Executive Overview

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

Critical Accounting Policies

The preparation of financial statements contained in this report requires the use of estimates and assumptions to determine certain amounts reported as net sales, costs, expenses, assets or liabilities and certain amounts disclosed as contingent assets or liabilities. Actual results may differ from those estimates or assumptions. Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. 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. We provide allowances for doubtful accounts when credit losses are both probable and estimable. 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.

• 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 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 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 also follow the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires 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 during the first quarter of 2009.

Under the provisions of SFAS No. 142, each test of goodwill requires us to determine the fair value of each reporting unit and compare the fair value to the reporting unit's carrying amount. SFAS No. 142 defines a reporting unit 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 blended to arrive at a single value for each reporting unit. Our annual determination of fair values involved a weighting of 25% to the market multiple approach, 50% to the discounted cash flow approach and 25% to the comparable transactions approach. 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 follow the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 establishes accounting standards for the impairment of long-lived assets such as property, plant and equipment and intangible assets subject to amortization. For purposes of recognizing and measuring impairment of long-lived assets, we evaluate assets at the lowest level of identifiable cash flows for associated product groups. 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. If the sum of the undiscounted expected future cash flows over the remaining useful life of the primary asset in the associated product groups is less than the carrying amount of the assets, the assets are considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. When fair values are not available, we estimate fair values using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to dispose.

• Pension and Other Postretirement Benefit Plan Actuarial Assumptions: We follow the provisions of SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits," SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," SFAS No. 132 (Revised), "Employers' Disclosures about Pensions and Other Postretirement Benefits" and SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans." For purposes of calculating pension and postretirement medical benefit obligations and related costs, 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 March 31, 2009, 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.

2009 Outlook

We expect the current weak economic environment to negatively impact our primary markets during the remainder of 2009. We continue to expect lower volumes in nearly all geographical and

product markets, with the U.S. market deteriorating more significantly than our other geographic regions. We expect full-year 2009 total company net sales to be down in the mid-to-high teens as a percentage compared to 2008 results. We expect year-over-year quarterly net sales deterioration compared to 2008 to become less severe as the year progresses. Electrical and HVAC segments are expected to experience year-over-year net sales declines in the high teens, with high single-digit net sales growth expected in the Steel Structures segment. The second quarter will be critical to our overall sales forecast as it is the beginning of the traditional construction season and will be the first true indication of what to expect for the remainder of the year. We also expect Steel Structures segment earnings moderating towards the range of 17% to 20% of net sales for the balance of the year.

We expect diluted per share earnings will likely be near the low end of our previously communicated range for the full-year 2009 or $3.00 per diluted share. Full-year 2009 earnings guidance assumptions include annual depreciation of $50 million, annual interest expense of $35 million, annual acquisition-related amortization of $25 million, corporate expenses of $14 million per quarter, an effective tax rate of approximately 30% and 53 million fully diluted average shares outstanding. Additionally, our guidance reflects approximately $20 million in annual benefits from the acquisition integration efforts undertaken in 2008, although this will be entirely offset by higher annual pension expense.

Actions continued to be taken in the first quarter of 2009 to minimize the impact of the economic downturn, including a significant reduction in our employee headcount. The key risk factors we may face in 2009 include a weaker than anticipated construction season which typically begins in the second quarter, the impact on sales from a prolonged disruption in credit availability in our end markets, fluctuation in foreign currencies versus the U.S. dollar, volatility in commodity costs and availability and additional or heightened slowdowns in key market segments and geographic regions.

                        Summary of Consolidated Results


                                                               Quarter Ended March 31,
                                                       2009                              2008
                                                               % of Net                          % of Net
                                            In Thousands        Sales         In Thousands        Sales

Net sales                                  $      459,835          100.0     $      595,504          100.0
Cost of sales                                     322,427           70.1            409,243           68.7

Gross profit                                      137,408           29.9            186,261           31.3
Selling, general and administrative                92,610           20.2            116,285           19.5

Earnings from operations                           44,798            9.7             69,976           11.8
Interest expense, net                              (9,461 )         (2.0 )          (12,332 )         (2.1 )
Other (expense) income, net                         1,905            0.4             (1,277 )         (0.2 )

Earnings from continuing operations
before income taxes                                37,242            8.1             56,367            9.5
Income tax provision                               11,173            2.4             18,206            3.1

Net earnings from continuing operations            26,069            5.7             38,161            6.4
Earnings from discontinued operations,
net                                                     -              -                 91              -

Net earnings                               $       26,069            5.7     $       38,252            6.4

Basis earnings per share:
Continuing operations                      $         0.50                    $         0.66
Discontinued operations                                 -                                 -

Net earnings                               $         0.50                    $         0.66

Diluted earnings per share:
Continuing operations                      $         0.49                    $         0.66
Discontinued operations                                 -                                 -

Net earnings                               $         0.49                    $         0.66

2009 Compared with 2008

Overview

Net sales in the first quarter of 2009 decreased significantly from the prior-year period reflecting lower sales volumes on weaker demand in our Electrical and HVAC segments, which were partially offset by a year-over-year net sales increase for the quarter in our Steel Structures segment. A stronger U.S. dollar during 2009 also negatively impacted net sales. Gross profit in the first quarter of 2009 decreased modestly as a percent of net sales reflecting overall business mix and the impact of lower production volumes.

Earnings from operations in dollars and as a percent of sales decreased from the prior-year period as a result of the lower current period sales volumes and increased year-over-year selling, general and administrative expenses as a percent of net sales.

Net earnings in the first quarter of 2009 were $26.1 million, or $0.49 per diluted share compared to net earnings of $38.3 million, or $0.66 per diluted share in the prior-year period.

Net Sales and Gross Profit

Net sales in the first quarter of 2009 were $459.8 million, down $135.7 million, or 22.8%, from the prior-year period. The year-over-year sales decrease primarily reflects weaker demand for electrical products used in construction, industrial maintenance and electrical power distribution. The stronger U.S. dollar negatively impacted sales by approximately $35 million compared to the prior-year period.

Gross profit in the first quarter of 2009 was $137.4 million, or 29.9% of net sales, compared to $186.3 million, or 31.3% of net sales, in the first quarter of 2008. The year-over-year decrease as a percent of sales reflects overall business mix and the impact of lower production volumes.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expense in the first quarter of 2009 was $92.6 million, or 20.2% of net sales, compared to $116.3 million, or 19.5% of net sales, in the prior-year period. The $23.7 million, or 20.4%, decrease in SG&A expense largely reflects our overall efforts to tightly manage expenses as well as the impact of foreign currency.

Interest Expense, Net

Interest expense, net was $9.5 million for the first quarter of 2009, down $2.9 million from the prior-year period primarily as a result of lower average debt outstanding. Interest income included in interest expense, net was negligible for the first quarter of 2009 and $1.4 million for the first quarter of 2008.

Income Taxes

The effective tax rate in the first quarter of 2009 was 30.0 percent compared to 32.3 percent in the first quarter of 2008. The lower rate largely reflects the impact of lower overall and U.S. earnings. The effective rate for both years reflects benefits from our Puerto Rican manufacturing operations.

Net Earnings

Net earnings in the first quarter of 2009 were $26.1 million, or $0.49 per diluted share. Net earnings in the first quarter of 2008 were $38.3 million, or $0.66 per diluted share.

                           Summary of Segment Results

Net Sales


                                             Quarter Ended March 31,
                                     2009                              2008
                                             % of Net                          % of Net
                          In Thousands        Sales         In Thousands        Sales

      Electrical         $      368,832           80.2     $      508,770           85.5
      Steel Structures           61,945           13.5             51,960            8.7
      HVAC                       29,058            6.3             34,774            5.8

                         $      459,835          100.0     $      595,504          100.0

Segment Earnings


                                                           Quarter Ended March 31,
                                                   2009                              2008
                                                           % of Net                          % of Net
                                        In Thousands        Sales         In Thousands        Sales

Electrical                             $       57,440           15.6     $       96,121           18.9
Steel Structures                               14,430           23.3             10,042           19.3
HVAC                                            5,722           19.7              5,635           16.2

Segment earnings                               77,592           16.9            111,798           18.8
Corporate expense                             (11,198 )                         (13,262 )
Depreciation, amortization and
share-based compensation                      (21,596 )                         (28,560 )
Interest expense, net                          (9,461 )                         (12,332 )
Other (expense) income, net                     1,905                            (1,277 )

Earnings from continuing operations
before income taxes                    $       37,242                    $       56,367

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 more than 70% of consolidated segment earnings during the periods presented.

Electrical Segment

A challenging economic environment in the first quarter of 2009 affected Electrical segment performance. Electrical segment net sales in the first quarter of 2009 were $368.8 million, down $139.9 million, or 27.5%, from the first quarter of 2008. Decreased volumes were evident across virtually all product and geographic markets. Foreign currency exchange accounted for approximately $34 million of the sales decrease.

Electrical segment earnings in the first quarter of 2009 were $57.4 million, down $38.7 million, or 40.2%, from the first quarter of 2008. The decline in year-over-year segment earnings reflects the impact of lower sales volumes and a stronger U.S. dollar.

Other Segments

Net sales in the first quarter of 2009 in our Steel Structures segment were $61.9 million, up $10.0 million, or 19.2%, from the first quarter of 2008. Higher year-over-year steel pricing contributed to the net sales increase. Segment earnings in the first quarter of 2009 were $14.4 million, up $4.4 million, or 43.7%, from the first quarter of 2008, primarily reflecting favorable project mix.

Net sales in the first quarter of 2009 in our HVAC segment were $29.1 million, down $5.7 million, or 16.4%, from the first quarter of 2008. Despite lower sales volumes, HVAC segment earnings in the first quarter of 2009 were $5.7 million, up $0.1 million, or 1.5%, from the first quarter of 2008, primarily due to actions taken to adjust production costs, manage expenses and improve productivity.