ITEM 1. DESCRIPTION OF BUSINESS (Items either not applicable or not material have been excluded.)
(a),(c) GENERAL DEVELOPMENT AND NARRATIVE DESCRIPTION OF BUSINESS
Thomas & Betts Corporation and its subsidiaries (the "Corporation") design, manufacture and market, on a global basis, electrical and electronic connectors and components as well as other related products and accessories, with manufacturing facilities and marketing activities in North America, Europe and the Far East. The Corporation's products are sold worldwide through electrical, electronic and HVAC distributors, mass merchandisers, catalogs and home centers, and directly to original equipment manufacturer ("OEM") markets. No one of the Corporation's end users or distributors accounted for more than 6% of the Corporation's 1996 net sales. The Corporation is a worldwide designer and manufacturer of a broad range of electromechanical components and subsystems that provide solutions for the automotive, communication and information industries in North America, Europe and the Far East. The Corporation is also one of the largest manufacturers in North America of electrical connectors and accessories for industrial, commercial and residential construction, renovation and maintenance applications, and is a leading supplier of transmission poles, towers and roadway lighting products to the utility and telecommunications industries and of products and components to the heating, mechanical and refrigeration markets in North America and Europe.
The Corporation operates in three business segments. Electrical Construction and Maintenance Components are sold primarily in North America, and manufactured and assembled at facilities located in the United States, Puerto Rico, Canada and Mexico. Electronic/OEM Components are sold in North America, Europe and the Far East, and manufactured at facilities in the United States, Europe, Mexico, Japan and Singapore. Other Products and Components principally heaters, heating/ventilation systems, components for transmission and distribution of electric power, utility poles and transmission towers, and telecommunications products are sold primarily in North America and Europe, and manufactured in the United States, Europe and Mexico.
Thomas & Betts' objective is to continue to achieve profitable growth by offering its distributors and its OEM and end-user customers a broad family of high-quality products and state-of-the-art distribution services and by maintaining leadership positions in the markets that it serves. Its strategy for achieving this objective consists of the following elements:
- designing continuous improvements and making customer- specific modifications in widely used products allowing value to be added to mature product lines; - selectively acquiring product lines that complement the Corporation's existing product lines allowing the Corporation to reduce significantly the time required to bring new products to its markets; - expanding the use and features of the Corporation's state- of-the-art Distributor/Manufacturer Integration ("DMI") system allowing the Corporation to provide its distributors with an inventory and distribution management system that achieves significant transaction cost savings for both the Corporation and its distributors; and - globally locating and coordinating manufacturing facilities and marketing personnel allowing the Corporation to achieve low-cost manufacturing and to provide worldwide service to those of its OEM customers with globally dispersed operations.
Selective acquisitions have been made to broaden Thomas & Betts' business worldwide. In 1992, the Corporation acquired American Electric, a leading manufacturer of a broad range of electrical products and accessories. As a result of this acquisition the Corporation's sales approximately doubled (excluding the impact of the Augat pooling). Since the acquisition of American Electric, the Corporation has made numerous acquisitions involving complementary product lines. The most recent was the merger with Augat Inc. ("Augat"), the Corporation's largest-ever acquisition, completed on December 11, 1996. The Augat transaction has been accounted for as a pooling of interests; as a result, all financial information which follows has been restated to reflect the combined results of the Corporation and Augat for all periods presented. Augat is a worldwide manufacturer of electronic connectors and devices used in markets such as telecommunications, automotive, information processing and cable television. This acquisition places Thomas & Betts among the world's five largest electronic connector manufacturers and evens the balance between the Corporation's electronic and electrical businesses, providing a critical mass in higher-growth markets. Augat's sales in 1996 were $577 million. Other recent acquisitions include: the $212.5 million acquisition of Amerace Corporation, a manufacturer of electrical components for utility and industrial markets, in January 1996; the $51.2 million acquisition of Commander Electrical Products, Inc., a Canadian manufacturer of electrical outlet boxes, in August 1994; and the $35.0 million acquisition of Catamount Manufacturing Co., a manufacturer of cable ties, in October 1995. In addition, in August 1994, the Corporation completed the purchase, for $50.6 million, of a 29% interest in Leviton Manufacturing Co., Inc., a private company that is the largest U.S. manufacturer of wiring devices.
The Corporation was established in 1898 as a sales agency for electrical wires and raceways, was incorporated in New Jersey in 1917 and reincorporated in Tennessee in May, 1996. The Corporation's executive offices are located at 1555 Lynnfield Road, Memphis, Tennessee 38119, telephone number (901)682-7766.
Electrical Construction and Maintenance Components ("Electrical")
The Corporation's Electrical Construction and Maintenance Components' markets include industrial, commercial and residential construction and renovation companies, electrical contractors and telecommunications businesses, and maintenance, repair and overhaul operations ("MRO") customers. Total Electrical Construction and Maintenance Components sales were $627.3, $580.0 and $493.7 million, or 32%, 33% and 31% of the Corporation's total sales for 1996, 1995 and 1994, respectively.
The Corporation designs, manufactures and markets thousands of different electrical connectors, components and other products for industrial, commercial and residential construction applications, including (i) fittings and accessories for electrical raceways; (ii) fastening products, such as plastic and metallic ties for bundling wire and flexible tubing; (iii) terminals for small wires and power cables; (iv) power connectors, such as compression and mechanical connectors for high current power and grounding applications; (v) indoor and outdoor switch and outlet boxes, covers and accessories; (vi) floor boxes; (vii) metal framing used as structural supports for conduits, cable trays, electrical enclosures and lighting raceways; (viii) ground rods and clamps; (ix) products for outdoor security, roadway and adverse and hazardous location lighting; (x) circuit breakers, safety switches and meter centers; and (xi) other products, including insulation products, wire markers, cable tray and application tooling products.
The Corporation markets its electrical components under various brand names. These brand names and the related products include THOMAS & BETTS, T&B and CATAMOUNT electrical products and electricians' supply products; TY-RAP, TY-FAST and CATAMOUNT cable ties; STEEL CITY, BOWERS, COMMANDER and UNION switch and outlet boxes, covers and conduit fittings; STA-KON terminals; STEEL CITY floor boxes and wire management systems; BLACKBURN and COLOR-KEYED power connectors and grounding devices; T&B Electricians' Supplies, wire connectors, tools and accessories; LIQUID TITE connectors, KINDORF and SUPERSTRUT metal framing products; AMERICAN ELECTRIC LIGHTING and HAZLUX lighting products; THOMAS & BETTS and ZINSCO circuit breakers, safety switches and meter centers; T&B, CANSTRUT and ELECTROTRAY cable tray; E-Z-CODE wire markers; ANCHOR and MICROLECTRIC meter sockets; RUSSELLSTOLL, MAX-GARD and EVER-LOK interconnect components and systems; AGASTAT electro-mechanical and solid- state devices for timers and relays; BUCHANAN terminal blocks and connectors; TAYLOR wiring duct; and VALON electrical maintenance products.
In North America, the Corporation's components for industrial, commercial and residential construction and industrial MRO customers are sold through electrical distributors and retail outlets such as home centers and mass merchants. The Corporation has relationships with over 2,000 national, regional and independent distributors and buying groups with locations across North America. The Corporation believes that it has strong relationships with its distributors as a result of the breadth and quality of its product line, innovative service programs, product innovation, competitive pricing and brand name recognition among its customers. The Corporation has a network of factory and independent sales representatives who work with distributors, end users and retail outlets to increase demand for its products. The Corporation has thousands of customers, and no single end user, distributor or retailer accounted for more than 7% of the Corporation's Electrical Construction and Maintenance Components' segment 1996 net sales.
The Corporation also manufactures and distributes its components outside the United States. Certain of the Corporation's standard components are sold in countries where they conform to the applicable local electrical requirements, while other components are specifically designed and manufactured to conform to local standards. The Corporation also markets electrical components through offshore sales agents and domestic exporters.
Electronic/OEM Components ("Electronic")
The Corporation's electronic components are sold primarily to OEMs in the automotive, information services, office equipment, industrial electronics, test equipment, computer-aided engineering and manufacturing systems, instrumentation, medical electronics markets, and additional applications in aerospace, telecommunications and broadband communications - including CATV - - businesses. No single end user or distributor of the Corporation's electronic components accounted for more than 14% of the Corporation's Electronic/OEM Components segment 1996 net sales. Total Electronic/OEM Components sales were $920.7, $832.7 and $786.3 million, or 46%, 48% and 50% of the Corporation's total sales for 1996, 1995 and 1994, respectively, and reflect the inclusion of Augat's sales in all years under pooling-of- interests accounting.
The Corporation's electronic/OEM components include: (i) printed circuit connectors; (ii) IDC connectors for mass termination of flat cables; (iii) custom-engineered connectors for automotive and professional electronics applications; (iv) flexible interconnects, flat cables and assemblies for automotive and other applications; (v) cable ties; (vi) terminals; (vii) D- subminiature connectors, a broad group of industry standard connectors; (viii) custom and standard switches, printed circuit board sockets and terminal blocks; and (ix) modular voice and data connectors, twinax and coax connectors, baluns, patch panels, jack and wall plates and related components for use in mainframe-to-terminal systems and personal computer-based local area networks in commercial properties. These components are sold under various brand names, including THOMAS & BETTS customer- specific interconnects and components, and backplane, input/output, fiber optic and printed circuit board connectors; ANSLEY flat cable and connectors; FLEXSTRIP flexible interconnects; TY-RAP, TY-FAST and CATAMOUNT cable ties; HOLMBERG D-subminiature and card edge connectors; NEVADA WESTERN, ARMIGER and EPITOME premises wiring brand names; RUSSELLSTOLL, MAX-GARD and EVER-LOK interconnect components and systems; MIPCO power connectors; FEEDRAIL trolley busway electrification systems; AGASTAT electro-mechanical and solid-state devices for timers and relays; ALL-LAN interconnection system; and BUCHANAN terminal blocks and connectors. The merger with Augat added AUGAT sockets; ALCOSWITCH switches; ASTER fiber couplers and connectors; ELASTOMERIC TECHNOLOGIES connectors; LRC connectors, adapters and accessories; PHOTON laser transmitters and optical nodes; TELZON cross-connection devices; and RDI terminal blocks.
In North America, the Corporation sells its standard components through electronic distributors and directly to end users, and provides customer-specific components directly to major OEMs. The Corporation sells through national, regional and local distributors serving a large customer base.
The Corporation also manufactures and markets its electronic/OEM components internationally, with design, manufacturing and distribution capabilities in Europe and the Far East. In Europe and the Far East, as in North America, electronic/OEM components are sold primarily to automotive, computer, office equipment, test equipment, instrumentation, industrial automation and telecommunications markets, and certain of the Corporation's electronic components are developed and manufactured for specific customer applications.
There has been a trend on the part of OEM customers to reduce the number of their preferred suppliers, focusing on companies that can meet quality and delivery standards and that have a global presence, a broad product package, strong design capability and competitive prices. The Corporation has achieved a preferred supplier designation from many of its most important OEM customers for electronic components, and continues to seek this preferred status from other accounts.
Other Products and Components ("Other")
The Corporation sells its other products and components, comprised of heating products, utility poles and transmission towers, telecommunication components and other components, through distributors and directly to end users. No single end user or distributor accounted for more than 3% of the Corporation's Other Products and Components segment 1996 net sales. Total Other Products and Components sales were $437.1, $320.7 and $293.7 million, or 22%, 19% and 19% of the Corporation's total sales for 1996, 1995 and 1994, respectively.
Heating Products
The Corporation designs, manufactures and markets heating and ventilation products for commercial and industrial buildings. Products include gas, oil and electric unit heaters, gas-fired duct furnaces, indirect and direct gas-fired make-up air heaters, infrared heaters, and evaporative cooling and heat recovery products for the heating, ventilation and air conditioning ("HVAC") marketplace under the REZNOR and E.K. CAMPBELL brand names. The Corporation's products are sold through HVAC, mechanical and refrigeration distributors in over 2,000 locations throughout North America and Europe.
Transmission Poles and Towers
The Corporation designs, manufactures and markets transmission and distribution poles and towers for North American power and telecommunications companies and for export. These products are primarily sold to five types of end users: investor-owned utilities; cooperatives, which purchase power from utilities and manage its distribution to end users; municipal utilities; cable television operating companies; and telephone companies. The Corporation's products include tubular steel transmission and distribution poles and lattice steel transmission towers. The Corporation manufactures and sells its transmission towers and its transmission and distribution poles under the LEHIGH, MEYER and THOMAS & BETTS brand names.
Telecommunication Components
The Corporation designs, manufactures and markets T&B aerial, pole, pedestal and buried splice enclosures; T&B connectors; KOLD-N-KLOSE encapsulation and sheath repair systems; TY-RAP, TY- FAST and CATAMOUNT cable ties; and DELTEC specialty devices for cable television companies and telephone operating companies. These components are sold both directly to end users and through distributors.
Other Components
The Corporation designs, manufactures and markets flood, roadway and security lighting fixtures; and connectors, grounding systems, fastening and metal framing components for North American power companies and heating, mechanical and refrigeration ("HMR") product distributors. These products are primarily sold to four markets: investor-owned utilities, cooperatives, municipal utilities and HMR distributors. The Corporation's other component products include BLACKBURN power connectors and grounding systems; AMERICAN ELECTRIC LIGHTING roadway, security and area lighting fixtures; SUPERSTRUT metal framing; TY-RAP, TY-FAST and CATAMOUNT cable ties; ANCHOR meter sockets; INTERNATIONAL ENERGY SAVER evaporative cooling and energy recovery equipment; and ELASTIMOLD power connectors.
MANUFACTURING AND DISTRIBUTION
The Corporation employs advanced processes in order to manufacture quality products. The Corporation's manufacturing processes include high-speed stamping, precision molding, machining, plating and automated assembly. The Corporation makes extensive use of computer-aided design and computer-aided manufacturing (CAD/CAM) software and equipment to link product engineering with its factories.
The Corporation also utilizes other advanced equipment and techniques in the manufacturing and distribution process, including computer software for scheduling, material requirements, shop floor control, capacity planning, and the warehousing and shipment of products.
The Corporation believes that its products enjoy a reputation for quality in the markets in which they are sold. The Corporation has implemented quality control processes in its design, manufacturing, delivery and other operations in order to further improve product quality and the service level to customers. These techniques include just-in-time manufacturing programs for more efficient use of machine tools in manufacturing different products, statistical process control, statistical problem solving, and other processes related to the Corporation's SIGNATURE SERVICE/DMI program.
From its origin as a delivery guarantee, the SIGNATURE SERVICE/DMI program has evolved into a partnership for profitability that encompasses purchasing incentives, extensive marketing support, training and service discounts. The Corporation believes its DMI process is now the benchmark in the industry on how business through electronic commerce should be conducted. In 1996, participation in the DMI program increased 54% over the previous year. The DMI advanced partnership includes customer-cost-reduction processes such as automatic stock replenishment, advanced distributor inventory modeling, automatic receiving, price synchronization, invoice balancing and summary billing. The program also provides rights to return merchandise, which is prevalent in the electrical industry. Combining these business process redefinitions with a leading effort in electronic commerce such as extensive use of industry- standard Electronic Data Interchange ("EDI") has made the DMI partnership a success for the Corporation as well as its participating distributors.
The Corporation manufactures its products on a worldwide basis, with manufacturing operations throughout North America, in Europe and in the Far East.
The Corporation purchases a wide variety of raw materials for the manufacture of its products, including metals such as brass, copper, aluminum, steel plate, steel strip and malleable iron castings, and resins and rubber compounds. The Corporation's sources of raw materials and component parts are well established and are sufficiently numerous to avoid serious interruption of production in the event that certain suppliers are unable to provide raw materials and component parts.
RESEARCH AND DEVELOPMENT
The Corporation has research, development and engineering capabilities in each of the three regions of the world in which it operates in order to respond locally to its customers' needs and technological requirements. The Corporation believes that it has a reputation for innovation based upon its ability to develop quality new and/or improved products that meet the specific application needs of its customers.
The Corporation allocates significant resources to its research and development activities. The Corporation's research, development and engineering expenditures for the creation and application of new and improved products and processes were $47.2, $44.1 and $40.5 million for 1996, 1995 and 1994, respectively.
The research and development activities of the Corporation are focused on complementary product areas and specific high growth markets. Certain of the Corporation's recent new products and enhancements introduced in the marketplace or under design include high-speed data communications systems; high-density interconnect sockets; storage device interconnects; broadened cable tray products for the communications market; expanded automotive products offering; a mini hand-held label printer; new hazardous-location lighting products; an improved electric switch box design; a quick-lock conduit fitting; improved reflector lenses for roadway lighting; improved wire nut design; and a new light-duty pole design.
PATENTS AND TRADEMARKS
The Corporation owns approximately 1,780 active patent registrations and applications worldwide. The Corporation has over 230 trademarks, including THOMAS & BETTS, T&B, SIGNATURE SERVICE, DMI, TY-RAP, TY-FAST, STA-KON, ANSLEY, FLEXSTRIP, BLACKBURN, STEEL CITY, KINDORF, HAZLUX, AMERICAN ELECTRIC LIGHTING, COLOR-KEYED, SUPERSTRUT, PERFECT-LINE, REZNOR, ANCHOR METALS, LEHIGH, MEYER, NEVADA WESTERN, WESTLINE, HOLMBERG, ZINSCO, E.K. CAMPBELL, BOWERS, AGASTAT, ALL-LAN, BUCHANAN, FEEDRAIL, MIPCO, RUSSELLSTOLL, CATAMOUNT, and ELASTIMOLD. Trademarks added with the Augat merger include AUGAT, SNAP-N- SEAL, HOLTITE, FLIC, ALCO, and PHOTON. While the Corporation considers its patents and trademarks (including trade dress) to be valuable assets, it does not believe that its competitive position is dependent solely on patent or trademark protection or that its operations are dependent on any individual patent or trademark. The Corporation does not consider any of its licenses, franchises or concessions to be material to its business.
COMPETITION
The Corporation encounters competition in all areas of its business. The Corporation competes primarily on the basis of product quality, technology, price, performance and customer service. There are many companies which manufacture a number of products which compete with those of the Corporation. All of the Corporation's products are in competition with products of other manufacturers, some of which have greater financial and other resources than the Corporation.
EMPLOYEES
As of December 29, 1996, the Corporation had approximately 14,700 full-time employees worldwide.
SEASONALITY
The Corporation's businesses are not seasonal.
ENVIRONMENTAL
See Item 3, Legal Proceedings.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information regarding business segments is presented in Item 1 (a) and (c) above, Exhibit 13 hereto and in the Corporation's 1996 Annual Report to Shareholders on page 36, which is incorporated herein by reference.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Information relating to operations in different geographic areas is presented in both Exhibit 13 hereto and in the Corporation's 1996 Annual Report to Shareholders on page 36, which is incorporated herein by reference. The risks attendant to these sales and profits are relatively small because the operations are in foreign countries that have relatively stable political systems. It is expected that the international markets will continue to provide sales growth in the future. Export sales originating in the U.S. were $26.7, $24.0 and $20.8 million for 1996, 1995 and 1994, respectively.
ITEM 2.
ITEM 2. PROPERTIES
The Corporation has total plant, office and distribution space of approximately 9,744,000 sq. ft. in 138 locations in 24 states, the Commonwealth of Puerto Rico and 16 other countries. This space is composed of 6,297,000 sq. ft. of manufacturing space, 2,503,000 sq. ft. of office and distribution space and 944,000 sq. ft. of idle space.
The following table lists the Corporation's manufacturing locations by primary segment as of December 29, 1996:
Approximate Area No. Of In Sq. Ft. Segment Location Facilities Leased Owned Electrical Construction and Maintenance Components Arkansas 1 246,000 California 2 249,000 Georgia 2 180,000 160,000 Massachusetts 1 116,000 Mississippi 1 237,000 Oklahoma 1 108,000 Pennsylvania 1 52,000 Puerto Rico 4 112,000 28,000 Tennessee 2 457,000 Texas 1 36,000 Canada 5 34,000 305,000 Mexico 5 320,000
Electronic/OEM Components California 1 120,000 Florida 1 65,000 Maine 1 92,000 Massachusetts 3 22,000 52,000 Michigan 4 110,000 230,000 New York 2 113,000 75,000 Pennsylvania 2 30,000 South Carolina 3 89,000 Washington 1 106,000 Canada 1 20,000 England 4 37,000 69,000 Hungary 1 215,000 Japan 1 9,000 247,000 Luxembourg 1 27,000 43,000 Mexico 3 661,000 Singapore 3 24,000 63,000 Switzerland 1 188,000
Other Products and Components Kansas 1 43,000 New Jersey 1 168,000 New Mexico 1 100,000 Pennsylvania 1 227,000 South Carolina 1 105,000 Texas 1 136,000 Wisconsin 1 171,000
The Corporation leases approximately 115,000 sq. ft. of space in Memphis, Tennessee for its corporate and divisional headquarters. Principal sales offices and distribution facilities are located in 2,388,000 sq. ft. of property, approximately one- half of which is leased.
The Corporation has 944,000 sq. ft. of idle manufacturing and office space primarily in Alabama, Pennsylvania, New Jersey, Massachusetts, Nevada and Texas, not included in the above table. In 1996, the Corporation recorded a $6 million special charge related to certain of these facilities to provide for losses on leases and to reduce owned facilities to their net realizable values.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is subject to federal, state and local environmental laws and regulations which govern the discharge of pollutants into the air, soil and water, as well as the handling and disposal of solid and hazardous wastes. The Corporation believes that it is currently in substantial compliance with all applicable environmental laws and regulations and that the costs of maintaining or coming into compliance with such environmental laws and regulations will not be material to the Corporation's financial statements.
Owners and operators of sites containing hazardous substances, as well as generators of hazardous substances, are subject to broad liability under various federal and state environmental laws and regulations, including liability for cleanup costs and damages arising out of past disposal activity. Such liability in many cases may be imposed regardless of fault or the legality of the original disposal activity. The Corporation is the owner or operator or former owner of various manufacturing facilities currently being evaluated for the presence of contamination or remediated, including closed facilities in Anniston, Alabama; Elizabeth, New Jersey; Pittsburgh, Pennsylvania; and St. Louis, Missouri; and its currently operated facilities in Hager City, Wisconsin; and Lancaster, South Carolina. In addition, the Corporation is evaluating two manufacturing plants which were sold by American Electric prior to its acquisition by the Corporation, located in Medora, Indiana; and Monroe, Louisiana that may require site remediation.
All but two of the above facilities (Elizabeth and Lancaster) were purchased by American Electric from other parties between the years 1985 and 1988. With respect to all but one of those former American Electric facilities (Pittsburgh), at the time of those purchases by American Electric the sellers committed to indemnify American Electric for environmental liabilities that occurred prior to the purchase of the facilities by American Electric. There can be no assurances that such indemnities will be honored, but the Corporation believes that the indemnities are reliable. Subsequent to the Corporation's acquisition of American Electric, the Corporation entered into agreements with the sellers to cooperate with each other in resolving obligations in connection with the above-mentioned environmental issues.
In October 1996, the Corporation donated its former facility located in St. Louis, Missouri, to a charitable organization. That organization has assumed full liability for the environmental evaluation and remediation of the facility, and has committed, both to the Corporation and to the State of Missouri, to conduct and complete all legally required remediation. That obligation has been co-assumed by a professional concern engaged in environmental remediation, and which is working with the charity to remediate and re-develop the facility. The charity has also purchased an environmental insurance policy which limits the extent of any liability associated with the assessment and remediation of the facility, and has made the Corporation a direct beneficiary of that insurance.
The Corporation has received notifications from the United States Environmental Protection Agency ("EPA") or similar state environmental regulatory agencies or private parties that the Corporation, along with others, may currently be potentially responsible for the remediation of twelve sites pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (the "Superfund" Act) or similar state environmental statutes. Pursuant to the Asset Purchase Agreement dated June 28, 1985 between American Electric and ITT Corporation ("ITT"), ITT has to date assumed responsibility for costs associated with contamination prior to June 1985 at four of these sites. The Corporation has assumed responsibility for its share of costs at the remaining eight sites. The Corporation has resolved its liabilities (largely through de minimis settlements) at additional sites not identified herein.
In January 1996 the Corporation acquired Amerace Corporation. Pursuant to the various environmental laws and regulations described above, Amerace is evaluating or remediating, or may have liability associated with contamination at four facilities formerly owned or operated by Amerace (located in Butler, New Jersey; Richland, Michigan; Tenafly, New Jersey; and Union, New Jersey); and at one facility currently owned and operated by Amerace located in Hackettstown, New Jersey. In addition, Amerace has received notifications from the EPA or from similar state environmental regulatory agencies or private parties that Amerace, along with others, may currently be potentially responsible for its share of the costs relating to the remediation of nine sites pursuant to the Superfund Act, or similar state environmental statutes.
In December 1996 the Corporation acquired Augat Inc. Pursuant to the various environmental laws and regulations described above, Augat is evaluating or remediating, or may have liability associated with contamination at five facilities currently owned or operated by Augat (located in Canton, Massachusetts; Horseheads, New York; Mashpee, Massachusetts; and at two facilities in Montgomery, Alabama). In addition, Augat has received notifications from the EPA or from similar state environmental regulatory agencies or private parties that Augat, along with others, may currently be potentially responsible for its share of the costs relating to the remediation of five sites pursuant to the Superfund Act or similar state environmental statutes.
The Corporation is not able to predict with certainty the extent of its ultimate liability with respect to any pending or future environmental matters. However, the Corporation does not believe that any such liability with respect to the aforementioned environmental matters will be material to its financial statements.
The Corporation has been named as defendant in various product liability and commercial legal actions arising from normal business activities. Although the amount of any ultimate liability with respect to such matters cannot be precisely determined, the Corporation does not believe any such liability will be material to its financial statements.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Shareholders of the Corporation was held on December 11, 1996, pursuant to due notice, to vote upon the Agreement and Plan of Merger (the "Merger Agreement"), among Augat Inc., a Massachusetts corporation, the Corporation and EG Acquisitions Corp., a Delaware corporation and a wholly owned subsidiary of the Corporation, dated as of October 7, 1996, and to approve the transactions contemplated by the Merger Agreement. The result of the vote was 33,050,974 votes for and 44,610 votes against, with 154,292 abstentions and no broker non-votes.
Executive Officers of the Registrant
Date Assumed Name Position Age Present Position T. Kevin Dunnigan Chairman of the Board 59 January 1992 and Chief Executive Officer
Clyde R. Moore President and Chief 43 January 1994 Operating Officer
Fred R. Jones Vice President- 49 August 1995 Finance and Treasurer (Chief Financial Officer)
T. Roy Burton President- 49 March 1994 Electronics/OEM Division
William A. Fredrick President-Special 50 March 1994 Markets Division
Gregory M. Langston President-Utility 41 April 1995 Division
Dick R. McCullough President-Mechanical 43 November 1995 Products Division
W. Neil Parker President-Electrical 54 February 1996 Components Division
Gary R. Stevenson Vice President- 44 January 1994 Operations
Mr. Dunnigan has been Chief Executive Officer since 1985.
Mr. Moore previously was President and Chief Operating Officer of FL Industries, Inc. (1990 to 1992) and President of its American Electric Division from 1985 until its acquisition by Thomas & Betts Corporation in 1992. He was President-Electrical Division of the Corporation (1992 to 1994).
Mr. Jones previously was President of ABB Financial Services, Inc. (1990 to 1992) and Senior Vice President and Chief Financial Officer of Joy Technologies, Inc. (1992 to 1995).
Mr. Burton previously was Vice President and General Manager of Bendix Connector Operations (1989 to 1992), Vice President-Information Technology Operations (1992 to 1993), and Vice President-Aerospace Operations (1993 to 1994) of Amphenol Corporation.
Mr. Fredrick previously was Vice President-Commercial and Industrial Lighting Group of the American Electric Division of FL Industries, Inc. (1988 to 1992) and Vice President and General Manager-Commercial and Industrial Lighting Group of Thomas & Betts Holdings, Inc. (1992 to 1994).
Mr. Langston previously was Managing Director of Square D Australia (1989 to 1990), Managing Director of Square D Asia Pacific (1991 to 1992), President of Square D de Mexico (1992) and President of Groupe Schneider Mexico (1992 to 1995).
Mr. McCullough previously was Commercial Marketing Director of Lennox Industries (1990 to 1991), Director of Marketing (1991 to 1993) and Vice President and General Manager (1993 to 1995) of the Corporation's Mechanical Products Division.
Mr. Parker previously was Vice President of General Electric Canada (1983 to 1992), President of Thomas & Betts Limited (1992 to 1996), and President-Thomas & Betts Canada (1995 to 1996). He is also currently Chief Executive Officer of Thomas & Betts Limited (1996 to present).
Mr. Stevenson previously was Vice President-Operations of the American Electric Division of FL Industries, Inc. (1989 to 1992) and Vice President-Operations of Thomas & Betts Holdings, Inc. (1992 to 1994).
The executive officers were elected by the Board of Directors for a term which expires on May 7, 1997, the date of the next organizational meeting of the Board of Directors. Normally, officers are elected for one-year terms or until their successors have been elected. There exists no special arrangement or understanding regarding election to executive office other than that described herein. See Item 11 for information relating to Directors.
PART II
ITEMS 5 THROUGH 8.
Information required by Items 5 through 8 of Form 10-K is included in both Exhibit 13 hereto and in the Corporation's 1996 Annual Report to Shareholders, portions of which are incorporated herein by reference as indicated below:
Item No. Pages 5 23 & 38 6 39 7 19 - 23 8 24 - 38
Forward-Looking Statements
Certain statements in this Form 10-K and in written and oral statements made by the Corporation ("T&B") may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "expect" and "anticipate" and similar expressions identify forward-looking statements. Although these statements reflect the Corporation's current views with respect to future events and financial performance, they are subject to many uncertainties and factors relating to the Corporation's operations and business environment which may cause the actual results of the Corporation to be materially different from any future results expressed or implied by such forward-looking statements.
Examples of such uncertainties include, but are not limited to: changes in customer demand for various T&B products that could affect its overall product mix, margins, plant utilization levels and asset valuations; economic slowdown in the U.S. (contrary to T&B's expectations of continued economic growth throughout 1997) or economic slowdowns in T&B's major offshore markets, including Canada, Western Europe (particularly Germany and the U.K.), Japan and Taiwan; effects of significant changes in monetary and fiscal policies in the U.S. and abroad which could result in currency fluctuations, including fluctuations in the Canadian dollar, German mark and Japanese yen; inflationary pressures which could raise interest rates and consequently T&B's cost of funds; unforeseen difficulties in completing identified restructuring actions initiated in 1996 in connection with the Augat merger, including disposal of idle facilities, geographic shifts of production locations and closure of redundant administrative facilities; availability and pricing of commodities and materials needed for production of T&B's products, including steel, copper, zinc, aluminum and plastic resins; increased downward pressure on selling prices for T&B's products; unforeseen difficulties arising from the integration of acquired businesses with T&B's operations; changes in financial results and consequently in equity income from T&B's equity investments in Taiwan, Japan, Belgium and the U.S.; changes in environmental regulations and policies that could impact projections of remediation expenses; significant changes in governmental policies domestically and abroad that could create trade restrictions, patent enforcement issues, tax rate changes and changes in tax treatment of such items as tax credits, withholding taxes, transfer pricing and other income and expense recognition for tax purposes, including changes in taxation on income generated in Puerto Rico.
The Corporation does not, by making any forward-looking statements, undertake any obligation to update them (whether as a result of new information, future events or otherwise).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEMS 10, 11, 12 and 13.
Registrant, on March 20, 1997 filed with the Securities and Exchange Commission a definitive Proxy Statement. Information required by Items 10, 11, 12 and 13 of Form 10-K, but not provided herein, is included in the Proxy Statement and is incorporated herein by reference. Certain of the information required with respect to executive officers is also set forth in Part I of this report under the heading "Executive Officers of the Registrant."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Financial statements. All financial statements as set forth under Item 8.