Fitch Revises Thomas & Betts' Outlook to Positive; Affirms 'BBB/F2' Ratings.

CHICAGO -- Fitch Ratings has affirmed the ratings of Thomas & Betts Corporation (NYSE:TNB) as follows:

--Issuer Default Rating (IDR) 'BBB';

--Senior unsecured bank credit facilities 'BBB';

--Senior unsecured debt 'BBB';

--Short-term 'F2'.

Fitch has also revised TNB's Rating Outlook to Positive from Stable.

The ratings affect approximately $388 million of total debt that was outstanding at Dec. 31, 2006.

The Outlook revision to Positive reflects TNB's solid operating results and disciplined discretionary spending that could potentially lead to permanently improved credit metrics. Early in 2006, TNB used its high cash balances to retire maturing debt. As a result, debt/EBITDA for the last twelve months ended Sept. 30, 2006 declined to 1.3 times (x) from 2.1x at the end of 2005. The operating environment continues to be favorable in most of TNB's markets, but free cash flow in 2006 was affected by increased working capital requirements related to higher raw material costs. However, TNB has effectively managed its inventory and pricing, and free cash flow can reasonably be expected to stabilize at a stronger level in 2007. An upgrade of TNB's ratings would be contingent on continued strong financial performance as well as consistent financial policies supportive of appropriate financial measures over the long term.

Rating concerns include the impact of potential acquisitions that would involve integration risk and could contribute to higher leverage. However, Fitch anticipates that any debt funded acquisitions would align with TNB's existing business model and that the company would use its cash flow to reduce debt. In the absence of substantial acquisitions, TNB has recently used free cash flow to repurchase shares which were minimal prior to 2006. Concerns about cyclicality in TNB's end-markets are mitigated by its broad product line and ability to manage inventory and distribution channels.

The ratings also consider TNB's well-established presence in its niche electrical markets, a favorable cost structure, its product development capabilities and the relatively long life cycles of its products that help to offset the company's geographic concentration in North America. For the latest 12 months ended Sept. 30, 2006, EBITDA margins increased 90 basis points, to 15.8%. The improvement was a result of better operating leverage related to sales growth and TNB's ability to raise prices to offset higher material and energy costs.

TNB strengthened its liquidity and financial flexibility in late 2006 by repatriating foreign earnings and increasing its bank facilities. Liquidity included cash of $371 million at Dec. 31, 2006 (preliminary basis) and a $300 million unsecured bank revolver, offset by current debt of approximately $1 million. TNB's financial flexibility is further supported by a conservative debt structure and minimal net pension obligations which required only a nominal contribution in 2006.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.