of 2010 was 27.6% compared to 28.7% in the third quarter of 2009. The effective tax rate for the first nine months of 2010 was 29.2% compared to 29.5% in the first nine months of 2009. The decreased effective rate for the third quarter and first nine months of 2010 reflects the favorable impact of the release of a $1.5 million tax reserve assumed with the 2007 acquisition of Lamson & Sessions. This benefit to the effective rate for the first nine months of 2010 was partially offset by a non-cash income tax charge during the first quarter of 2010 of $0.3 million related to the impact of the Health Care and Education Reconciliation Act, which was signed into law during the first quarter of 2010. The first quarter charge relates to a reversal of deferred tax assets due to the elimination, beginning in 2013, of the non-taxable treatment for retiree drug subsidies the Corporation expects to receive from the U.S. government. The effective rate for both years also reflects benefits from our Puerto Rican manufacturing operations.
 
 
Net earnings in the third quarter of 2010 were $44.1 million, or $0.84 per diluted share, compared to $32.1 million, or $0.61 per diluted share, in the prior-year period. Net earnings in the first nine months of 2010 were $105.7 million, or $2.00 per diluted share, compared to $80.8 million, or $1.53 per diluted share, in the prior-year period. The third quarter and first nine months of 2010 included the favorable impact of the release of a $1.5 million ($0.03 per share) tax reserve. The nine months ended September 30, 2010 included a pre-tax $5.3 million ($0.06 per share) environmental remediation charge and $3.2 million ($0.04 per share) of first quarter, pre-tax charges related to facility consolidation. The three and nine months ended September 30, 2009 included a pre-tax $4.0 million ($0.05 per share) environmental remediation charge.


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Summary of Segment Results
 
 
                                                                 
    Quarter Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    In
    % of Net
    In
    % of Net
    In
    % of Net
    In
    % of Net
 
    Thousands     Sales     Thousands     Sales     Thousands     Sales     Thousands     Sales  
 
Electrical
  $ 453,905       85.2     $ 410,872       84.7     $ 1,280,991       84.4     $ 1,163,062       82.7  
Steel Structures
    57,232       10.7       50,922       10.5       166,753       11.0       167,817       12.0  
HVAC
    21,829       4.1       23,281       4.8       69,330       4.6       75,027       5.3  
                                                                 
    $ 532,966       100.0     $ 485,075       100.0     $ 1,517,074       100.0     $ 1,405,906       100.0  
                                                                 
 
 
                                                                 
    Quarter Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    In
    % of Net
    In
    % of Net
    In
    % of Net
    In
    % of Net
 
    Thousands     Sales     Thousands     Sales     Thousands     Sales     Thousands     Sales  
 
Electrical
  $ 92,259       20.3     $ 78,267       19.0     $ 246,007       19.2     $ 194,480       16.7  
Steel Structures
    11,092       19.4       10,082       19.8       29,027       17.4       36,630       21.8  
HVAC
    2,868       13.1       3,221       13.8       9,466       13.7       11,505       15.3  
                                                                 
Segment earnings
    106,219       19.9       91,570       18.9       284,500       18.8       242,615       17.3  
Corporate expense
    (12,615 )             (14,908 )             (40,205 )             (37,916 )        
Depreciation, amortization expense and share-based compensation expense
    (22,686 )             (21,029 )             (68,761 )             (65,363 )        
Interest expense, net
    (9,042 )             (8,478 )             (26,315 )             (26,317 )        
Other (expense) income, net
    (975 )             (2,101 )             90               1,649          
                                                                 
Earnings before income taxes
  $ 60,901             $ 45,054             $ 149,309             $ 114,668          
                                                                 
 
We have three reportable segments: Electrical, Steel Structures and HVAC. 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 items.
 
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 the periods presented.
 
 
Electrical segment net sales in the third quarter of 2010 were $453.9 million, up $43.0 million, or 10.5%, from the third quarter of 2009. Electrical segment net sales in the first nine months of 2010 were $1.3 billion, up $117.9 million, or 10.1%, from the prior-year period. Current year acquisitions contributed net sales of approximately $28 million during the third quarter of 2010 and approximately $63 million during the first nine months of 2010. Increased volumes also positively impacted year-over-year sales in both periods and reflect improved global industrial and utility distribution demand, partially offset by weaker construction demand. The weaker U.S. dollar had a negligible positive impact on year-over-year third quarter 2010 net sales but positively impacted net


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sales for the first nine months of 2010 by approximately $36 million versus the corresponding prior-year period. In contrast to the prior year, during 2010 the Electrical segment has experienced a more traditional seasonal increase in sales during the second and third quarters reflecting the construction season and expects a more traditional seasonal decrease in sales from the third quarter to the fourth quarter of 2010.
 
Electrical segment earnings in the third quarter of 2010 were $92.3 million, up $14.0 million, or 17.9%, from the third quarter of 2009. Electrical segment earnings in the first nine months of 2010 were $246.0 million, up $51.5 million, or 26.5%, from the prior-year period. The increase in year-over-year segment earnings compared to both prior-year periods reflects the contribution from current year acquisitions, increased production volumes, continued discipline around pricing, the weaker U.S. dollar and previous actions taken to manage costs, headcount and capacity. The first nine months of 2010 also reflect first quarter pre-tax charges of $3.2 million for facility consolidations.
 
 
Net sales in the third quarter of 2010 in our Steel Structures segment were $57.2 million, up $6.3 million, or 12.4%, from the third quarter of 2009 and increased slightly in the first nine months of 2010, compared to the prior-year period, to $166.8 million. Net sales increases over the corresponding prior-year periods reflect the positive impact of higher volumes, which were largely offset by the negative price impact from lower year-over-year plate steel costs and more competitive market conditions. Segment earnings in the third quarter of 2010 were $11.1 million, up $1.0 million, or 10.0%, from the third quarter of 2009. Segment earnings in the first nine months of 2010 were $29.0 million, down $7.6 million, or 20.8%, compared to the unusually strong earnings performance in the prior-year. Segment earnings in the third quarter of 2010 reflect a favorable project mix which is expected to moderate in the fourth quarter of 2010.
 
 
Net sales in the third quarter of 2010 in our HVAC segment were $21.8 million, down $1.5 million, or 6.2%, from the third quarter of 2009. Net sales in the first nine months of 2010 in our HVAC segment were $69.3 million, down $5.7 million, or 7.6%, from the prior-year period. HVAC segment earnings in the third quarter of 2010 were $2.9 million, down $0.4 million, or 11.0%, from the third quarter of 2009. HVAC segment earnings in the first nine months of 2010 were $9.5 million, down $2.0 million, or 17.7%, from the prior-year period. The year-over-year sales and earnings declines for both of the current year periods reflect lower sales volumes resulting from weak commercial construction markets.
 
Liquidity and Capital Resources
 
We had cash and cash equivalents of $435.2 million and $478.6 million at September 30, 2010 and December 31, 2009, respectively.


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The following table reflects the primary category totals in our Consolidated Statements of Cash Flows:
 
                 
    Nine Months Ended
 
    September 30,  
    2010     2009  
 
(In thousands)
               
Net cash provided by (used in) operating activities
  $ 144,920     $ 145,427  
Net cash provided by (used in) investing activities
    (121,126 )     (26,243 )
Net cash provided by (used in) financing activities
    (72,841 )     (77,725 )
Effect of exchange-rate changes on cash
    5,655       23,476  
                 
Net increase (decrease) in cash and cash equivalents
  $ (43,392 )   $ 64,935  
                 
 
 
Cash provided by operating activities in the first nine months of 2010 was primarily attributable to net earnings of $105.7 million. The first nine months of 2010 included depreciation and amortization of $60.0 million and share-based compensation expense of $8.7 million. Net changes in working capital (accounts receivable, inventories and accounts payable), which negatively impacted cash in the first nine months of 2010, were partially offset by higher accrued liabilities, including benefit plan liabilities, and income taxes payable.
 
Cash provided by operating activities in the first nine months of 2009 was primarily attributable to net earnings of $80.8 million. The first nine months of 2009 included depreciation and amortization of $56.4 million and share-based compensation expense of $8.9 million. Changes in working capital (accounts receivable, inventories and accounts payable) as well as accrued liabilities, including benefit plan liabilities, negatively impacted cash in the first nine months of 2009.
 
 
Investing activities in the first nine months of 2010 included approximately $78 million to acquire PMA (cash portion of the purchase price) and approximately $21 million to acquire JT Packard. During the first nine months of 2010, we had capital expenditures to support our ongoing business plans totaling $22.3 million. Investing activities in the first nine months of 2009 included capital expenditures to support our ongoing business plans totaling $32.3 million. We expect capital expenditures to be in the $40-$45 million range for the full year 2010.
 
 
Financing activities in the first nine months of 2010 primarily included the repurchase of 1,075,000 common shares for $42.9 million and repayment of approximately $36 million to retire debt assumed as part of the PMA acquisition.
 
Financing activities in the first nine months of 2009 primarily included the repurchase of 1,000,000 common shares for $24.9 million and repayments of $148.3 million of debt using a combination of cash and $125.0 million in borrowings under our $750 million revolving credit facility. Net proceeds from borrowings under our revolving credit facility were $95.0 million in the first nine months of 2009.


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Our revolving credit facility has total availability of $750 million and 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. At September 30, 2010 and December 31, 2009, $390 million was outstanding under this facility.
 
In 2007, we entered into an interest rate swap to hedge our exposure to changes in the London Interbank Offered Rate (“LIBOR”) rate on $390 million of borrowings under this facility. See Item 3. “Quantitative and Qualitative Disclosures about Market Risk”.
 
Our revolving credit facility requires that we maintain:
 
  •  a maximum leverage ratio of 3.75 to 1.00; 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.
 
Outstanding letters of credit, which reduced availability under the credit facility, amounted to $25.0 million at September 30, 2010. The letters of credit relate primarily to third-party insurance claims processing.
 
 
We have a EUR 10.0 million (approximately US$13.5 million) committed revolving credit facility with a European bank that has an indefinite maturity. Outstanding letters of credit, which reduced availability under the European facility, amounted to EUR 0.6 million (approximately US$0.9 million) at September 30, 2010. 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.
 
We have a CAN 30.0 million (approximately US$29.3 million) committed revolving credit facility with a Canadian bank that matures in June 2011. There were no balances outstanding or letters of credit that reduced availability under the Canadian facility at September 30, 2010. 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.
 
 
As of September 30, 2010, we also had letters of credit in addition to those discussed above that do not reduce availability under our credit facilities. We had $2.7 million of such additional letters of credit that relate primarily to environmental assurances, third-party insurance claims processing, performance guarantees and acquisition obligations.
 
 
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


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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 obtaining immediate credit availability to repay the accelerated obligations and in obtaining credit facilities in the future. As of September 30, 2010, the aggregate availability of funds under our credit facilities is $376.9 million, after deducting outstanding letters of credit. Availability is subject to the satisfaction of various covenants and conditions to borrowing.
 
 
As of September 30, 2010, we had investment grade credit ratings from Standard & Poor’s (BBB rating), Moody’s Investor Service (Baa2 rating) and Fitch Ratings (BBB rating) 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.
 
Fees to access the $750 million credit facility and letters of credit under the facility are based on a pricing grid related to our debt ratings with Moody’s, S&P, and Fitch during the term of the facility.
 
 
Thomas & Betts had the following unsecured debt securities outstanding as of September 30, 2010:
 
                                 
Issue Date   Amount     Interest Rate     Interest Payable     Maturity Date  
 
November 2009
  $ 250.0 million       5.625 %     May 15 and November 15       November 2021  
 
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.
 
 
Contributions to our qualified pension plans during the first nine months of 2010 were not significant. We expect required contributions to our qualified pension plans in 2010 to be minimal.
 
Acquisitions
 
In late January 2010, we used existing cash resources to acquire JT Packard & Associates, Inc., the nation’s largest independent service provider for critical power equipment used by industrial and commercial enterprises in a broad array of markets, for approximately $21 million.
 
On April 1, 2010, we used existing cash resources to acquire PMA AG, a leading European manufacturer of technologically advanced cable protection systems, for approximately $114 million including cash used in the acquisition of approximately $78 million and cash used to retire debt assumed of approximately $36 million.
 
 
In 2008, our Board of Directors approved a share repurchase plan that authorized us to buy up to 5,000,000 of our common shares. In 2008, we repurchased, with available cash resources,


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2,425,000 common shares through open-market transactions. During 2009, we repurchased, with available cash resources, 1,000,000 common shares through open-market transactions, including 500,000 shares during the third quarter of 2009. We repurchased, with available cash resources, 500,000 common shares through open-market transactions during the third quarter of 2010 and 1,075,000 during the first nine months of 2010. This authorization expired on October 22, 2010.
 
In September 2010, the Corporation’s Board of Directors approved a share repurchase plan that authorizes the Corporation to buy up to 3,000,000 of its common shares. The Corporation has not repurchased any shares under this plan during the third quarter. The timing of future repurchases, if any, will depend upon a variety of factors, including market conditions. This authorization expires December 31, 2012.
 
We do not currently pay cash dividends. Future decisions concerning the payment of cash dividends on our common stock will depend upon our results of operations, financial condition, strategic investment opportunities, continued compliance with credit facilities and other factors that the Board of Directors may consider relevant.
 
As of September 30, 2010, we have $435.2 million in cash and cash equivalents and $376.9 million of aggregate availability under our credit facilities. We filed a universal shelf registration statement with the Securities and Exchange Commission on December 3, 2008, utilizing the well-known seasoned issuer (WKSI) process. The registration statement permits us to issue common stock, preferred stock and debt securities. The registration statement is effective for a period of three years from the date of filing. We continue to have cash requirements to, among other things, support working capital and capital expenditure needs, service debt and fund our retirement plans as required. We generally intend to use available cash and internally generated funds to meet these cash requirements in addition to pursuing longer-term strategic initiatives such as acquisitions and may borrow under existing credit facilities or access the capital markets as needed for liquidity. Though improved from levels seen early in 2009, credit markets remain tight with limited availability of credit in select market sectors. Our ability to satisfy our liquidity requirements has not been adversely affected by the volatility in the credit markets. We believe that we have sufficient liquidity to satisfy both short-term and long-term requirements.
 
 
As of September 30, 2010, we did not have any off-balance sheet arrangements.
 
Refer to Note 15 in the Notes to Consolidated Financial Statements for information regarding our guarantee and indemnification arrangements.


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Item 3.   Quantitative and Qualitative Disclosures About Market Risk
 
 
Thomas & Betts is exposed to market risk from changes in interest rates, foreign exchange rates and raw material prices, among others. 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 covered by this report, we have not experienced any material changes since December 31, 2009 in market risk that affect the quantitative and qualitative disclosures presented in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2009 Annual Report on Form 10-K.
 
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 these controls and procedures are effective.
 
(b)   Changes in Internal Control over Financial Reporting
 
There have been no significant changes in internal control over financial reporting that occurred during the quarter covered by this report that have materially affected or are reasonably likely to materially affect the Corporation’s internal control over financial reporting.


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Item 1.   Legal Proceedings
 
See Note 15, “Contingencies,” in the Notes to Consolidated Financial Statements, which is incorporated herein by reference. See also Item 3. “Legal Proceedings,” in our 2009 Annual Report on Form 10-K, which is incorporated herein by reference.
 
Item 1A.   Risk Factors
 
There have been no material changes from the risk factors as previously set forth in our 2009 Annual Report on Form 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 quarter ended September 30, 2010:
 
 
                                 
                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  
 
October 2008 Plan (5,000,000 common shares authorized)
                               
September 7, 2010 to September 16, 2010
    500,000     $ 40.53       500,000       500,000 (a)
                                 
Total for the quarter ended September 30, 2010
    500,000     $ 40.53       500,000       500,000 (a)
                                 
                                 
September 2010 Plan (3,000,000 common shares authorized)
                               
Total for the quarter ended September 30, 2010
        $             3,000,000  
                                 
 
(a) This authorization expired on October 22, 2010.
 
Item 6.   Exhibits
 
The Exhibit Index that follows the signature page of this Report is incorporated herein by reference.


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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Thomas & Betts Corporation
(Registrant)
 
  By: 
/s/  William E. Weaver, Jr.
William E. Weaver, Jr.
Senior Vice President and
Chief Financial Officer
(principal financial officer)
 
Date: October 29, 2010


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Exhibit No.   Description of Exhibit
 
  10 .1   The Thomas & Betts Supplemental Executive Investment Plan as amended and restated effective September 1, 2010 (Filed as an Exhibit to the Registrant’s Current Report on Form 8-K dated September 1, 2010 and incorporated herein by reference)
  12     Statement re Computation of Ratio of Earnings to Fixed Charges
  31 .1   Certification of Principal Executive Officer Under Securities Exchange Act Rules 13a-14(a) or 15d-14(a)
  31 .2   Certification of Principal Financial Officer Under Securities Exchange Act Rules 13a-14(a) or 15d-14(a)
  32 .1   Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) or Rule 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 to Rule 13a-14(b) or Rule 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
  101 *   Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statements of Operations for the Quarter and Nine months Ended September 30, 2010 and 2009, (ii) the Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009, (iii) the Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2010 and 2009 and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text
 
* Pursuant to Rule 406T of Regulation S-T, the interactive data included in Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections


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