TNB Thomas & Betts Corp.

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

Commission file number 1-4682

 

Thomas & Betts Corporation

(Exact name of registrant as specified in its charter)

 

 

 

(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  o      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. (Check one):

 

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.

 

 

Thomas & Betts Corporation and Subsidiaries

 

TABLE OF CONTENTS

 

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

 

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

 

 

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.

 

 

Thomas & Betts Corporation and Subsidiaries

 

 

 

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

Thomas & Betts Corporation and Subsidiaries

Consolidated Balance Sheets
(In thousands)
(Unaudited)

 

 

 

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

Thomas & Betts Corporation and Subsidiaries

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

 

 

 

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

Thomas & Betts Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Unaudited)

 

 

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, 2008. The results of operations for the periods ended September 30, 2009 and 2008 are not necessarily indicative of the operating results for the full year.

 

 

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

 

 

The Corporation had stock options that were out-of-the-money which were excluded because of their anti-dilutive effect. Such out-of-the money options were associated with 1.8 million shares of common stock for the third quarter of 2009 and 1.6 million shares of common stock for the third

quarter of 2008. Out-of-the money options were associated with 1.9 million shares of common stock for the first nine months of 2009 and 1.6 million shares of common stock for the first nine months of 2008.

 

 

The Corporation’s inventories at September 30, 2009 and December 31, 2008 were:

 

 

 

The Corporation’s property, plant and equipment at September 30, 2009 and December 31, 2008 were:

 

 

 

During the second quarter of 2008, the Corporation sold its entire minority interest (29.1%) in Leviton Manufacturing Company (“Leviton”) back to Leviton for net proceeds of $280 million. Net proceeds reflect $300 million from Leviton, which was offset in part by a $20 million contingent payment triggered by the sale of shares. The transaction resulted in a pre-tax gain of approximately $170 million. In the event of any subsequent sale of Leviton shares within three years after June 2008 at a price per share higher than the value reflected in this transaction, Leviton has agreed to pay the Corporation its pro-rata share of the excess.

 

 

The following table reflects activity for goodwill by segment during the third quarter of 2009:

 

 

The following table reflects activity for goodwill by segment during the first nine months of 2009:

 

 

The following table reflects activity for other intangible assets during the third quarter of 2009:

 

 

The following table reflects activity for other intangible assets during the first nine months of 2009:

 

 

 

The Corporation’s income tax provision for the third quarter of 2009 was $12.9 million, or an effective rate of 28.7% of pre-tax income, compared to a tax provision in the third quarter of 2008 of $28.4 million, or an effective rate of 31.0% of pre-tax income. The Corporation’s income tax provision for the nine months ended September 30, 2009 was $33.8 million, or an effective rate of 29.5% of pre-tax income, compared to a tax provision for the nine months ended September 30, 2008 of $155.3 million, or an effective rate of 38.4% of pre-tax income. The higher prior year effective rate for the nine months ended September 30, 2008 reflects the gain on sale of equity interest and a $14 million out-of-period, non-cash tax charge, both of which occurred in the second quarter of 2008. The effective rate for each period 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 $68.1 million as of September 30, 2009 and $75.2 million as of December 31, 2008. 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, 2009, will be sufficient to realize the recorded deferred tax assets, net of any valuation allowance.

 

 

Total comprehensive income and its components are as follows:

 

 

 

The Corporation’s financial instruments include cash and cash equivalents, restricted cash, marketable securities, short-term trade receivables and payables and debt. Financial instruments also include derivative instruments such as interest rate swap agreements. The carrying amounts of the Corporation’s financial instruments generally approximated their fair values at September 30, 2009 and December 31, 2008, 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 $614 million at September 30, 2009 and approximately $669 million at December 31, 2008, and the fair value of an interest rate swap at September 30, 2009 was a liability of $31.7 million and a liability of $39.7 million at December 31, 2008.

 

 

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

 

Interest Rate Swap Agreements

 

During the fourth quarter of 2007, the Corporation entered into a forward-starting interest rate swap for a notional amount of $390 million. The notional amount reduces to $325 million on December 15, 2010, $200 million on December 15, 2011 and $0 on October 1, 2012. The interest rate swap hedges $390 million of the Corporation’s exposure to changes in interest rates on borrowings 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 $31.7 million as of September 30, 2009 and $39.7 million as of December 31, 2008. 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. This approach estimates the present value of future cash

flows based upon current market expectations. The credit valuation adjustment (which was a reduction in the liability) was approximately $0.5 million as of September 30, 2009.

 

The Corporation’s balance of accumulated other comprehensive income has been reduced by $19.5 million, net of tax of $11.9 million, as of September 30, 2009 and $24.4 million, net of tax of $15.0 million, as of December 31, 2008 to reflect the above interest rate swap liability.

 

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 the first nine months of 2009 and 2008:

 

 

The ineffective portion of the swap reflected in interest expense, net during the third quarter and the first nine months of 2009 and 2008 was immaterial.

 

Forward Foreign Exchange Contracts

 

The Corporation had no outstanding forward sale or purchase contracts as of September 30, 2009 or December 31, 2008. During 2008, the Corporation was a party to currency forward exchange contracts that amortized monthly. The contracts were not designated as a hedge for accounting purposes. These contracts were intended to reduce cash flow volatility from exchange rate risk related to a short-term intercompany financing transaction. Under the terms of the contracts, the Corporation sold U.S. dollars at current spot rates and purchased Canadian dollars at a fixed forward exchange rate. During the third quarter and first nine months of 2008, the Corporation recognized a mark-to-market loss of $0.3 million and $1.1 million, respectively, on these contracts that effectively matched foreign exchange gains on the short-term intercompany financing transaction.

 

Commodities Futures Contracts

 

During the first nine months of 2009 and 2008, 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.

 

 

The Corporation’s long-term debt at September 30, 2009 and December 31, 2008 was:

 

 

 

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, 2009, $485 million was outstanding under this facility. At December 31, 2008, $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:

 

 

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 $12.3 million at September 30, 2009. The letters of credit relate primarily to third-party insurance claims processing.

The Corporation has a EUR 10.0 million (approximately US$14.7 million) committed revolving credit facility with a European bank. The Corporation pays an annual commitment fee of 20 basis points on the undrawn balance to maintain this facility. This credit facility contains standard covenants similar to those contained in the $750 million credit agreement and standard events of default such as covenant default and cross-default. This facility has an indefinite maturity, and no borrowings were outstanding as of September 30, 2009 and December 31, 2008.

 

The Corporation has a CAN 30.0 million (approximately US$27.4 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 2011, and no borrowings were outstanding as of September 30, 2009 and December 31, 2008.

 

As of September 30, 2009, the Corporation’s aggregate availability of funds under its credit facilities is approximately $294.8 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, 2009, 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 $18.3 million of such additional letters of credit that relate primarily to environmental assurances, third-party insurance claims processing, performance guarantees and acquisition obligations.

 

 

Share-based compensation expense, net of tax, of $1.6 million was charged against income during the third quarter of 2009 and $1.4 million was charged against income during the third quarter of 2008. During the third quarter of 2009, the Corporation had 9,700 stock options exercised at a weighted average exercise price of $18.64 per share and had 38,468 stock options forfeited or expired.

 

Share-based compensation expense, net of tax, of $5.5 million was charged against income during the first nine months of 2009 and $7.5 million was charged against income during the first nine months of 2008. The net of tax share-based compensation expense reflected accelerated amortization over periods shorter than the stated service periods of approximately $3 million during the first nine months of 2008. The accelerated amortization relates to share award grants to certain employees who are retirement eligible. During the first nine months of 2009, the Corporation granted 46,104 stock options with a weighted average exercise price of $22.95 per share and an average grant date fair value of $9.54 per share, had 22,079 stock options exercised at a weighted average exercise price of $20.46 per share and had 159,545 stock options forfeited or expired. Also, during the first nine months of 2009, the Corporation granted 8,222 shares of nonvested restricted stock with a weighted average grant date fair value of $22.95 per share.

 

The first nine months of both 2009 and 2008 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 2009, the Corporation granted non-employee members of the Board of Directors a total of 13,950 shares of common stock with a weighted average grant date fair value of $32.25.

 

 

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

 

 

 

Contributions to our qualified pension plans during the nine months ended September 30, 2009 and 2008 were not significant. We expect required contributions to our qualified pension plans during the remainder of 2009 to be minimal.

 

 

The merger of Lamson & Sessions Co. into Thomas & Betts Corporation was completed in November 2007. The Corporation’s senior management began assessing and formulating a restructuring and integration plan as of the acquisition date. Approval of the plan by the Corporation’s senior management and Board of Directors occurred during the first quarter of 2008. The objective of the restructuring and integration plan was to achieve operational efficiencies and eliminate duplicative operating costs resulting from the LMS acquisition. The Corporation also intended to achieve greater efficiency in sales, marketing, administration and other operational

activities. The Corporation identified certain liabilities and other costs for restructuring and integration actions. Included in this amount are approximately $14 million of planned severance costs for involuntary termination of approximately 320 employees of LMS and approximately $8 million of lease cancellation costs associated with the closure of LMS distribution centers, which was recorded as part of the Corporation’s purchase price allocation of LMS. Severance and lease cancellation costs have been reflected in the Corporation’s consolidated balance sheet in accrued liabilities and reflect cash paid or to be paid for these actions. Integration costs were recognized as incurred and either expensed or capitalized, as appropriate. The amount recognized as integration expense during the third quarter of 2008 was negligible, with the amount recognized during the first nine months of 2008 totaling approximately $3 million. The actions required by the plan began soon after the plan was approved, including the communication to affected employees of the Corporation’s intent to terminate as soon as possible.

 

The Corporation ceased operations at all LMS distribution centers during the second quarter of 2008, consolidating these activities into its existing distribution centers. As of September 30, 2009, substantially all employees planned for involuntary termination under the plan have been terminated. Payments associated with certain of the restructuring and integration actions taken are expected to continue through 2009 due to compliance with applicable regulations and other considerations. The cash payments necessary to fund the plan are expected to come from operations or available cash resources including restricted cash.

 

Activities related to the LMS accrual for restructuring during the third quarter of 2009 are as follows:

 

 

Activities related to the LMS accrual for restructuring during the first nine months of 2009 are as follows:

 

 

 

The Corporation decided at the time of acquisition to divest its rigid polyvinyl chloride (“PVC”) and high-density polyethylene (“HDPE”) conduit, duct and pressure pipe businesses, which were acquired as part of the LMS acquisition. The operations associated with these businesses since the date of acquisition were reflected as discontinued operations in the Corporation’s consolidated statements of operations. During 2008, the Corporation completed the divestiture of these

discontinued operations. Discontinued operations in the third quarter of 2008 reflected net sales of approximately $41 million, loss before income taxes of $1.6 million, income tax benefit of $0.6 million and net loss of $1.0 million. Results from discontinued operations for the first nine months of 2008 reflected net sales of approximately $146 million, loss before income taxes of $1.7 million, an income tax benefit of $0.6 million and net loss of $1.1 million.

 

 

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.

 

The Electrical segment designs, manufactures and markets thousands of different electrical connectors, components and other products for construction, industrial, utility and communications applications. The Steel Structures segment designs, manufactures and markets highly engineered tubular steel transmission poles. 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.

 

As a result of the Corporation’s decision to divest the PVC and HDPE pipe operations acquired as part of Lamson & Sessions Co., 2008 operating results for the pipe business are reported as “discontinued operations” and are shown on a net basis on the consolidated financial statements. Results for discontinued operations are not included in segment reporting below.

 

 

 

Legal Proceedings

 

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.

Guarantee and Indemnification Arrangements

 

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:

 

 

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.

 

 

In 2008, the Corporation’s Board of Directors approved a share repurchase plan that authorized the Corporation to buy up to 5,000,000 of its common shares. In 2008, the Corporation repurchased, with available cash resources, 2,425,000 common shares through open-market transactions. The Corporation repurchased, with available cash resources, 500,000 common shares through open-market transactions during the third quarter of 2009 and 1,000,000 common shares during the first nine months of 2009. The timing of future repurchases, if any, will depend upon a variety of factors, including market conditions. This authorization expires in October 2010.

 

 

Management performed an evaluation of the Corporation’s activities through the time of filing this Quarterly Report on Form 10-Q on October 27, 2009, and has concluded that there are no significant subsequent events requiring recognition or disclosure in these consolidated financial statements.

 

Executive Overview

 

Thomas & Betts Corporation is a leading designer and manufacturer of electrical components used in construction, industrial, utility and communications markets. We are a leading producer of highly engineered steel structures, used primarily for utility transmission. We are also a leading producer of commercial heating and ventilation 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:

 

 

 

 

 

2009 Outlook

 

We experienced continued pressure in all of our key markets in the first nine months of 2009. The lack of any meaningful improvement in credit availability crippled capital investment in the global industrial base and severely curtailed spending on construction projects. We have not yet seen any notable impact from government-initiated stimulus spending. We did not experience the traditional seasonal summer increase in non-residential construction-related demand usually seen in our Electrical segment during the first nine months of 2009. Constraints on credit availability and unfavorable vacancy rates continue to have a serious impact on commercial construction spending. Residential markets continue to suffer from overcapacity as well as credit constraints. Given these factors, we believe that our markets will not show meaningful improvement in the fourth quarter of the year.

We expect full-year 2009 consolidated net sales to be down 23% to 25% compared to 2008 results. In our Electrical segment, we expect year-over-year net sales to be down 25% to 28%, and in our HVAC segment, we expect net sales to be down 22% to 25%. The sales declines in our Electrical and HVAC segments should be somewhat mitigated by flat to slightly positive net sales growth in our Steel Structures segment. We expect that the year-over-year sales decline in the fourth quarter will not be as severe due to a more favorable comparison with last year’s fourth quarter which reflected a significant strengthening of the U.S. dollar and weaker market conditions in 2008. We expect Electrical segment earnings in the high teens as a percent of net sales for the fourth quarter of 2009 reflecting the continued favorable impact of lower overall manufacturing costs and maintaining our pricing discipline. Expected Electrical segment earnings in the fourth quarter also reflect approximately $4 million in expenses related to an in-process consolidation of a manufacturing facility. We also expect Steel Structures segment earnings of 17% to 19% of net sales and HVAC segment earnings of 14% to 17% of net sales for the fourth quarter of 2009.

 

We have narrowed the range of our expectation for diluted per share earnings for the full-year 2009 to $2.10 to $2.25. This range reflects an expected fourth quarter charge of $0.05 per diluted share for an in-process facility consolidation. Fourth quarter guidance assumptions include approximately 52.5 million average shares outstanding and an effective tax rate of approximately 29.5%. On a combined basis, corporate expense, depreciation, amortization, share-based compensation, other expense and interest expense, net will roughly equal that reported in the third quarter.

 

With our expectation of continued weak market demand in the fourth quarter of 2009, we have continued to focus on adjusting production to match demand, reducing headcount and curtailing wage costs, tightly managing discretionary spending and prudently managing cash. The key risks to achieving results within our full year 2009 earnings per share range include further disruption in credit markets and the negative impact on credit availability in key end markets, excessive 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