SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the year ended December 31, 1993
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File No. 1-4235
AMP Incorporated,
A Pennsylvania corporation
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(Exact name of registrant as specified in its charter, and state of
incorporation)
Employer Identification No. 23-0332575
Harrisburg, Pennsylvania 17105-3608
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(Address of principal executive offices of registrant)
(717) 564-0100
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Exchange on which Registered
Common Stock (without Par Value) New York
(Outstanding at 3/15/94 - 104,926,021
shares)
Securities registered pursuant to Section 12(g) of the Act:
None
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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 [X] . No [ ] .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 11, 1994: $6,721,292,170 (104,004,521
shares at $64.625 per share). For purposes of the foregoing
calculation, all directors and/or executive officers have been deemed
to be affiliates, but the Company disclaims that all such directors
and/or executive officers are affiliates.
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Documents Incorporated by Reference:
1. Cited portions of the Annual Report to shareholders for
fiscal year ended December 31, 1993 (Parts I, II, IV)
2. Cited portions of the Proxy Statement for the AMP
Incorporated 1994 Annual Shareholders' Meeting (Part III)
<PAGE>
10-K REPORT FOR YEAR ENDED DECEMBER 31, 1993
PART I.
Item 1. BUSINESS
The following sections of the Annual Report to shareholders for the
year ended December 31, 1993 are hereby incorporated by reference: i)
the entire "Corporate Profile" section found on the front side of the
fold-out page, including the "No Boundaries", center, and "Highlights"
columns; ii) within the portion of the "Historical Data" table found
on the reverse side of the fold-out page, items "Net Sales" down to
and including "Cash Dividends Per Share" under the "For the Year"
column for years 1988 through 1993, and all items under the "At
December 31" column for years 1988 through 1993; iii) the right hand
column of page 1, entitled "Diversification of AMP Worldwide Sales"
(reference item (1) of the Appendix for a description of the graphic
material contained therein); iv) all narrative text found on pages
2-5, 7, 9, 11, 13-15, 17-24, excluding all pictures and their
captions; v) the right hand column of page 21, including the section
at the top entitled "Sales Dollar Use" and the section at the bottom
entitled "Key Ratios" (reference item (2) of the Appendix for a
description of the graphic material contained therein); vi) the left
hand column of page 22, stating the sources and uses, in the
aggregate, of cash flow during the period 1991 to 1993 (reference item
(3) of the Appendix for a description of the graphic material
contained therein); and vii) Notes 13, 14 and 15 to the Consolidated
Financial Statements, found on pages 33 and 34 of the Annual Report.
The business in which the Company is engaged is highly competitive.
The Company believes it is the leading producer of
electrical/electronic connection devices, and associated application
tools and machines. Over 90% of its business is in this single
business segment. Within this segment there is great variety: well
over 100,000 types and sizes are included in nearly 300 product
families. These product families generally involve the same or very
similar basic technology, materials, production processes and
marketing approaches. Over 60% of sales are of products provided in
strip form on reels and applied by customers with special AMP tools.
The balance of sales is of pre-assembled devices that do not require
application tools or machines. Over 90% of sales are of products in
just three Standard Industrial Classification 4-digit codes --
Electronic Connectors, Electronic Components - NEC, and Current
Carrying Wiring Devices. In all cases, the Company's products are
subject to direct and indirect competition. Generally speaking, most
of the Company's products involve technical competence in development
and manufacture and are subject to active competition with products
manufactured and sold by many other companies. The Company competes
primarily through offering high-quality, technical products and
associated application tooling, with emphasis on product performance
and service, and only secondarily competes on a price basis. The
Company has over 3000 patents issued or pending in the U.S. and over
11,000 patents issued or pending in 37 other countries, with no one
patent considered significant. The number of competitors is estimated
at over 1500.
The Company feels it has adequate sources of supply and does not
expect the cost and availability of materials to have a significant
overall effect on its total current operations.
The Company's backlog of unfilled orders decreased from $506,000,000
at year-end 1992 to $493,000,000 at year-end 1993, due partially to
currency effects, but has risen by approximately $65,000,000 so far in
1994. A majority of these orders were for delivery within the next
ninety days, and substantially all were scheduled for delivery within
12 months.
The Company is not aware of any material claims against its assets.
However, it is potentially liable for all or a portion of
investigative and environmental clean-up costs at several sites,
including three National Priorities List sites in the U.S. At one
Company-owned site, which is the subject of a Corrective Action
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Order under the Resource Conservation and Recovery Act, the Company
has incurred costs of approximately $1,600,000 since 1984 and
anticipates incurring additional costs of $150,000 - $210,000 per year
for at least the next five years. At another site, for which the
Company shares potential liability with at least seven other parties,
the Company spent approximately $350,000 in 1991-1993. The U.S. EPA
is expected to issue a decision on the required clean-up during 1994.
The Company expects the final amount it will be required to pay for
the clean-up to be less than $4,000,000, to be incurred primarily in
1995-1996. The Company also just recently received notice from the U.S.
EPA regarding potential liability at a third site. Because this matter
is in its early stages, potential liability to the Company is difficult
to estimate, although a preliminary review indicates potential liability
could amount to as much as $750,000.
During 1993 the Company resolved its liability at two
sites in settlement agreements reached with the government, and
remains involved in six other clean-up actions in the U.S. at which it
is considered a "de minimus" contributor. Several additional sites
are in the investigative stage, and the Company anticipates being
named as a potentially responsible party at some of those sites. The
Company is also voluntarily undertaking remediation activities at
approximately 16 of its own present or former facilities in the U.S.,
having spent approximately $12,500,000 in this type of effort since
1984. The Company's future environmental compliance costs are not
expected to have a material impact on the Company's financial results,
liquidity or capital expenditures. Over the five-year period
1989-1993 the Company has spent several million dollars annually for
remedial and preventative actions in protection of the environment.
The primary seasonal effect generally experienced by the Company is in
the third quarter when there usually is a temporary leveling off or
modest drop in the rate of new orders and shipments because of the
softening of customer demand in certain markets such as appliances,
automotive, and home entertainment goods arising from model year
changeovers, plant vacations and closedowns, and other traditional
seasonal practices. This seasonal effect is most evident in the
Company's European and Asia/Pacific regions, compared against sales
results of the second quarter. Earnings growth was interrupted in
the fourth quarter again this year primarily due to lower than
expected U.S., European and Japanese sales and strengthening of the
U.S. dollar. In the first quarter the Company usually experiences
some seasonal strengthening in domestic sales and orders.
Availability of remittances to the parent company by its subsidiaries is
subject to exchange controls and other restrictions of the various countries
in which the subsidiaries are located. Presently, there are no foreign
exchange or currency restrictions in the various countries that would
significantly affect the remittance of funds to AMP.
Item 2. PROPERTIES
The following sections of the Annual Report to shareholders for the
year ended December 31, 1993 are hereby incorporated by reference: i)
the item "Floor space (sq. ft. in millions)" under the "At December
31" column of the "Historical Data" table found on the reverse side of
the fold-out page, for years 1988 through 1993; ii) all narrative text
found on pages 7, 9 and 18, excluding all pictures and their captions
unless otherwise described below; iii) the picture of the new Singapore
plant found on page 7, together with its caption (reference item (4) of
the Appendix for a description of the picture and its caption); iv) the
pictures of the automotive connector plant under construction in Greensboro,
N.C. and the new CFC-free cleaning system at the Rapho Park, Manheim, PA
facility, found on page 9, together with their respective captions (reference
items (5) and (6) of the Appendix for a description of these pictures and
their captions); and v) the back cover (reference item (7) of the Appendix
for a description of two pictures included on the back cover, and their
respective captions).
The Company has approximately 10,100,000 sq. ft. of floor space in 175
facilities in the U.S. and 35 other countries, representing an increase of
over 600,000 sq. ft. in 1993. This expansion occurred primarily in the U.S.,
Argentina, China, Singapore and Spain. U.S. manufacturing, warehousing and
administrative facilities are located in Pennsylvania (50), North Carolina
(19), Arizona (1), California (14), Connecticut (2), Delaware (1), Florida (3),
Georgia (1), Massachusetts (3), New Jersey (1), Oregon (2), Texas (8), and
Virginia (4). Nearly half of these facilities are manufacturing plants. The
3
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Company's operations in the 35 countries other than the U.S. involve 32 major
facilities, 19 of which perform manufacturing and 13 of which have
marketing/warehousing/engineering functions.
Facilities are generally modern, well maintained and diversified
geographically within regions, with the typical size of major
facilities in the 50,000-100,000 sq. ft. range. No single facility is
material to the Company's business. The Company owns over 85% of its
floor space and leases the balance. The Company owns most of its major
facilities. Most of the leases on the other major manufacturing and
administrative facilities provide the right to buy or renew.
Capital expenditures were $330,400,000 in 1993, up from $312,500,000
in 1992 and $313,300,000 in 1991, and are expected to be somewhat
higher in 1994 compared to 1992-1993 levels. The current rate
of capacity utilization is estimated at 70-75% in domestic and 75-80%
in international operations.
Item 3. LEGAL PROCEEDINGS
In the opinion of management of the Company, there are no material
legal proceedings pending other than ordinary routine litigation
incident to the kind of business conducted by the Company, and no such
proceedings are known to be contemplated by governmental authorities.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Elected:
James E. Marley (58)* Ted L. Dalrymple (61) Javad K. Hassan (53)
Chairman of the Board Vice President, Vice President,
Global Marketing Global Strategic
William J. Hudson, Jr. (59)* Businesses
Chief Executive Officer Charles W. Goonrey (57)
and President, and Vice President, General David C. Cornelius (50)
Director Legal Counsel Controller
Benjamin Savidge (64)* Jean Gorjat (63) Joseph C. Overbaugh (48)
Executive Vice President Vice President, Treasurer
and Chief Financial Asia/Pacific
Officer, and Director David F. Henschel (43)
Corporate Secretary
Philip G. Guarneschelli (61)
Vice President, Global
Human Resources
John E. Gurski (53)
Vice President, Europe
Appointed:
Merrill A. Yohe (59)
Vice President - Public Affairs
*Member of the Executive Committee of the Board.
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The inside-back cover of the Annual Report to shareholders for the
year ended December 31, 1993 lists other officers who are not
executive officers and are not subject to Section 16 of the Securities
Exchange Act of 1934; the top portion of the inside-back cover where
the officers and divisional vice presidents of the Corporation are identified
is hereby incorporated by reference.
All of the elected executive officers with the exception of Mr.
Goonrey and Mr. Hassan have been employed by the Company for 16 years
or more. Messrs. Marley, Hudson, Savidge, Dalrymple and Guarneschelli
have served as officers for 10 or more years. Prior positions are as
follows: Mr. Marley was a divisional Vice President and group
director from 1970 to 1979, divisional Vice President, Manufacturing
Resources Planning from 1979 to 1980, divisional Vice President,
Manufacturing from 1980 to 1981, corporate Vice President, Manufacturing
from 1981 to 1983, corporate Vice President, Operations from 1983 to 1986,
President from 1986 to 1990, and President and Chief Operating Officer from
1990 to 1993. Mr. Hudson was divisional Vice President, Connector and
Electronic Products in 1982, divisional Vice President, Far East Operations
from 1983 to 1989, corporate Vice President, Far East Operations in 1989,
corporate Vice President, Asia/Pacific Operations from 1990 to 1991, and
Executive Vice President, International from 1991 to 1993. Mr. Savidge was
Assistant Controller from 1971 to 1979, Controller from 1979 to 1982, Vice
President and Controller from 1982 to 1986, and Vice President, Chief
Financial Officer from 1986 to 1989. Mr. Dalrymple was divisional Vice
President, International Sales from 1980 to 1987. Mr. Goonrey was Assistant
Secretary from 1983 to 1986, Assistant Secretary and General Legal Counsel
from 1986 to 1989, and divisional Vice President and General Legal Counsel
from 1989 to 1992. Mr. Gorjat was divisional Vice President, Latin America
Operations from 1986 to 1991, and divisional Vice President, Asia/Pacific
from 1991 to 1992. Mr. Guarneschelli was divisional Vice President,
Industrial Relations from 1980 to 1989. Mr. Gurski was divisional Vice
President, Connector & Electronics Product Group from 1985 to 1987,
divisional Vice President, Interconnection and Component Products Group in
1987, divisional Vice President, Operations from 1987 to 1989, corporate Vice
President, Operations in 1989, corporate Vice President, Capital Goods Sector
from 1989 to 1992, and corporate Vice President, Business and Operations
Planning, International from 1992 to 1993. Mr. Hassan was divisional
Vice President, Technology from 1989 to 1992, and corporate Vice
President, Technology and Strategic Products in 1992. Mr. Cornelius
was Assistant Controller from 1979 to 1991. Mr. Overbaugh was
Assistant Treasurer from 1987 to 1993. Mr. Henschel was Associate
General Legal Counsel from 1990 to 1993. The terms of these offices
are of one year duration or until a successor is elected and
qualifies.
Mr. Yohe, an appointed executive officer, became a divisional Vice
President in 1993, having previously been Secretary of the Company
from 1989 to 1993. Mr. Yohe has been employed by the Company for
more than 25 years.
PART II.
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The following sections of the Annual Report to shareholders for the
year ended December 31, 1993 are hereby incorporated by reference: i)
the items "Cash Dividends" and "Cash Dividends Per Share" under
the "For the Year" column of the "Historical Data" table found on the
reverse side of the fold-out page, for years 1988 through 1993; ii) the
"Stock Price Range" column of the "Historical Data" table found on the
reverse side of the fold-out page and the inside front cover, for years
1983 through 1993; and iii) the portion of the Corporate Data set forth
on page 36 that is entitled "Stock Information".
Annual dividends, which are paid on a quarterly basis, have increased
for 40 consecutive years and have increased more than 10% each year
for the past 34 years, except in 1972, 1986, 1991, 1992, and 1993.
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Annual dividends have increased at a compound annual average growth
rate of over 14%. The quarterly dividend increased to 40 cents per
share on March 1, 1993 and to 42 cents per share on March 1, 1994.
If the March 1, 1994 dividend rate continues through 1994, it will
result in the 41st consecutive increase in annual dividends.
Item 6. SELECTED FINANCIAL DATA
Within the portion of the "Historical Data" table found on the reverse
side of the fold-out page of the Annual Report to shareholders for the
year ended December 31, 1993, items "Net Sales" down to and including
"Cash Dividends Per Share" under the "For the Year" column for years
1988 through 1993, and all items under the "At December 31" column for
years 1988 through 1993, are hereby incorporated by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Pages 20-24 of the Annual Report to shareholders for the year ended
December 31, 1993 are hereby incorporated by reference (reference
items (2) and (3) of the Appendix for a description of the graphic
material contained therein).
Subsequent to the mailing of the Annual Report to shareholders for the year
ended December 31, 1993, the Company received notice from the U.S. EPA
regarding potential liability at a third National Priorities List
site. Because this matter is in its early stages, potential liability
to the Company is difficult to estimate, although a preliminary review
indicates potential liability could amount to as much as $750,000.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and Notes on pages 25-35 of the Annual Report
to shareholders for the year ended December 31, 1993 are hereby
incorporated by reference.
Financial Statement Schedules are filed under Item 14.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the Executive Officers of the
registrant, see "Executive Officers of the Registrant" at the end of
Part I of this Report. For information with respect to the Directors
of the registrant, see "Election of Directors" on pages 2-6 of the
Proxy Statement for the AMP Incorporated 1994 Annual Shareholders'
Meeting, which are hereby incorporated by reference (reference item
(8) of the Appendix for a description of the graphic material
contained therein).
Item 11. EXECUTIVE COMPENSATION
Pages 6-17 and 19-23 of the Proxy Statement for the AMP Incorporated
1994 Annual Shareholders' Meeting are hereby incorporated by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
No person is known to own beneficially more than 5% of the Common
Stock of the Company as of March 11, 1994.
Page 18 and the right hand column of pages 2-6 (entitled "Shares of
Common Stock (5)"), together with footnotes (5) through (9) on page 6,
of the Proxy Statement for the AMP Incorporated 1994 Annual
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Shareholder's Meeting are hereby incorporated by reference as to
security ownership of directors and executive officers.
There are no arrangements known to the registrant which may at a
subsequent date result in a change in control of the registrant.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Footnotes (2) and (3) on page 7 and the section at the bottom of page 23
entitled "Certain Relationships and Related Transactions" of the Proxy
Statement for the AMP Incorporated 1994 Annual Shareholders'
Meeting are hereby incorporated by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) Documents Filed as a Part of the Form 10-K Report
1. Consolidated Statements of Income, Shareholders' Equity, and Cash
Flows, for the years ended December 31, 1991, 1992 and 1993;
Consolidated Balance Sheets as of December 31, 1992 and 1993; the
accompanying Notes to Consolidated Financial Statements; and the
Report of Independent Public Accountants thereon, on pages 25-35
of the Annual Report to shareholders for the year ended December
31, 1993, are hereby incorporated by reference.
Statements of the Registrant - Separate financial statements are
omitted for AMP Incorporated since it is primarily an operating
company and all subsidiaries included in the consolidated
financial statements are wholly owned and their restricted net
assets are not material in relation to total consolidated net
assets at December 31, 1993.
2. Financial Statement Schedules:
Schedules included:
I - Marketable Securities - Other Security Investments... P. 12
II - Amounts Receivable From Related Parties ............. P. 12
V - Property, Plant and Equipment........................ P. 13
VI - Accumulated Depreciation on Property, Plant and
Equipment........................................... P. 14
VIII - Valuation and Qualifying Accounts and
Reserves............................................ P. 15
IX - Short-Term Borrowings................................ P. 15
X - Supplementary Income Statement Information........... P. 16
Report of Company's independent public accountants with respect
to the Financial Statement Schedules............................. P. 16
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Schedules Omitted - Schedules III, IV, VII, XI, XII and XIII are
omitted as not applicable because the required matter or conditions
are not present.
3. EXHIBITS:
Exhibit
Number Description
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3.(i) - Articles of Incorporation of the Company
3.(ii) - Bylaws of the Company (incorporated by reference to Exhibit
3-b of the 10-K Report for the year ended December 31, 1991)
4.A - Shareholder Rights Plan adopted by the Company's Board of
Directors October 25, 1989 (incorporated by reference to
Exhibit 4 of the 10-Q Report for the Quarter ended September
30, 1989)
4.B - Amendment Rights Agreement between the Company and Chemical
Bank, as Rights Agent for the Shareholder Rights Plan, dated
September 4, 1992 (incorporated by reference to Exhibit 4-b
of the 10-K Report for the year ended December 31, 1992)
4.C - Instruments defining the rights of holders of long-term debt,
including indentures. Upon request of the Securities and Exchange
Commission, the Company hereby undertakes to furnish copies of the
instruments with respect to its long-term debt, none of which have
been registered or authorize securities in a total amount that
exceeds 10 percent of the total assets of the Company and its
subisidiaries on a consolidated basis
10.A*- Directors' and Officers' Liability Insurance Policies issued
by Federal Insurance Company, current policy period
commencing September 1, 1993 (basic policy incorporated by
reference to Exhibit 10-a of the 10-K Report for the year
ended December 31, 1990)
10.B*- Executive Severance Agreements dated October 28, 1981,
October 27, 1983, and January 24, 1990 between the Company
and certain of the Company's Executive Officers (also see
the section entitled "Termination of Employment and Change of
Control Arrangements" on Page 23 of the AMP 1994 Proxy
Statement incorporated by reference under Item 11, Part III
of this Report). (The 1981 and 1983 Agreements are
incorporated by reference to Exhibit 10-b of the 10-K Report
for the year ended December 31, 1990)
10.C*- AMP Incorporated Bonus Plan (Stock Plus Cash) (also see
footnote (1) on Pages 13-14 of the AMP 1994 Proxy Statement
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 10-c of the
10-K Report for the year ended December 31, 1992)
10.D*- Supplemental Employee Retirement Plan (summarized on Page 16
of the AMP 1994 Proxy Statement incorporated by reference
under Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10-d of the 10-K Report for the year
ended December 31, 1991)
10.E*- Executive life insurance plan (incorporated by reference to
Exhibit 10-e of the 10-K Report for the year ended December
31, 1990)
10.F*- Executive secular trust agreement (also see Page 16 of the
AMP 1994 Proxy Statement incorporated by reference under Item
11, Part III of this Report). (Incorporated by reference to
Exhibit 10-f of the 10-K Report for the year ended December
31, 1991)
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<PAGE>
10.G*- Retirement plan for outside directors (also see the section
entitled "Retirement" on Pages 7-8 of the AMP 1994 Proxy
Statement incorporated by reference under Item 11, Part III
of this Report). (Incorporated by reference to Exhibit 10-g
of the 10-K Report for the year ended December 31, 1990)
10.H*- Consulting agreement between the Company and Mr. Walter F.
Raab, Director and former Chairman of the Board and Chief
Executive Officer, dated December 19, 1990 (incorporated
by reference to Exhibit 10-h of the 10-K Report for the year
ended December 31, 1992)
10.I*- Amendment to the consulting agreement between the Company and
Mr. Walter F. Raab, dated December 21, 1992 (also see
footnote (3) on Page 7 of the AMP 1994 Proxy Statement
incorporated by reference under Item 13, Part III of this
Report). (Incorporated by reference to Exhibit 10-i of the
10-K report for the year ended December 31, 1992)
10.J*- Consulting agreement between the Company and Mr. Harold A.
McInnes, Director and former Chairman of the Board and Chief
Executive Officer, dated December 21, 1992 (also see footnote
(2) on Page 7 of the AMP 1994 Proxy Statement incorporated by
reference under Item 13, Part III of this Report).
(Incorporated by reference to Exhibit 10-j of the 10-K Report
for the year ended December 31, 1992)
10.K*- Management Incentive Plan (also see column (d) of the Summary
Compensation Table on Page 9 of the AMP 1994 Proxy Statement
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 10-i of the
10-K Report for the year ended December 31, 1991)
10.L*- Director and officer indemnification agreements (incorporated
by reference to Exhibit 10-j of the 10-K Report for the year
ended December 31, 1991)
10.M*- AMP Incorporated 1993 Long-Term Equity Incentive Plan (also
see footnote (1) on Page 12 of the 1994 Proxy Statement
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 4-a of
Registration No. 33-65048 on Form S-8 as filed with the
Securities and Exchange Commission on June 25, 1993)
10.N*- AMP Incorporated Stock Bonus Unit and Supplemental Cash Bonus
Agreement (Incorporated by reference to Exhibit 10.B of the
10-Q Report for the Quarter ended September 30, 1993)
10.O*- AMP Incorporated Non-Qualified Stock Option Agreement
(incorporated by reference to Exhibit 10.C of the 10-Q Report
for the Quarter ended September 30, 1993)
10.P*- AMP Incorporated Incentive Stock Option Agreement
(incorporated by reference to Exhibit 10.D of the 10-Q Report
for the Quarter ended September 30, 1993)
13 - Portions of the Annual Report to shareholders for the
year ended December 31, 1993 that are specifically
incorporated by reference into this Report
21 - List of Subsidiaries
23 - Consent of Independent Public Accountants
- ----------------------
* A management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to the
requirements of this 10-K Annual Report.
9
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THE COMPANY WILL FURNISH ANY EXHIBIT LISTED ABOVE UPON REQUEST.
EXCEPT FOR THE ANNUAL REPORT TO SHAREHOLDERS, PAYMENT FOR THE COST OF
PROVIDING THE EXHIBIT MAY BE REQUIRED FOR VOLUMINOUS EXHIBITS.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months
ended December 31, 1993.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual
report to be signed on its behalf by the undersigned, thereunto duly
authorized, as of the 29th day of March, 1994.
AMP Incorporated
/s/ Benjamin Savidge
By_____________________________________
Benjamin Savidge, Executive Vice
President and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report has been signed by the following persons on behalf
of the registrant and in the capacities and as of the dates indicated.
Signature Title Date
/s/ J. E. Marley
___________________ Chairman of the Board and a March 29, 1994
(J. E. Marley) Director
/s/ W. J. Hudson
___________________ Chief Executive Officer and March 29, 1994
W. J. Hudson) President and a Director
/s/ B. Savidge
___________________ Executive Vice President and March 29, 1994
(B. Savidge) Chief Financial Officer, and
a Director
/s/ D. C. Cornelius
___________________ Controller March 29, 1994
(D. C. Cornelius)
/s/ D. F. Baker
___________________ Director March 29, 1994
(D. F. Baker)
/s/ J. J. Burdge
___________________ Director March 29, 1994
(J. J. Burdge)
/s/ W.E.C. Dearden
___________________ Director March 29, 1994
(W. E. C. Dearden)
/s/ Ralph D. DeNunzio
___________________ Director March 29, 1994
(R. D. DeNunzio)
/s/ B. H. Franklin
___________________ Director March 29, 1994
(B. H. Franklin)
/s/ J. M. Hixon
___________________ Director March 29, 1994
(J. M. Hixon III)
/s/ H. A. McInnes
___________________ Director March 29, 1994
(H. A. McInnes)
/s/ John C. Morley
___________________ Director March 29, 1994
(J. C. Morley)
/s/ W. F. Raab
___________________ Director March 29, 1994
(W. F. Raab)
/s/ P. G. Schloemer
___________________ Director March 29, 1994
(P. G. Schloemer)
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AMP INCORPORATED & SUBSIDIARIES
<TABLE>
Schedule I
MARKETABLE SECURITIES -- OTHER SECURITY INVESTMENTS
<CAPTION>
Amount Included in the
Number of Consolidated Balance Sheet as: Value Based
Shares or Units -- ------------------------------ on Market
Name of Issuer and Principal Amount of Cost of Cash Marketable Quotations at
Title of Each Issue Bonds and Notes Each Issue Equivalents Securities Year End
------------------- ------------------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
U.S. Government Securities<F1>...$ 88,000,000 $ 88,285,000 $ --- $ 88,283,000 $ 88,275,000
State and Municipal Securities... 51,000,000 50,804,000 34,820,000 15,984,000 50,804,000
Commercial Paper................. 19,000,000 18,867,000 10,317,000 8,550,000 18,867,000
Preferred Stock<F1>.............. --- --- --- --- ---
Mutual and Money Market
funds<F1><F2>.................... 156,000,000 155,752,000 119,177,000 36,500,000 155,824,000
Repurchase Agreements<F3>........ 12,000,000 11,988,000 11,988,000 --- 11,988,000
------------ ------------ ------------ ------------ ------------
$326,000,000 $325,696,000 $176,302,000<F4> $149,317,000 $325,758,000
============ ============ ============ ============ ============
__________
<FN>
<F1> No individual security issue exceeds 2% of total assets.
<F2> Invested principally in U. S. Government, State, Municipal and
high-grade corporate securities.
<F3> Loans to banks, which are fully collateralized by U. S.
Government securities or high-grade commercial paper.
<F4> Also included in the balance sheet caption "Cash and Cash
Equivalents" are cash and time deposits of $81,376,000.
</TABLE>
<TABLE>
Schedule II
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
<CAPTION>
Deductions
Balance at ------------------------ Balance at
Beginning Amounts Amounts End
Name of Debtor of Year Additions Collected Written Off of Year<F3>
-------------- ---------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Javad K. Hassan<F1>
Year ended December 31, 1993 $ -- $ -- $ -- $ -- $ --
Year ended December 31, 1992 $ -- $ -- $ -- $ -- $ --
Year ended December 31, 1991 $750,000 $ -- $750,000 $ -- $ --<F2>
__________
<FN>
<F1> Vice President-Global Strategic Businesses, AMP Incorporated.
<F2> Non-interest bearing loan due April 4, 1991 (paid April 8, 1991)
secured by personal property.
<F3> Classified with Investments and Other Assets in the Consolidated
Balance Sheet.
</TABLE>
12
<PAGE>
AMP INCORPORATED & SUBSIDIARIES
<TABLE>
Schedule V
PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
<CAPTION>
Balance at Balance at
Beginning Additions Retirements, Translation End
Classification of Year at Cost Etc. Adjustments of Year
- -------------- -------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
Land...................... $ 50,783,000 $ 2,142,000 $ 44,000 $ 1,962,000 $ 54,931,000
Buildings and
leasehold improvements.... 547,673,000 53,458,000 (68,000) (1,001,000) 600,062,000
Machinery and equipment... 1,777,320,000 239,470,000 (52,537,000) (2,570,000) 1,961,683,000
Machines and tools with
customers................. 339,468,000 35,335,000 (32,821,000) (3,722,000) 338,260,000
-------------- ------------ ------------- ------------ --------------
$2,715,244,000 $330,405,000 $(85,382,000) $(5,331,000) $2,954,936,000
============== ============ ============= ============ ==============
YEAR ENDED DECEMBER 31, 1992:
Land...................... $ 50,582,000 $ 388,000 $ 28,000 $ (215,000) $ 50,783,000
Buildings and
leasehold improvements.... 512,546,000 46,986,000 (4,737,000) (7,122,000) 547,673,000
Machinery and equipment... 1,643,934,000 223,698,000 (45,449,000) (44,863,000) 1,777,320,000
Machines and tools with
customers................. 343,344,000 41,391,000 (34,104,000) (11,163,000) 339,468,000
-------------- ------------ ------------- ------------ --------------
$2,550,406,000 $312,463,000 $(84,262,000) $(63,363,000) $2,715,244,000
============== ============ ============= ============ ==============
YEAR ENDED DECEMBER 31, 1991:
Land...................... $ 48,766,000 $ 1,249,000 $ 308,000 $ 259,000 $ 50,582,000
Buildings and
leasehold improvements.... 479,243,000 39,407,000 (6,779,000) 675,000 512,546,000
Machinery and equipment... 1,451,566,000 227,028,000 (38,331,000) 3,671,000 1,643,934,000
Machines and tools with
customers................. 323,753,000 45,650,000 (25,604,000) (455,000) 343,344,000
-------------- ------------ ------------- ----------- --------------
$2,303,328,000 $313,334,000 $(70,406,000) $4,150,000 $2,550,406,000
============== ============ ============= =========== ==============
</TABLE>
13 <PAGE>
<PAGE>
AMP INCORPORATED & SUBSIDIARIES
<TABLE>
Schedule VI
ACCUMULATED DEPRECIATION ON PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and Retirements, Translation End
Classification of Year Expenses Etc. Adjustments of Year
- -------------- -------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
Buildings and
leasehold improvements.... $ 209,736,000 $ 26,372,000 $ (1,699,000) $ (1,066,000) $ 233,343,000
Machinery and equipment... 1,088,970,000 199,332,000 (49,340,000) (8,815,000) 1,230,147,000
Machines and tools with
customers................. 237,777,000 36,425,000 (24,649,000) (3,232,000) 246,321,000
-------------- ------------ ------------- ------------- --------------
$1,536,483,000 $262,129,000 $(75,688,000) $(13,113,000) $1,709,811,000
============== ============ ============= ============= ==============
YEAR ENDED DECEMBER 31, 1992:
Buildings and
leasehold improvements.... $ 187,605,000 $ 26,119,000 $ (1,168,000) $ (2,820,000) $ 209,736,000
Machinery and equipment... 951,943,000 200,486,000 (35,448,000) (28,011,000) 1,088,970,000
Machines and tools with
customers................. 230,688,000 40,080,000 (24,969,000) (8,022,000) 237,777,000
-------------- ------------ ------------- ------------- --------------
$1,370,236,000 $266,685,000 $(61,585,000) $(38,853,000) $1,536,483,000
============== ============ ============= ============= ==============
YEAR ENDED DECEMBER 31, 1991:
Buildings and
leasehold improvements.... $ 167,118,000 $ 23,341,000 $ (2,704,000) $ (150,000) $ 187,605,000
Machinery and equipment... 803,880,000 174,312,000 (29,373,000) 3,124,000 951,943,000
Machines and tools with
customers................. 210,786,000 38,836,000 (19,258,000) 324,000 230,688,000
-------------- ------------ ------------- ------------ --------------
$1,181,784,000 $236,489,000 $(51,335,000) $3,298,000 $1,370,236,000
============== ============ ============= =========== ==============
</TABLE>
14
<PAGE>
AMP INCORPORATED & SUBSIDIARIES
<TABLE>
Schedule VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
Balance at Additions Deductions Balance at
Beginning Charged to from Translation End
Description of Year Expense Reserves<F1> Adjustments of Year
- ----------- ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
RESERVE DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSET TO WHICH IT APPLIES:
Reserve for doubtful accounts--
Year ended December 31, 1993 $11,532,000 $5,544,000 $(3,045,000) $(611,000) $13,420,000
Year ended December 31, 1992 $10,822,000 $5,147,000 $(3,525,000) $(912,000) $11,532,000
Year ended December 31, 1991 $ 9,859,000 $3,470,000 $(2,495,000) $ (12,000) $10,822,000
__________
<FN>
<F1> Uncollectible accounts charged against the reserve, net of recoveries.
Schedule IX
</TABLE>
<TABLE>
SHORT-TERM BORROWINGS
<CAPTION>
Weighted Maximum Average Weighted
Average Amount Amount Average
Balance at Interest Rate Outstanding Outstanding Interest Rate
Category of Aggregate End of at End of During the During the During the
Short-Term Borrowings Year Year Year Year <F2> Year <F3>
- ---------------------------- ------------ -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Bank loans <F1>........... $162,485,000 5.7% $255,223,000 $187,277,000 5.9%
YEAR ENDED DECEMBER 31, 1992
Bank loans <F1>........... $296,120,000 7.1% $325,484,000 $274,524,000 7.7%
YEAR ENDED DECEMBER 31, 1991
Bank loans <F1>........... $304,333,000 9.1% $343,594,000 $313,454,000 10.1%
_
<FN>
<F1> These amounts represent borrowings of international subsidiaries that are substantially on an overdraft basis.
<F2> The average amount outstanding during the period was calculated by dividing the borrowings outstanding at the
end of the months by the number of months such amounts were outstanding.
<F3> The weighted average interest rate during the period was calculated by dividing interest expense on each
category of short-term borrowings by the related average amount outstanding during the period.
</TABLE>
15
<PAGE>
AMP INCORPORATED & SUBSIDIARIES
<TABLE>
Schedule X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
<CAPTION>
Year Ended December 31,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
CHARGED TO COSTS AND EXPENSES
Maintenance and repairs $123,499,000 $117,364,000 $108,433,000
Amounts for depreciation and amortization of intangible assets, preoperating costs and similar deferrals,
taxes other than payroll and income taxes, royalties and advertising costs are not presented as such
amounts are less than 1% of net sales.
</TABLE>
---------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To AMP Incorporated:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in AMP
Incorporated's annual report to shareholders, incorporated by
reference in this Form 10-K, and have issued our report thereon
dated February 18, 1994. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The
schedules listed in Item 14-2 are the responsibility of the
Company's management and are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have
been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly
state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements
taken as a whole.
Philadelphia, PA
February 18, 1994 /s/ Arthur Andersen & Co.
Arthur Andersen & Co.
16
<PAGE>
APPENDIX
10-K Report for Year Ended December 31 ,1993
1) Part I, Item 1, Business. The right hand column of page 1 of the
Annual Report to shareholders for the year ended December 31,
1993, entitled "Diversification of AMP Worldwide Sales", sets
forth three pie charts. The first pie chart graphically depicts,
by color coding, the following geographic diversification of
1993 AMP worldwide sales (by percent):
United States 43
Europe 31
Asia/Pacific 21
Americas 5
The second pie chart graphically depicts, by color coding, the
following diversification of markets to which 1993 AMP worldwide
sales were made (by percent):
Aerospace/Military 5
Industrial/Commercial 10
Communications 10
Computer/Office 20
Consumer Goods 10
Transportation/Electrical 30
Distribution, Construction, etc. 15
The third pie chart graphically depicts, by color coding, the
following diversification in channels through which the 1993 AMP
worldwide sales were made (by percent):
Direct 86
Distribution & Co-op Affiliates 14
2) Part I, Item 1, Business. The right hand column of page 21 of the
Annual Report to shareholders for the year ended December 31, 1993
includes a pie chart in the section entitled "Sales Dollar Use".
This pie chart graphically depicts, by color coding, the following
uses to which sales dollar revenues were directed in 1993 (by
percent):
Wages, benefits 34.2
Materials, services 42.4
Depreciation/amortization 8.2
Interest .6
Taxes 6.0
Dividends 4.9
Reinvested 3.7
__________
100.0
3) Part I, Item 1, Business. The left hand column of page 22 of the
Annual Report to shareholders for the year ended December 31, 1993
sets forth two pie charts. The first pie chart graphically depicts,
by color coding, the following sources of cash flow for the period
1991-1993, in the aggregate (stated in millions of dollars):
Net Income 847
Depreciation and Other Operating
Sources, Net 875
Decrease in Cash and Equivalents 145
__________
1,867
17
<PAGE>
The second pie chart graphically depicts, by color coding, the
following uses of cash flow for the period 1991-1993, in the aggregate
(stated in millions of dollars):
Additions to Property, Plant and
Equipment, and Other Investments 1,163
Dividends 481
Purchase of Treasury Stock 82
Reduction of Debt, Net 141
___________
1,867
4) Part I, Item 2, Properties. The bottom picture on page 7 of the Annual
Report to shareholders for the year ended December 31, 1993 is approximately
2 1/2 inches-by-1 13/16 inches and shows a view of the new plant in
Singapore from the front of the building at an angle, showing the front and
a portion of the left side (as you face the building) of a newly-constructed
4-story, largely glass and concrete structure with an arched portico over the
front entrance. The front face of the building is virtually entirely a bluish-
tinted glass, with the front entrance and portico located slightly left of
center. The caption for the picture reads: "BOTTOM - Our third plant
in Singapore, which began operation in 1993, adds significant capacity for
serving the entire rapidly growing Asia/Pacific region."
5) Part I, Item 2, Properties. The middle picture on page 9 of the Annual
Report to shareholders for the year ended December 31, 1993 is approximately
1 3/4 inches square and shows three men in hard hats reviewing a blueprint
they are holding while standing in the middle of a large, open interior of a
structure that is under construction, with construction materials in the
foreground and vehicles and other people in the background. The caption for
the picture states: "MIDDLE - Plant management/team leader personnel planning
layout of large (200,000 sq. ft.) automotive connector plant in Greensboro,
N.C. Left to right: Automotive business unit director John Cranford, project
manager Robert Marcus, and Chris Mitchell, building contractor."
6) Part I, Item 2, Properties. The bottom picture on page 9 of the Annual
Report to shareholders for the year ended December 31, 1993, which is
approximately 1 3/4 inches square, shows a female and a male examining both
a clipboard that the male is holding and the industrial equipment in the
foreground. The industrial equipment consists of a series of large cylinders,
approximately 2 feet in diameter and 4 feet long, that rotate while partly
submerged in a liquid. The caption for the picture reads: "BOTTOM - Carol
Ritter, divisional Vice President - Environmental Programs (left), reviewing
with project manager Robert Maier a new CFC-free cleaning system at our Rapho
Park facility, Manheim, PA. We continue to move closer to our goal of zero
discharge."
7) Part I, Item 2, Properties. The two pictures found on the back cover of
the Annual Report to shareholders for the year ended December 31, 1993 consist
of the following:
1. The picture to the left is approximately 1 1/8 inches-by-13/16 inch and
shows the new AMP S.A. Argentina C.I.Y.F. facility. The view is from
the right front as you face the building. The building is a two-story
brick and concrete structure. There is a concrete overhang that
protects the entrance to the building, which is centered in the front.
The concrete rises up from the overhang and extends above the top of
the building, on which extension the name "AMP" appears. The windows
alternate with concrete sections on the first floor, but on the second
floor sets of three windows are offset by one concrete section. The
building has a grass border in the front along a sidewalk that extends
the length of the front of the building, and there is a fenced-in
garden on one side of the entrance, between the sidewalk and the
building. The caption below the picture reads: "New AMP Argentina
facility".
18
<PAGE>
2. The second picture, which is the same size as the picture described
above, shows a view of the new AMP Shanghai facility from the front
of the building at an angle, showing the front and a portion of the
left side (as you face the building). The left part of the building
has two stories and is white with continuous brownish-tinted glass
windows on both floors and a rounded corner. At an entrance where the
2-story portion of the building interfaces with the remaining 1-story
portion, a rounded glass enclosure extends from above the entrance to
the top of the second story. The 1-story portion of the building
represents the majority of the frontage and has the same appearance as
the first floor of the 2-story section. A second entrance is
approximately in the middle of the 1-story section and has a portico
that protects a driveway and is supported by a dark-colored arch that
is about the same size and shape as the white portico itself. A
driveway wraps around the building to the extent it is shown in the
picture. The caption below the picture reads: "New AMP Shanghai
facility".
8) Part III, Item 10, Directors and Executive Officers of the
Registrant. Page 2 of the Proxy Statement for the AMP Incorporated
1994 Annual Shareholders' Meeting includes a portrait photograph of
Dexter F. Baker, a director and nominee for director. Page 3 of said
Proxy Statement includes portrait photographs of the following
directors and nominees for director: Jeffrey J. Burdge, William E.
Dearden, Ralph D. DeNunzio, and Barbara Hackman Franklin. Page 4 of
said Proxy Statement includes portrait photographs of the following
directors and nominees for director: Joseph M. Hixon, III, William J.
Hudson, Jr., James E. Marley, and Harold A. McInnes. Page 5 of said Proxy
Statement includes portrait photographs of the following directors and
nominees for director: John C. Morley, Walter F. Raab, Benjamin
Savidge, and Paul G. Schloemer.
19
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -------------
3.(i) - Articles of Incorporation of the Company
3.(ii) - Bylaws of the Company (incorporated by reference to Exhibit
3-b of the 10-K Report for the year ended December 31, 1991)
4.A - Shareholder Rights Plan adopted by the Company's Board of
Directors October 25, 1989 (incorporated by reference to
Exhibit 4 of the 10-Q Report for the Quarter ended September
30, 1989)
4.B - Amendment Rights Agreement between the Company and Chemical
Bank, as Rights Agent for the Shareholder Rights Plan, dated
September 4, 1992 (incorporated by reference to Exhibit 4-b
of the 10-K Report for the year ended December 31, 1992)
4.C - Instruments defining the rights of holders of long-term debt,
including indentures. Upon request of the Securities and Exchange
Commission, the Company hereby undertakes to furnish copies of the
instruments with respect to its long-term debt, none of which have
been registered or authorize securities in a total amount that
exceeds 10 percent of the total assets of the Company and its
subsidiaries on a consolidated basis
10.A - Directors' and Officers' Liability Insurance Policies issued
by Federal Insurance Company, current policy period
commencing September 1, 1993 (basic policy incorporated by
reference to Exhibit 10-a of the 10-K Report for the year
ended December 31, 1990)
10.B - Executive Severance Agreements dated October 28, 1981,
October 27, 1983, and January 24, 1990 between the Company
and certain of the Company's Executive Officers (also see
the section entitled "Termination of Employment and Change of
Control Arrangements" on Page 23 of the AMP 1994 Proxy
Statement incorporated by reference under Item 11, Part III
of this Report). (The 1981 and 1983 Agreements are
incorporated by reference to Exhibit 10-b of the 10-K Report
for the year ended December 31, 1990)
10.C - AMP Incorporated Bonus Plan (Stock Plus Cash) (also see
footnote (1) on Pages 13-14 of the AMP 1994 Proxy Statement
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 10-c of the
10-K Report for the year ended December 31, 1992)
10.D - Supplemental Employee Retirement Plan (summarized on Page 16
of the AMP 1994 Proxy Statement incorporated by reference
under Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10-d of the 10-K Report for the year
ended December 31, 1991)
10.E - Executive life insurance plan (incorporated by reference to
Exhibit 10-e of the 10-K Report for the year ended December
31, 1990)
10.F - Executive secular trust agreement (also see Page 16 of the
AMP 1994 Proxy Statement incorporated by reference under Item
11, Part III of this Report). (Incorporated by reference to
Exhibit 10-f of the 10-K Report for the year ended December
31, 1991)
10.G - Retirement plan for outside directors (also see the section
entitled "Retirement" on Pages 7-8 of the AMP 1994 Proxy
Statement incorporated by reference under Item 11, Part III
of this Report). (Incorporated by reference to Exhibit 10-g
of the 10-K Report for the year ended December 31, 1990)
10.H - Consulting agreement between the Company and Mr. Walter F.
Raab, Director and former Chairman of the Board and Chief
Executive Officer, dated December 19, 1990 (incorporated
by reference to Exhibit 10-h of the 10-K Report for the year
ended December 31, 1992)
10.I - Amendment to the consulting agreement between the Company and
Mr. Walter F. Raab, dated December 21, 1992 (also see
footnote (3) on Page 7 of the AMP 1994 Proxy Statement
incorporated by reference under Item 13, Part III of this
Report). (Incorporated by reference to Exhibit 10-i of the
10-K report for the year ended December 31, 1992)
10.J - Consulting agreement between the Company and Mr. Harold A.
McInnes, Director and former Chairman of the Board and Chief
Executive Officer, dated December 21, 1992 (also see footnote
(2) on Page 7 of the AMP 1994 Proxy Statement incorporated by
reference under Item 13, Part III of this Report).
(Incorporated by reference to Exhibit 10-j of the 10-K Report
for the year ended December 31, 1992)
10.K - Management Incentive Plan (also see column (d) of the Summary
Compensation Table on Page 9 of the AMP 1994 Proxy Statement
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 10-i of the
10-K Report for the year ended December 31, 1991)
10.L - Director and officer indemnification agreements (incorporated
by reference to Exhibit 10-j of the 10-K Report for the year
ended December 31, 1991)
10.M - AMP Incorporated 1993 Long-Term Equity Incentive Plan (also
see footnote (1) on Page 12 of the 1994 Proxy Statement
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 4-a of
Registration No. 33-65048 on Form S-8 as filed with the
Securities and Exchange Commission on June 25, 1993)
10.N - AMP Incorporated Stock Bonus Unit and Supplemental Cash Bonus
Agreement (Incorporated by reference to Exhibit 10.B of the
10-Q Report for the Quarter ended September 30, 1993)
10.O - AMP Incorporated Non-Qualified Stock Option Agreement
(incorporated by reference to Exhibit 10.C of the 10-Q Report
for the Quarter ended September 30, 1993)
10.P - AMP Incorporated Incentive Stock Option Agreement
(incorporated by reference to Exhibit 10.D of the 10-Q Report
for the Quarter ended September 30, 1993)
13 - Portions of the Annual Report to shareholders for the
year ended December 31, 1993 that are specifically
incorporated by reference into this Report
21 - List of Subsidiaries
23 - Consent of Independent Public Accountants
EX-3.(i)
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Restated Articles of Incorporation
Domestic Business Corporation
In compliance with the requirements of the Pennsylvania
Business Corporation Law of 1988, Act of December 21, 1988, P.L.
1444, No. 177, as amended, and specifically Section 1914(c)(4)
thereof, the undersigned, desiring to restate without change all
of the operative provisions of the Articles of Incorporation as
heretofore amended, hereby certifies that the Articles of
Incorporation are the following:
ARTICLE I The name of the Corporation is AMP INCORPORATED.
ARTICLE II The address of its registered office in the
Commonwealth of Pennsylvania is 470 Friendship Road, Harrisburg,
Dauphin County, Pennsylvania 17111.
ARTICLE III The Corporation is incorporated under the
Business Corporation Law of the Commonwealth of Pennsylvania, Act
of May 5, 1933, P.L. 364, as amended. The purposes for which the
Corporation is incorporated are that the Corporation shall have
unlimited power to engage in and to do any lawful act concerning
any or all lawful business for which corporations now or at any
time hereafter may be incorporated under the Business Corporation
Law of the Commonwealth of Pennsylvania, Act of May 5, 1933, P.L.
364, as amended and under all amendments and supplements thereto,
or any revision or restatement thereof or any statute enacted to
take the place thereof (hereinafter the "Business Corporation
Law"), including but not limited to manufacturing, processing,
fabricating, assembling and research and development, and also
including without limiting the generality of the foregoing:
1. To engage in any such activities directly or through a
subsidiary or subsidiaries and to take any and all acts deemed
appropriate to promote the interest of such subsidiary or
subsidiaries, including without limiting the foregoing, the
following: making contracts and incurring liabilities for the
benefit of such subsidiary or subsidiaries; transferring or
causing to be transferred to any such subsidiary or subsidiaries
assets of this Corporation; guaranteeing dividends on any shares
of the capital stock of any such subsidiary; guaranteeing the
principal and interest or either of the bonds, debentures, notes
or other evidences of indebtedness issued or obligations incurred
by any such subsidiary or subsidiaries; securing said bonds,
debentures, notes or other evidences of indebtedness so
guaranteed by mortgage of or security interest in the property of
the Corporation; and contracting that said bonds, debentures,
notes or other evidences of indebtedness so guaranteed, whether
secured or not, may be convertible into shares of the Corporation
upon such terms and conditions as may be approved by the Board of
Directors; and
2. To exercise as a purpose or purposes each power granted
to corporations by the Business Corporation Law insofar as such
powers authorize or may hereafter authorize corporations to
engage in activities; and to guarantee the bonds, debentures,
notes or other evidences of indebtedness issued, or obligations
incurred, by any corporation, partnership, limited partnership,
joint venture or other association in which the Corporation at
the time such guarantee is made has a substantial interest or
where such guarantee is otherwise in furtherance of the interests
of the Corporation.
ARTICLE IV The aggregate number of shares which the
Corporation shall have authority to issue is 350,000,000 shares
of Common Stock without par value. The Corporation may issue and
deliver unissued or treasury shares, or option rights, or
securities having conversion or option rights, whether presently
or hereafter authorized, in such manner and for such
considerations as from time to time may be fixed by the Board of
Directors, without first offering them to existing shareholders.
ARTICLE V The duration of the Corporation shall be
perpetual. The stock of the Corporation shall not be assessed,
nor shall the holders thereof or their property be liable for the
debts of the Corporation, to any extent whatever.
ARTICLE VI
1. The number of directors of the Corporation shall be such
number not less than three as may be fixed from time to time by the
By-Laws or in the manner prescribed in the By-Laws.
2. The Board of Directors may determine from time to time to
what extent and at what places and under what conditions and
regulations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the shareholders, and no
shareholder shall have any right to inspect any account, book or
documents of the Corporation, except as conferred by statute or
by the Board of Directors.
ARTICLE VII Except as otherwise provided by statute or by
these Articles of Incorporation as the same may be amended from
time to time or by By-Laws as the same may be amended from time
to time, all corporate powers may be exercised by the Board of
Directors. Without limiting the foregoing, the Board of
Directors shall have power, without shareholder action:
1. To authorize the Corporation to purchase, acquire, hold,
lease, mortgage, pledge, sell and convey such property, real,
personal and mixed, without as well as within the Commonwealth of
Pennsylvania, as the Board of Directors may from time to time
determine, and in payment for any property purchased to issue, or
cause to be issued, shares of the Corporation, or bonds,
debentures, notes or other obligations or evidences of
indebtedness thereof secured by pledge, security interest or
mortgage, or unsecured.
2. To authorize the borrowing of money; the issuance of
bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation, secured or unsecured, and the
inclusion of provisions as to redeemability and convertibility
into shares of stock of the Corporation or otherwise; and, as
security for money borrowed or bonds, debentures, notes and other
obligations or evidences of indebtedness issued by the
Corporation, the mortgaging or pledging of any property, real,
personal or mixed, then owned or thereafter acquired by the
Corporation.
ARTICLE VIII The shareholders of the Corporation shall
not have cumulative voting in the election of directors.
ARTICLE IX Any action that may be taken at a meeting of
the shareholders or of a class of shareholders may be taken
without a meeting if proper consent is made to the action. Any
such action may be taken without a meeting upon the written
consent of shareholders who would have been entitled to cast the
minimum number of votes that would be necessary to authorize the
action at a meeting at which all shareholders entitled to vote
were present and voting.
ARTICLE X Except as provided in subparagraph 2 below,
no corporate action of a character described in subparagraph 1
below, and no agreement, plan or resolution providing therefor,
shall be valid or binding upon the Corporation unless such
corporate action shall have been approved in compliance with all
applicable provisions of the Business Corporation Law and these
Articles and shall have been authorized by the affirmative vote
of at least sixty-six and two-thirds (66-2/3%) percent of the
votes cast by all shareholders entitled to vote thereon.
1. Corporate actions subject to the voting requirements of
this Article X shall be:
(i) any merger, consolidation or share exchange to which
the Corporation is a party;
(ii) any sale, lease, exchange or other disposition of all
or substantially all of the properties or assets of the
Corporation;
(iii) any voluntary dissolution of the Corporation; or
(iv) any amendment of these Articles.
2. The voting requirements of this Article X shall not
apply to any transaction of a character described in subparagraph
1 above should either of the following apply with respect to the
transaction:
(i) the Business Corporation Law permits corporate action
with respect to any such transaction to be taken by the Board of
Directors, or any committee thereof, and does not require a vote
of shareholders; or
(ii) the transaction shall be a "business combination" as
defined in Section 2554 of the Business Corporation Law and shall
be subject to a vote of shareholders in the manner prescribed by
Section 2555 of the Business Corporation Law.
IN WITNESS WHEREOF, the Secretary of the Corporation has
signed and sealed these Articles of Incorporation this 28th day
of July, 1993.
AMP Incorporated
/s/ M. A. Yohe
By: ______________________
Secretary
EX-10.B
EXECUTIVE SEVERANCE AGREEMENT
dated January 24, 1990
The Board of Directors ("Board") of AMP Incorporated (the
"Corporation") and the Compensation and Management Development
Committee ("Committee") of the Board have determined that it is
in the best interests of the Corporation and its shareholders for
the Corporation to agree, as provided herein, to pay you
termination compensation in the event you should leave the employ
of the Corporation under the circumstances described below.
The Board and the Committee recognize that the continuing
possibility of an unsolicited tender offer or takeover bid, or a
tender offer solicited by the Corporation in response to or in
connection with an unsolicited tender offer (or any similar
transaction) for the Corporation, is unsettling to you and other
executives of the Corporation. Therefore, these arrangements are
being made to help assure a continuing dedication by you to your
duties to the Corporation notwithstanding the occurrence of such
an event. In particular, the Board believes it important, should
the Corporation receive proposals with respect to its future, to
enable you, without being influenced by the uncertainties of your
own situation, to assess and advise the Board whether such
proposals would be in the best interests of the Corporation and
its shareholders and to take such other action regarding such
proposals as the Board might determine to be appropriate. The
Board also wishes to demonstrate to you and other executives of
the Corporation that the Corporation is concerned with the
welfare of its executives and intends to see that the executives
are treated fairly.
1. (a) In view of the foregoing and in further consideration of
your continued employment with the Corporation, the Corporation
will promptly pay you upon your request as termination
compensation a lump sum amount, determined as provided below, in
the event that anytime within two years after a "change of
control" (as defined below) of the Corporation your employment
with the Corporation (i) is terminated by the Corporation for any
reason, other than death, disability, continuous willful
misconduct substantially to the detriment of the Corporation
(including entering the employment of a competitor of the
Corporation), or retirement at or after your normal retirement
date under the Corporation's Pension Plan, or (ii) is terminated
by you for "good reason" (also as defined below).
The termination compensation so payable in a lump sum amount
shall be equal to the sum of your highest annual base salary rate
in effect during the year of your termination plus incentive
compensation paid or payable by the Corporation to you for the
year prior to your termination multiplied by the number of whole
years and any fractions thereof remaining from the first day of
the month following the date of your termination to the first day
of the month following your 65th birthday, provided that such
multiplier shall not be more than three.
(b) For the purpose of this agreement, a "change of
control" ("Change of Control") shall mean:
(i) the acquisition of beneficial ownership (other
than from the Corporation) by any person, entity or "group,"
within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), excluding,
for this purpose, the Corporation or its subsidiaries that
acquires beneficial ownership of voting securities of the
Corporation (within the meaning of Rule 13d-3 promulgated under
the Exchange Act), of 30% or more of either the then outstanding
shares of common stock or the combined voting power of the
Corporation's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) a change in the persons constituting the Board as
it exists at the date hereof (the "Incumbent Board") such that
the directors of the Incumbent Board no longer constitute a
majority of the Board; provided that any person becoming a
director subsequent to the date hereof whose election,
or nomination for election, by the Corporation's shareholders was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the Directors of the Corporation, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this agreement,
considered as though such person were a member of the Incumbent
Board; or
(iii) approval by the stockholders of the
Corporation of a reorganization, merger, consolidation in each
case with respect to which persons who were the stockholders of
the Corporation immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated corporation's then outstanding voting securities, or
a liquidation or dissolution of the Corporation or of the sale of
all or substantially all of the assets of the Corporation.
(c) For the purpose of this agreement, "good reason" shall
mean:
(i) the assignment to you of any duties inconsistent
in any respect with your position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities immediately before the Change of Control, any
other action by the Corporation that results in a diminution in
such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and that is remedied by the
Corporation promptly after receipt of notice thereof given by
you;
(ii) the Corporation's requiring you to be based at any
office or location other than that immediately before the Change
of Control, except for travel reasonably required in the
performance of your responsibilities; or
(iii) any diminution in your rate of annual base
salary or rate of incentive compensation immediately before the
Change of Control.
For purposes of this agreement, any good faith determination
of "good reason" made by you shall be conclusive.
2. In addition to the lump sum payment provided in Section 1(a)
above, in the event your employment with the Corporation so
terminates within two years after such a Change of Control of the
Corporation:
(a) All outstanding Bonus Units awarded to you under the
Bonus Plan (Stock plus Cash) ("Bonus Plan") with respect to which
a Stock and Cash bonus has not been previously computed and
distributed to you, including any Bonus Plan awards granted to
you subsequent to the date of any change of control, shall fully
and irrevocably vest and shall be computed and distributed to you
in cash as if your termination date were a Bonus Computation Date
with respect to all of such outstanding Bonus Units; and the
Market Value applicable to such computation shall be the greater
of (i) the highest price offered for an endorsed share of the
common stock of the Corporation on a nationally-recognized
securities exchange in the course of a change of control, or (ii)
the closing price on such exchange prior to your date of
termination.
(b) All pension benefits credited to you under the
provisions of the Corporation's tax-qualified Pension Plan in
effect immediately prior to the Change of Control shall thereupon
fully vest together with an annual future service benefit
calculated on your highest annual base salary rate in effect
during the year of your termination, but not including any
incentive compensation, multiplied by the number of whole years
and fractions thereof (but not more than three years) remaining
from the date of your termination to the earliest of: (i) your
65th birthday, (ii) your elected early retirement date, or (iii)
your eligibility to join a successor employer's pension plan;
such pension shall be payable to you in accordance with the
provisions of the Pension Plan, including the election, at the
time of your retirement date, of a joint annuity option; provided
that the amounts provided for under this Section 2(b) shall be
provided on an unfunded basis, are not intended to meet
the qualification requirements of section 401 of the Internal
Revenue Code of 1986, as amended ("Code"), and shall be payable
solely from the general assets of the Corporation.
(c) The principal amount of your group term life insurance,
under the provisions of the Corporation's group contract for such
insurance in effect immediately prior to the Change of Control,
will be immediately converted in a like principal amount to a
fully paid-up permanent life insurance policy incorporating your
designation of owner and beneficiary at the sole cost of the
Corporation.
(d) You shall be entitled to a continuation of all
hospital, major medical, medical, dental and other insurance or
benefits not otherwise addressed in this agreement in the same
manner and amount as you were entitled at the time of your
employment with the Corporation, at the sole cost of the
Corporation, until the earliest of (i) a period of 36 months
after termination, (ii) your reaching normal retirement age under
the Corporation's Pension Plan, or (iii) your eligibility for
similar benefits with a new employer.
(e) You shall retain in confidence any confidential
information known to you concerning the Corporation and its
business so long as such information is not publicly disclosed.
3. (a) Anything in this agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Corporation to or for your benefit
pursuant to Section 1(a) or Section 2(a), whether paid or payable
or distributed or distributable pursuant to the terms of this
agreement or otherwise (a "payment"), would be subject to the
excise tax imposed by section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "excise tax"), then you shall be
entitled to receive an additional payment (a "gross-up payment")
in an amount such that after payment by you of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any excise tax, imposed upon the gross-up
payment, you retain an amount of the gross-up payment equal to
the excise tax imposed upon the payments.
(b) Subject to the provisions of Section 3(c), all
determinations required to be made under this Section 3,
including whether a gross-up payment is required and the amount
of such gross-up payment, shall be made by Arthur Andersen & Co.
(the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Corporation and you within 15 business
days after your date of employment termination, if applicable, or
such earlier time as is requested by the Corporation. The
initial gross-up payment, if any, as determined pursuant to this
Section 3(b), shall be paid to you within five days of the
receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no excise tax is payable by you,
it shall furnish you with an opinion that you have substantial
authority not to report any excise tax on your federal income tax
return. Any determination by the Accounting Firm shall be
binding upon the Corporation and you. As a result of the
uncertainty in the application of section 4999 of the Code at the
time of the initial determination by the Accounting Firm
hereunder, it is possible that gross-up payments that will not
have been made by the Corporation should have been made
("underpayment"), consistent with the calculations required to
be made hereunder. In the event that the Corporation exhausts
its remedies pursuant to Section 3(c) and you thereafter are
required to make a payment of any excise tax, the Accounting Firm
shall determine the amount of the underpayment that has occurred
and any such underpayment shall be promptly paid by the
Corporation to or for your benefit.
(c) You shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the gross-up payment.
Such notification shall be given as soon as practicable but no
later than 10 business days after you know of such claim and
shall apprise the Corporation of the nature of such claim and the
date on which such claim is requested to be paid. You shall not
pay such claim prior to the expiration of the 30-day period
following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(i) give the Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing
from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Corporation,
(iii) cooperate with the Corporation in good faith in
order effectively to contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay
directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold you harmless, on an after-tax basis, for any
excise tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3(c), the Corporation shall
control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and
you agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Corporation shall
determine; provided further, however, that if the Corporation
directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on
an interest-free basis, and shall indemnify and hold you
harmless, on an after-tax basis, from any excise tax or income
tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and provided
further, that any extension of the statute of limitations
relating to payment of taxes for your taxable year with respect
to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect
to which a gross-up payment would be payable hereunder and you
shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by you of an amount advanced by
the Corporation pursuant to Section 3(c), you become entitled to
receive any refund with respect to such claim, you shall (subject
to the Corporation's complying with the requirements of Section
3(c)) promptly pay to the Corporation the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by you of an amount
advanced by the Corporation pursuant to Section 3(c), a
determination is made that you are not entitled to any refund
with respect to such claim and the Corporation does not notify
you in writing of its intent to contest such denial or refund
prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the extent
thereof, the amount of gross-up payment required to be paid.
4. (a) In the event of termination of employment under the
circumstances described above, the arrangements provided for by
this agreement, or any other agreement between the Corporation
and you in effect at the time, and by any other applicable plan
of the Corporation shall constitute the entire obligation of the
Corporation to you and performance thereof shall constitute
full settlement of any claim that you might otherwise assert
against the Corporation on account of such termination.
(b) The Corporation's obligation to pay you under this
agreement shall be absolute and unconditional and shall not be
affected by any circumstances, including without limitation any
set-off, counterclaim, defense or other rights the Corporation
may have against you or anyone else.
5. In the event you are required to engage an attorney or sue
in law or equity in order to enforce any provision of this
agreement or to receive any benefit or distribution or right
under this agreement or any other agreement or arrangement
contemplated by this agreement, the Corporation shall indemnify
and hold you harmless against any loss or damage and reimburse
your for costs, including reasonable attorney fees, you may incur
in the enforcement of any provision, right or arrangement herein
contained or contemplated by this agreement. The Corporation
further agrees to pay interest on any amounts unpaid to you from
seven days after the date of your demand for payment, calculated
at the prime rate of The Chase Manhattan Bank N.A. for its most
credit-worthy customers in effect from time to time.
6. This agreement shall be binding upon and inure to the
benefit of you and your estate, and the Corporation and any
successor of the Corporation, but neither this agreement nor any
rights arising hereunder may be assigned or pledged by you.
7. Any provision in this agreement that is prohibited or
unenforceable in any jurisdiction where it is sought to be
enforced, shall be ineffective only to the extent of such
prohibition or unenforceability, without invalidating or
affecting the remaining provisions of this agreement or
invalidating or rendering unenforceable such provision in any
other jurisdiction.
8. This agreement shall be governed and construed in accordance
with the laws of Pennsylvania.
If you are in agreement with the foregoing, please so
indicate by signing and returning to the Corporation the enclosed
copy of this letter, whereupon this letter shall constitute a
binding agreement between you and the Corporation and our mutual
intention to be legally bound as of the day and year first above
written.
Very truly yours,
AMP Incorporated
By:
Agreed:
<PAGE>
Schedule to
EX-10.B
Agreements identical to the "Executive Severance Agreement
dated January 24, 1990" but containing the indicated multiplier,
as provided for at the end of the second paragraph of Section
1(a) of the Agreement, were entered into with the following
executive officers:
Name Date of Agreement Multiplier
W. J. Hudson, Jr. January 24, 1990 4
T. L. Dalrymple January 24, 1990 4
C. W. Goonrey January 24, 1990 3
P. G. Guarneschelli January 24, 1990 3
J. E. Gurski January 24, 1990 3
M. A. Yohe January 24, 1990 3
J. K. Hassan February 15, 1993 4
D. C. Cornelius February 15, 1993 3
J. C. Overbaugh February 15, 1993 3
EX-13
------
AMP INCORPORATED ANNUAL REPORT 1993
to the extent specifically incorporated by
reference into the Annual Report on Form 10-K
for the year ended December 31, 1993
[the front side of the fold-out page of
Annual Report: the left column:]
No Boundaries
From sockets for next-generation semiconductor devices to printed circuit
boards, networking units and electro-optic devices, AMP's involvement in
electronics is steadily broadening as computer and communications
technologies converge. Many new electronic systems are on the horizon --
including the much-publicized interactive, multimedia "Information
Superhighway." Connections are increasingly critical to the performance of
these systems. Building on our leadership in connectors, we are steadily
expanding into total interconnection systems, related components, and
connector-intensive assemblies. We see no boundaries in the spread of
electronics into all facets of society, and in the opportunities for AMP
arising from this pervasive growth.
[the center column of the front side of
the fold-out page:]
CORPORATE PROFILE
The world leader in electrical/electronic connection devices, AMP has
an 18-19% market share in this $17-19 billion market. Headquartered in
Harrisburg, PA, it employs 26,900 in 175 facilities in 36 countries. Well
over 100,000 types and sizes of units, splices, connectors, cable and panel
assemblies, networking units, sensors, switches, electro-optic devices,
touch screen data entry systems, and application tooling (52,000 machines;
millions of tools) are supplied to over 200,000 original
electrical/electronic equipment makers -- and tens of thousands of
customers who install and maintain equipment.
Virtually all growth was achieved by serving growth markets, developing
new products, and entering new markets -- acquisitions have not been a
significant factor. New products continue at 15-20% of current sales. Total
spending on research, development, and engineering (RD&E) is being
maintained at a high rate (nearly 12% of sales) and has risen each year to
$406 million in 1993.
AMP is pursuing a two-fold strategy of widening its leadership in its
core business of connectors while steadily diversifying into total
interconnection systems, related components, and connector-intensive
assemblies -- increasing the potential size of markets being addressed from
nearly $20 billion to over $65 billion.
Growth in the last 37 years from sales of $32 million in 1956 (when AMP
became publicly owned) to $3.45 billion in 1993 (a 13% compound growth
rate) has been directly linked to the growth of the electronics (12%) and
electrical/transportation (7%) equipment industries. In the last ten years,
a period of recessions, industry corrections, slower market growth, price
erosion, and negative currency effects, AMP's compound growth rate was 8.6%
- -- well below the Company's goal for the rest of this decade.
[the right column of the front side of
the fold-out page:]
Highlights
- - Sales up 3% to record $3.45 billion
- - Earnings up 3% to near-record $2.83/share
- - Margins -- Operating 15.2%, pretax 14.1%, after tax 8.6%
- - ROA 9.7%, ROE 14.8%
- - Dividend up 5% in 1994 to indicated $1.68/share (41st annual
increase)
- - Shareholders' equity increased $113 million to $2.06 billion
- - Barbara Hackman Franklin, former U.S. Commerce Secretary,
elected to Board of Directors
- - Henschel elected corporate secretary; Keizer, Peiffer,
Ritter, Timashenka, Walker, Yohe named div. V.P.s;
V.P. Gerhard Schmidt retired
- - Capital spending $330 million, up from $312 million in 1992
- - Over 600,000 sq. ft. added in U.S., Argentina, China,
Singapore, Spain
- - New subsidiaries formed in Czech Republic, India, Hungary,
Poland, Turkey, and the Philippines
- - Acquired Smart American Home Centers, ATM Div. of Net
Express, Elf Atochem Sensors, JWP Businessland Japan, MCS Div. of
Fischer & Porter, and Microwave Electronics Div. of COMSAT
- - Made minority equity investments in LANart, MicroModule
Systems, New Media, and WiSE Communications
- - Formed subsidiaries ACSYS, Connectware, and Microwave Signal
- - Formed more strategic business units
- - Gained market share in all regions
- - Highest customer satisfaction ratings
- - ISO 9000 quality certification complete by mid-1994; MRP II
Class A certification by late 1995
- - ICCP Div. won top North Carolina quality award; one of final
four for Malcolm Baldrige National Quality Award in
manufacturing category
- - Good growth expected in 1994
[the reverse side of the fold-out page
of Annual Report:]
<TABLE>
<CAPTION>
HISTORICAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR
(dollars in millions
except per share data)
Net Sales....................... $3,450.6 $3,337.1 $3,095.0 $3,043.6 $2,796.6 $2,669.7
Gross Income.................... 1,141.3 1,118.2 1,025.4 1,031.2 979.8 996.9
Selling, General
and Administrative
Expenses........................ 616.6 584.9 555.6 543.4 505.2 467.0
Income From Operations.......... 524.7 533.3 469.8 487.8 474.6 529.9
Operating Margin (%)......... 15.2 16.0 15.2 16.0 17.0 19.8
Interest Expense................ (19.5) (29.5) (41.6) (38.3) (21.6) (16.2)
Other Income
(Deductions), Net............... (19.3) (24.7) (4.6) 12.5 2.3 15.5
Income Before Income
Taxes........................... 485.9 479.1 423.6 462.0 455.3 529.2
% of Sales................... 14.1 14.4 13.7 15.2 16.3 19.8
Income Taxes.................... 189.3 188.8 163.9 174.9 174.4 210.1
Effective Tax Rate.............. 39.0 39.4 38.7 37.9 38.3 39.7
Net Income...................... 296.6 290.3 259.7 287.1 280.9 319.1
% of Sales................... 8.6 8.7 8.4 9.4 10.0 12.0
Net Income Per Share <F1>....... $2.83 $2.75 $2.45 $2.70 $2.63 $2.96
Cash Dividends.................. 167.8 160.4 152.4 144.7 128.1 107.8
Cash Dividends Per
Share <F1><F2>.................. $1.60 $1.52 $1.44 $1.36 $1.20 $1.00
- ---------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31
(dollars in millions
except per share data)
Working Capital................. $ 892.0 $ 768.7 $ 738.0 $ 665.2 $ 711.7 $ 700.9
Property, Plant and
Equipment, Net.................. 1,245.1 1,178.8 1,180.2 1,121.5 953.8 894.6
Total Assets.................... 3,117.9 3,005.1 3,006.9 2,928.6 2,529.8 2,375.5
% Return on Assets <F3> ..... 9.7 9.7 8.8 10.5 11.5 14.3
Long-Term Debt.................. 131.0 42.9 53.0 61.1 69.5 82.8
Total Debt...................... 314.6 353.8 389.7 439.7 284.0 224.8
Shareholders' Equity............ 2,056.4 1,943.3 1,913.0 1,792.8 1,625.4 1,521.3
% Return on Equity <F3> ..... 14.8 15.1 14.0 16.8 17.9 22.2
Shareholders' Equity
(Book Value) Per Share....... $19.60 $18.52 $18.04 $16.92 $15.27 $14.16
Backlog......................... $ 493.0 $ 506.0 $ 525.0 $ 514.0 $ 489.0 $ 475.0
Number of Employees............. 26,900 25,100 25,000 24,700 24,400 24,100
Floor Space
(sq. ft. in millions)........... 10.1 9.5 9.2 9.2 9.0 9.0
Shares of Stock
Outstanding <F1>(millions)...... 104.9 104.9 106.0 105.9 106.5 107.4
- --------------------------------------------------------------------------------------------------------------------------
Stock Price Range <F1>
First Quarter.............61 3/8-54 5/8 68 3/4-56 54 3/4-40 7/8 53 5/8-42 1/8 49 3/8-41 54 1/4-40 1/2
Second Quarter............63 7/8-59 1/8 63 1/2-53 1/2 55 1/2-47 55 1/4-46 7/8 44 1/8-40 1/4 52 -42 7/8
Third Quarter.............67 1/4-59 3/4 61 3/4-52 5/8 55 3/4-50 52 1/4-38 47 1/4-40 1/2 52 -40 1/2
Fourth Quarter............66 3/8-57 65 7/8-54 5/8 60 -47 5/8 46 1/8-39 3/8 47 1/2-40 45 3/4-40 5/8
Stock Price/Earnings
Ratio, High-Low <F4>...... 24-19 25-19 24-17 20-14 19-15 18-14
--------------------------------------------------------------------------------------------------------
1987 1986 1985 1984 1983
--------------------------------------------------------------------------------------------------------
Stock Price Range <F1> (cont'd.)
First Quarter.............55 3/8-36 1/8 42 1/2-33 3/8 37 7/8-29 3/4 39 1/2-30 3/4 28 3/4-22
Second Quarter............61 1/4-50 45 -35 1/4 34 1/2-28 5/8 35 3/8-31 1/2 35 3/8-26 5/8
Third Quarter.............71 1/2-55 42 1/4-32 7/8 35 1/2-29 3/8 38 1/2-26 1/8 36 1/8-30 1/2
Fourth Quarter............70 1/4-34 1/8 40 5/8-35 5/8 37 1/2-27 1/2 34 1/2-28 5/8 39 -32 1/2
Stock Price/Earnings
Ratio, High-Low <F4>...... 31-15 30-22 38-28 21-14 26-14
- ----------
<FN>
<F1> Share data has been adjusted for the 3-for-1 stock split in 1984.
<F2> On January 26, 1994 a regular quarterly dividend of 42(cents symbol) per share was declared -- an indicated annual rate of
$1.68 per share.
<F3> Computed on average total assets and shareholders' equity in each year.
<F4> High and low stock price divided by reported earnings per share for calendar year.
</TABLE>
[the right column of page 1 of Annual
Report, including three pie charts:]
Diversification of AMP
Worldwide Sales
1993
Geographic
(percent)
[reference Appendix, 1)]
1993 1983 1973
- - United States 43 61 52
- - Europe 31 22 31
- - Asia/Pacific 21 12 13
- - Americas 5 5 4
1993
Markets
(percent)
[reference Appendix, 1)]
1993 1983 1973
- - Aerospace/Military 5 5 5
- - Industrial/Commercial 10 10 15
- - Communications 10 15 5
- - Computer/Office 20 30 20
- - Consumer Goods 10 10 20
- - Transportation/Electrical 30 20 20
- - Distribution,
Construction, etc. 15 10 15
1993
Channels
(percent)
[reference Appendix, 1)]
1993 1983 1973
- - Direct 86 94 99
- - Distribution &
Co-0p Affiliates 14 6 1
[page 2 of Annual Report:]
TO OUR SHAREHOLDERS
(headline)
Excellence has no national boundaries
(text)
Redefining AMP as a world-class leader in the interconnection
systems business continues to be an exciting and promising
undertaking. Our global vision for the year 2000 and our
achievements in 1993 energize us. The vision pins the growth of
AMP to totally satisfying our customers, exploiting the still
untapped potential of both our core connector business and the
emerging strategic businesses, and earning the number one or two
positions in all markets. Our challenge is to make the vision a
global reality. As we meet that challenge, we remain strongly
committed to those who have a stake in AMP:
TO SHAREHOLDERS, we are committed to building the value of
your investment in AMP through steady growth in earnings,
dividends and stock value. We believe AMP sales and earnings can
increase to more than one and one-half times the 6-9% growth rate
expected for the connector industry. In addition, we are striving
to achieve 18% pre-tax and better than 10% after-tax margins, as
well as a 20% return on equity. Boosting the prospects of success
in this regard are our strong balance sheet and very good cash
flow.
TO EMPLOYEES, we commit as senior management to growing the
company worldwide, which will grow your career opportunities and
financial rewards.
TO CUSTOMERS, we commit to providing you with the highest
quality products whenever you want them and wherever in the world
you want them.
TO LEADERS in countries where AMP operates, we commit to
advancing your country and region's financial success through our
profitability and long-term investments in your economies.
TO ALL OF US who are concerned about the environment, we
recommit to our long-standing policy against jeopardizing the
environment in the name of profit.
AMP can best fulfill these commitments by being an integrated
global leader. Of course, AMP has been operating internationally
since the early 1950s. Yet, to be truly global, to be truly world
class, is different. No longer can we think of ourselves as a
Harrisburg-based U.S. corporation reaching around the world. We
must be borderless geographically and virtually limitless in
business possibilities. Our major customers expect us to think
globally; opportunities demand that we act globally.
We know that to be world class requires new thinking. Just
about every dimension of the company has to be reassessed, from
product design to the environmental impact of those products,
from how we exchange technology among countries to how we
anticipate and capitalize on emerging markets, and from how much
we standardize our systems globally to how much risk we should
encourage. As we work through this thought process, we are
committed to one principle: We refuse to serve up second best
anywhere. When customers buy a product from AMP, whether they are
in India, Hungary, China, Russia, the United States, Argentina or
Brazil, our products will be of uniformly high quality and
performance. To back up this claim, the quality systems at most
of our locations worldwide have now been certified under the
international standard, ISO 9000. By mid-1994, all should attain
that goal. The more rigorous MRP (Manufacturing Requirements
Planning) II, Class A rating should be reached at all locations
in 1995. Conforming to ISO 9000 and MRP II requires a sizeable
investment of capital and human resources but, inevitably, the
result will be a bigger pipeline of orders.
Customer satisfaction still drives our company. For overall
customer satisfaction, AMP was number one for the third
2
[narrative text on page 3 of Annual Report:]
consecutive year in independent surveys. Quality is a major
ingredient in that satisfaction. In fact, quality now ranks above
price, delivery and service in customer needs surveys. Our
Integrated Circuit Connector Products Division set out to
demonstrate their quality by pushing for the prestigious Malcolm
Baldrige National Quality Award. ICCP earned one of four
"manufacturing category" site visits and then turned to the North
Carolina Annual Quality Award, for which they took top honors.
Not just in North Carolina but everywhere we do business, we are
measuring virtually every aspect of our performance. Continuous
improvement is woven into the fabric of AMP. We call it our Plan
for Excellence.
Excellence has no national boundaries. Our global expansion
builds on our core expertise and innovation in the connector
business. That expertise and innovation can be found wherever AMP
operates. We continue to extrapolate our engineering and
manufacturing mastery of connector technology vertically and
horizontally, finding new uses for connector products and new
applications for interconnection systems, as well as providing a
broader array of related products such as printed circuit boards,
sensors, switches, and transceivers.
Teaming with customers on product design and application is
the lifeblood of our success. AMP has shown repeatedly that we
can be a strategic global partner with virtually any
manufacturing customer anywhere. We are determined to get in sync
with more customers early in their design phase, and then to
manufacture the product wherever they need it. To aid this
effort, global account management is being introduced. Focusing
an AMP marketing team on individual global customers should help
us anticipate needs and respond quicker when and wherever those
needs materialize.
Speed is essential to the customer partnership. We are
investing over $50 million to replace or upgrade systems that let
us move even more rapidly from design to full manufacturability
anywhere in the world -- and do so at a lower cost. Computerized,
just-in-time systems have helped ship products to U.S. customers
95% on time in 1993. Our inventory turnover rate has
significantly increased in recent years.
Meeting customers' "time-to-market" and "time-to-volume"
needs is quickly becoming a top priority that we are meeting
successfully. In the electronics industry, determining when a
customer will accept a new AMP product idea is, itself,
uncertain, but calculating volume requirements can be very
unpredictable. The sale of the many electronic products made by
our customers is difficult to gauge. Few market analysts, for
example, anticipated the boom in model 486 personal computer
purchases in 1993. AMP thus needs enormous flexibility to respond
to surges in high-volume orders.
In 1993, we continued to be aggressive in locating
manufacturing and sales operations where positive investment
climates and growth economies exist. We expanded our ability to
produce closer to customers' operations and markets. At the same
time, our expansion capitalizes on the opportunities of the
emerging business in local and regional markets. To serve the
Indian market, for example, AMP has to manufacture in India --
and we are planning a second manufacturing plant there. The same
is true in China, in Hungary and elsewhere. AMP is there. Since
1990, we have started subsidiaries in India, China, Hungary, the
Philippines, Thailand, the Czech Republic, Poland and Turkey.
Several more subsidiaries will follow in 1994.
3
[narrative text on page 4 of Annual
Report: the left column:]
Goals
- - Provide customers with superior products and services
- - Maintain undisputed leadership in the connector industry
- - Provide complete interconnection systems and value-added
assemblies
- - Become a totally integrated global organization
- - Implement the worldwide Plan for Excellence continuous
improvement program
- - Achieve full ISO 9000 and MRP II Class A certification
- - Achieve a longer-term compound annual growth rate more than
1 1/2 times better than the 6-9% expected growth rate of the
connector industry and the markets we serve
- - Achieve profitability of 18% pretax; 10% or better after tax
- - Achieve return on average shareholders' equity of 20%
- - Steadily build longer-term value for shareholders through
adding economic value, dividend payments, and price
appreciation
- - Improve the business climate for AMP and other technology
companies through a proactive external relations program
[the center and right columns of page 4:]
We have further enhanced our geographic reach and flexibility
through a variety of business endeavors. Several dozen
acquisitions, minority investments, joint ventures and other
strategic alliances have surfaced in just three years. For
example, to gain the lead in the fast-growing market for PCMCIA
(Personal Computer Memory Card International Association) cards
used in laptop computers, AMP holds a minority interest in a
small design firm, joint development contracts with several
semiconductor companies and a manufacturing subcontract with
another company. Likewise, AMP stretches its expertise and market
penetration through research consortia, research and development
contracts, licensing, and marketing agreements.
Geographic flexibility can work to our advantage when various
economies and currencies turn soft. However, we can do little
when, essentially, the world economy is soft, as it was in 1993.
Despite our strong market share in some countries, we could not
generate the sales and revenue growth we wanted from markets that
simply were not growing. In addition, modest price erosion
continued in most regions.
The frustrating economic drag in 1993 forced us to ask what
more we could do. We struggled with the answer, until we
realized, once again, it was simple. Do more of what has made AMP
world class: more globalizing of the business, more teaming among
employees, more partnering with customers and suppliers, more
investment in global research, development and engineering, even
tighter financial controls -- and more risk-taking.
As we push harder in these areas, we also push harder for
increased and broader product sales. We also have forced down
costs. In 1993, we learned even better ways to lower the cost of
materials, upgrade distribution systems, boost productivity and
improve quality.
Corralling indirect costs is more of a challenge. They keep
rising as a proportion of total costs. Included are employee
benefits and training, environmental protection, regulatory
compliance, safety and health, legal, insurance, marketing
services, and administrative activities, as well as research,
development and engineering. Likewise, depreciation and
amortization have doubled over the last six years because we
spent more on capital expenditures and acquisitions.
We continued to strengthen our organization. At the board
level we added Barbara Hackman Franklin, former U.S. Secretary of
Commerce, who was named one of the top 50 corporate directors in
4
[narrative text on page 5 of Annual
Report: the left and center columns:]
1990. We also elected David Henschel as corporate secretary, and
named six new divisional vice presidents -- Alan Keizer, Howard
Peiffer, Carol Ritter, Paul Timashenka, Larry Walker, and Merrill
Yohe. Corporate Vice President Gerhard Schmidt retired after 37
years of excellent service, the last five as head of our European
operations.
We expect good growth in sales and earnings in 1994. U.S.
sales should grow at a similar or better rate than the 10% in
1993. We also expect strong growth in Canada, South America, and
in Asia/Pacific outside of Japan. We expect European economic
conditions to improve later this year. Although we may have to
wait until 1995 for a pickup in the Japanese economy, we expect
some sales growth in Japan in 1994 in local currency after a
modest decline in 1993. Prospects look good for continued sales
growth in 1995 as economic recovery spreads throughout the world.
Assuming fairly constant currency rates, earnings could set a new
high this year -- exceeding the $2.96/share in 1988.
Our challenge for the future is an enviable one: how to
capitalize on the upswing in the world's economic health, on the
rapid-fire opportunities in the electronics industry, and the
increasingly critical role of AMP interconnections in the
performance of electrical and electronic equipment and systems.
Our ability to deploy resources throughout world markets -- to
work interdependently, ignoring geographic borders and
organizational seams -- reflects a current strength that will be
even more essential to our success as a world-class global
leader. Focusing on worldwide opportunities and developing
strategies to capitalize on these opportunities is fast becoming
a trademark of AMP employees.
We thank all AMP employees worldwide for your commitment to
be the best. Thank you to our customers who demand excellence
from us, and to our suppliers who enable us to achieve that
excellence.
/s/ W. J. Hudson
William J. Hudson
President and
Chief Executive Officer
/s/ J. E. Marley
James E. Marley
Chairman of the Board
Harrisburg, PA
March 1, 1994
[the right column of page 5:]
Policies
- - Grow primarily through new products and markets
- - Broaden into total interconnection systems and value-added
assemblies, while maintaining leadership in core connector
business
- - Maintain a high level of technical spending; parallel
development of products and application tooling
- - Maintain a "systems" marketing approach which emphasizes
quality, service, and total installed cost of products to
customers
- - Rely primarily on direct selling, supplemented by distributors
and other channels responsive to customer buying preferences
- - Use a global approach to managing activities and meeting
customer requirements
- - Fully empower, enable and develop employees through Plan for
Excellence via leadership, organizational changes,
communications, training and teaming approach
- - Use conservative financial/accounting policies and practices
- - Adhere to a written ethical conduct code
- - Maintain full compliance with and responsiveness to government,
public, community requirements on environmental protection,
conservation of resources, safety and health, and other
business-related social/economic issues globally
5
[narrative text on page 7 of Annual
Report, together with the bottom
picture and its caption: the left and
center columns:]
OPERATIONS
(headline)
World-class performance is evidenced by national, state, customer
recognition; external certifications; highest ratings on customer
satisfaction surveys
(text)
We continue to steadily strengthen and broaden our
manufacturing capabilities. Capital expenditures rose to a
near-record $330 million from $312 million in 1992. Over
two-thirds was to expand capacity on existing and many new
products, improve productivity and quality, and add new technical
capabilities. We constructed, acquired, or enlarged a dozen
facilities -- adding over 600,000 sq. ft. of floor area to a
record 10.1 million sq. ft. New plants began operation in
Argentina, China, and Singapore. Plants will soon start up in
North Carolina, Hungary, and South Korea. Construction has begun
on a large engineering facility in the Harrisburg area. Plans are
underway for second plants in China and India, and for expansion
in Great Britain, Japan, and Spain.
Good progress on regional management of manufacturing
resources, better methods and equipment, and higher quality is
providing improved output per sq. ft. and per production
employee, and reduced unit costs. Manufacturing employment
increased 400 in 1993 to over 14,000 people utilizing 6.2 million
sq. ft. in 93 plants in 20 countries. AMP's basic connector
manufacturing capabilities -- high speed metal stamping,
precision metal plating, plastic molding, automated assembly of
small metal and plastic parts -- are being leveraged into related
components and connector-intensive assemblies. For better use of
assets and technical skills, certain AMP business units and
subsidiaries have been designated "Regional Centers of
Competency" in specific product/market categories. Acquisitions,
equity investments, strategic alliances, and research consortiums
are also providing access to new manufacturing technologies.
During the 1980s we launched a series of programs to improve
quality, productivity, delivery, service, engineering skills, and
many other key aspects of our business. In early 1990 these
successful programs came together under the Plan for Excellence -
- - a comprehensive program seeking continuous, never-ending
improvement in all areas. It uses techniques such as "process
mapping," "value analysis," and "best demonstrated practices."
Extensive benchmarking is also being done to compare specific
functions against other well performing companies.
This rising emphasis on continuous improvement -- meeting
ever-higher performance standards -- has led to:
- - On-time shipment on 150,000 U.S. orders/month up from 65% in
1987 to 95% in 1993
- - Warehousing, shipping, and other distribution costs reduced
while handling higher volume with fewer people
- - Inventory turnover up significantly in recent years
- - Scrap rates, defects/million, error rates, returned materials
down significantly
- - Response times on inquiries, order placement, and
sample/literature requests sharply reduced, e.g., customer
calls answered in less than five seconds
- - Stamping, plating, molding, assembly rates up several-fold in
last decade
- - Greater use of proprietary computer based-systems -- including
unique Scorecard and Supplier Performance Index reporting on
key factors.
[the bottom picture and its caption in
the right column of page 7:]
[reference Appendix, 4)]
[narrative text on page 9 of Annual
Report, together with middle and bottom
pictures and their respective captions:
the left and center columns:]
(headline)
Dramatic improvements made in on-time shipments, quality,
productivity, and other key factors
(text)
Confirmation of our progress includes hundreds of
quality/service awards, approvals, and certifications. Formal
third party awards and certifications have become much more
important. Our Integrated Circuit Connector Products Division won
the top quality award from the state of North Carolina, and was
one of four entrants receiving a site visit for the Malcolm
Baldrige National Quality Award. Our Williamstown/Tower City, PA
facilities were in the top 15 in Industry Week's "10 best U.S.
manufacturing plants" competition. Our Automotive/Consumer
Business Group received a special award as best appliance
industry supplier after winning the top spot for five consecutive
years over 500 other suppliers. AMP was named best or outstanding
by customers such as Abbott Laboratories, AT&T, Ford, GE, IBM,
Northern Telecom, Raytheon, Siemens, and UNISYS. We now have
nearly 60 quality management systems, covering almost 90% of
production volume, certified to ISO (International Standards
Organization) 9000 standards -- with the remaining systems to be
done this year. We are on schedule toward a late 1995 goal on the
much more rigorous MRP II Class A certification of manufacturing
requirements planning systems.
Most important in our drive for continuous improvement is far
better use of human resources. This includes empowerment of
people through delegation of more authority and responsibility,
enablement through more training and development, organizational
changes to reduce layers and speed decisions, employee teams to
unleash creativity and "ownership" of the assigned function, pay
linked to performance, recognition of outstanding achievements,
and greater opportunity for transfer and advancement. Hundreds of
product/project/task-oriented teams throughout the world are
generating many thousands of improvement recommendations,
shortening cycle times, reducing costs, and improving
responsiveness. We are spending more on employee development and
training, with a current goal of 40 hours minimum training per
employee per year. Thousands of employees are involved in
hundreds of courses, workshops, conferences, and related
activities. Accompanying this is rising expenditures to provide
employees with the equipment required to fully leverage their
efforts -- tens of millions of dollars annually on the latest
computers, communication systems, business machines, and
engineering/scientific equipment.
Environmental protection, recycling, packaging, safety, and
health have become increasingly important in our business. We
started an aggressive environmental program over ten years ago --
emphasizing preventive measures, audits, prompt and complete
corrective action, heavy investment in the latest systems, and
full reporting. Because of this, AMP has been widely recognized
for its proactive program. AMP recently received the top
environmental rating in the electrical equipment industry by the
Council on Economic Priorities. In May 1993 we reached our goal
of elimination of Class I ozone-depleting chemicals, and we are
working steadily toward attainment of our zero discharge goal
through installation of closed-loop systems, recycling systems,
and other means. We are also redesigning product packaging and
shipping containers to use less (and more environmentally
friendly) materials, and facilitate recycling.
[the middle and bottom pictures, and
their respective captions, in the right
column of page 9:]
[reference Appendix, 5) and 6)]
[narrative text on page 11 of Annual
Report: the left and center columns:]
MARKETING
(headline)
Expansion into assemblies and related components expands market
to over $65 billion.
(text)
Worldwide sales rose 3% to a record $3.45 billion. Continued
good growth in the U.S. (up 10%) and in the Americas (up 15%) was
offset by recession-affected performance in Europe and Japan.
Europe was up 1% in local currencies; down 10% in U.S. dollars.
Asia/Pacific was up 2% in local currencies; up 11% in U.S.
dollars. Through our thrust into related components and
value-added assemblies, we are enlarging the potential size of
the markets being addressed to over $65 billion. Our two-fold
strategy of expanding our core connector business while carefully
diversifying into logically related areas presents distinct
marketing challenges. We serve over 250,000 customers in over 50
countries with over 500,000 part numbers in nearly 300 product
families. Customers are steadily shrinking their supplier lists
- -- retaining only those few meeting ever-higher performance
requirements. Multinational customers are using global sourcing
contracts -- selecting only those suppliers meeting these rising
requirements uniformly at hundreds of customer locations. The
increasingly critical role of connectors in electrical/electronic
system performance, growing implementation of just-in-time
manufacturing systems, and more outsourcing and alliances require
ever closer relationships between manufacturers and key
suppliers.
In this far more demanding environment, our strong marketing
capabilities are playing a significant role in gaining market
share and leveraging resources into related areas. We have:
- - The broadest product range by far in the connector industry --
from sockets for semiconductor devices to power connectors for
buildings and utilities
- - Nearly 3,000 marketing and sales personnel throughout the world
- - A worldwide network of over 1,500 distributor locations (14% of
sales)
- - A growing list of ACES (AMP Cooperative Electronic
Subcontractors) who use AMP connectors to fabricate cable and
panel assemblies
- - A growing fleet of AMPLIVERSAL sales vans that bring AMP
products to maintenance and repair customers
- - A just-launched Global Account Management program to better
serve our large multinational customers
- - A unique consulting service that provides computer simulation
of proposed interconnection systems
- - Industry-first service innovations such as the Product
Information Center and customer service departments (25,000
calls monthly); automated fax service (27,000 literature and
drawing requests monthly); thousands of AMP engineering data
computer disks used in customer CAD/CAM systems; Electronic
Data Interchange order system now used on over half our U.S.
sales; and customer support services (e.g., 24-hour turnaround
on 98% of 400,000 sample requests in 1993).
These and other innovative capabilities have led to market
share gains and the top rating on customer satisfaction in
independent customer surveys. Our expansion into related
components and value-added assemblies, and renewed emphasis on
markets such as the building and utility fields, pose new
marketing challenges being met by specialized AMP marketing
organizations, marketing alliances, and innovations such as
demonstration vans, SMART HOUSE regional service centers, and new
training services for networking/premises wiring customers.
[narrative text on page 13 of Annual
Report: the left and center columns:]
TECHNOLOGY
(headline)
Acquisitions and strategic alliances play a key role in our
product/market diversification.
(text)
For more than five decades AMP's growth has been driven by
new products. Currently 15-20% of sales are new products
introduced in the last five years; our near-term goal is 25%. In
1993 we added about two dozen new product families and 25,000 new
product part numbers (100 per day).
Total spending on all research, development, and engineering
continued at nearly 12% of sales, and has risen each year in
dollars. This high level of technical spending ($406 million in
1993; over $3 billion in the last ten years) has been the
foundation -- the wellspring -- of our growth since the early
years. From the introduction of the first successful pre-insulated
terminals and splices for the aircraft and marine markets in the
early 1940s, we have steadily broadened our product and market
range. This continued strong commitment to expanding our
technical capabilities has led to a steady stream of new products
and patents.
Although 148th on the Fortune 500 sales ranking, AMP is 20th
among U.S. corporations and 50th worldwide in patents received in
1993. A recent study ranked AMP 24th in the world on
"Technological Strength" based on the number and importance of
patents. Today AMP has over 3,000 patents issued or pending in
the U.S. and over 11,000 in 37 other countries. This extremely
strong patent position, reflecting our diligence in both
obtaining and defending our patents, is a crucial factor in our
growth through new products.
Only a few percent of current sales are from acquisitions,
which have been made primarily to gain access to new technologies
and markets, not to add significant immediate sales volume.
However, we have recently stepped up the pace of acquisitions,
minority interest investments, and strategic alliances. Most of
this activity is being done through our Global Strategic
Businesses Group, and is an essential part of our diversification
into related components and value-added assemblies. By targeting
large, emerging, fast-growing markets, we expect the new
non-connector part of our business will grow much faster than our
core connector business, and thus become a steadily increasing
portion of total sales. However, the bulk of our technical
spending will continue to be devoted to widening our leadership
in the connector industry.
[narrative text on page 14 of Annual
Report: the right column:]
(headline)
AMP has the widest range of networking/premises wiring
interconnection products of any manufacturer, and has also become
a leading supplier of cable assemblies.
(text)
Success in our aggressive drive to step up the creation of
new products, strengthen our patent position, widen our
leadership in our core connector business, and diversify into
related components and assemblies rests squarely on a number of
key technology factors.
We are addressing, both in our core business and in our
product and market diversification, the faster growing sectors
and major trends in the electrical and electronic markets -- such
as miniaturization, higher speed circuitry, networking, wireless
transmission, electro-optics, conversion to digital, software
integration with hardware, and the convergence of computer and
communications technologies. For example, AMP sockets will be
widely used to connect the far more powerful next-generation
semiconductor devices now coming into use -- such as Intel
Pentium (registered trademark symbol), DEC ALPHA (registered
trademark symbol), and Apple/IBM/Motorola Power P.C. (registered
trademark symbol) processors. Much of our technical efforts
center around how AMP can play a growing role in the multimedia,
interactive Information Superhighway of the near future.
[narrative text on page 15 of Annual
Report: the left and center columns:]
We are using a rapidly widening range of resources to
identify and participate in these sectors and trends. Our unique
capabilities in connection technology are being leveraged by
acquisitions, minority equity investment positions, joint
ventures, alliances, research contracts, subcontracting,
licensing, etc., with dozens of customers, suppliers and other
companies, consortiums, universities, and research institutes.
Increasingly, a company's success in an environment of intense
global competition, higher performance, and accelerating rate of
technological change depends as much on its network of external
strategic relationships as on its internal capabilities. The new
AMP of the 1990s is using its strong financial and technical
resources to forge the steadily broader network of relationships
essential to success in our ventures into new component and
assembly areas. For example, the one-year-old business unit that
has just entered the emerging PCMCIA card market has alliances
with a half dozen semiconductor companies who are leaders in
their specific fields.
Recently we have taken a number of organizational actions to
strengthen our internal technical capabilities -- such as
formation of the Global Strategic Businesses Group, which now has
nearly a dozen business units, and establishment of the Global
Engineering and Manufacturing Assurance Department to coordinate
worldwide efforts in such activities as best practices, value
analysis, cycle-time reduction, and simultaneous engineering. We
have also created hundreds of multidisciplinary technical teams,
task forces, and steering committees. Our Global Quality
organization coordinates very extensive activities in performance
measurement, process mapping and benchmarking.
[narrative text on page 17 of Annual
Report: the left and center columns:]
(headline)
Our standards-setting capabilities are increasingly important.
Renewed emphasis on outdoor plant/utility markets.
(text)
We are also steadily broadening our education, training, and
professional development programs. Our unique AMP Engineering
Education Program has now grown to 38 courses, and a cumulative
total of 9,000 enrollments. New courses include a four-hour
training unit, Design for the Environment, believed to be one of
the first in the U.S. that is being taken by thousands of AMP
employees to raise awareness of the environmental aspects of
product, process, and packaging design. The new regional training
center in Singapore will be followed by one in Europe.
A top priority of the last few years is globalization of our
activities to manage resources more effectively, bring products
to market sooner, and better serve multinational customers. We
have expanded corporate and regional staffs, transferred dozens
of experienced people between regions, accelerated the
implementation of our Plan for Excellence by our international
companies, formed a number of global product and
function-oriented teams and task forces, and are streamlining
intercompany procedures. The goal is a "seamless" organization
that identifies worldwide opportunities, then quickly and
efficiently designs, produces, and markets products to meet
global standards and customer requirements.
AMP has become a leader in the development of industry
standards. Product standards are rapidly evolving from
country-based to a regional and worldwide basis, are broadening
in scope, and are playing an increasingly important role in the
development of new products. Recognizing this, we have greatly
strengthened our standards activities -- building a strong
corporate group of standards professionals and a global
organization involving hundreds of AMP people in over 450
industry associations and standards-setting bodies. We have
developed a unique training course that has gained significant
customer and national recognition, and which will be the basis
for a national program by the American National Standards
Institute.
[narrative text on page 18 of Annual
Report: the right column:]
(headline)
AMP is the leader in application tooling. Over 60% of sales are
tool and machine-applied products.
(text)
Perhaps the most visible evidence of our commitment to
excellence in technology on a global basis, along with the high
level of annual technical spending, is our rising capital
expenditures. We continue to equip the nearly 4,000 AMP
scientists, engineers, technicians, and support personnel with
the modern facilities and advanced equipment they need to be
effective -- over 1.5 million sq. ft. of floor space and well
over $100 million in equipment. We have the most extensive
interconnection technology facilities in the world. During this
decade we will spend over $50 million for a new, more powerful
worldwide CAD/CAM/CAE computer workstation network system -- our
third generation of equipment in the past 15 years. In recent
years we have established advanced development centers in Europe
and Japan. We have just broken ground for a 155,000 sq. ft.
technical facility in the Harrisburg, PA area. Installation of a
multimillion dollar global general communications network will
soon be underway. A recent article on AMP, "Empowering People
Through Technology," describes how we are leveraging AMP
employees' efforts under the Plan for Excellence.
[narrative text on page 19 of Annual
Report: the left and center columns:]
Application tooling has always played a key role in AMP's
growth. Over 50% of AMP sales are products applied by the nearly
52,000 machines we have provided to customers to apply AMP
products to wires, cables, printed circuit boards, and flexible
circuitry. Another 10% of sales are products applied by the
millions of AMP manual and power tools now in use. Several
hundred AMP field service engineers throughout the world install
this equipment, train customer personnel, and provide emergency
service.
In the past decade we have introduced over 150 new types of
machines and tools ranging from hand tools for maintenance and
repair to computer controlled machines that make thousands of
connections per hour and continuously monitor the quality of the
connections as they are being made. We are the leader -- with
perhaps as many machines in use as the rest of the industry
combined.
As we get deeper into the networking/premises wiring market
and step up our activity in the utility markets, we are expanding
the role of our worldwide field service engineering force into
providing much more customer training. In 1993 an estimated
20,000 customer personnel received training at AMP or customer
facilities. AMP has always marketed products on the basis of
total installed cost -- not product price alone -- and this
approach is increasingly relevant as concerns for productivity,
quality, and system performance continue to rise. Through this
approach we can demonstrate that customers' warranty costs
decrease.
A new aspect in our drive to provide customers with lower
total installed costs is a far more extensive customer training
program on the steadily widening range of AMP products for the
rapidly growing networking/premises wiring market. Another is our
Source Reduction Program for packaging materials. Design changes
on packaging of products sold in the U.S. reduced the materials
usage by a million pounds in the fourth quarter of 1993 alone.
[page 20 of Annual Report:]
MANAGEMENT'S DISCUSSION & ANALYSIS
Results of Operations
1993 compared with 1992
Sales for the year were $3.45 billion, up 3% from 1992's
$3.34 billion. The overall effect of exchange rates reduced sales
by $73 million as weakening of the U.S. dollar against the
Japanese yen was more than offset by the strengthening of the
dollar against European currencies. Recessionary conditions in
Europe and Japan impacted sales growth again in 1993, as was the
case in 1992.
Customer order backlog ended 1993 at $493 million, down
slightly from 1992's $506 million. The portion of the backlog
scheduled for delivery in the current and immediately following
month continues to be high. This reflects customer emphasis on
shorter delivery lead times and lower component inventories and
tends to make absolute dollar amounts of backlog less important.
Net income per share increased from $2.75 in 1992 to $2.83 in
1993. Exchange rate movements that adversely affected sales in
1993 reduced net income by approximately 8(cents symbol) per
share. Average shares outstanding changed little during the year
as stock repurchases were not significant.
The decline in operating margin from 16.0% in 1992 to 15.2%
in 1993 was strongly influenced by the recessionary conditions
that existed in Europe and Japan throughout the year. The Company
experienced modest price erosion on commodity products for the
computer market. Costs such as employee benefits, safety and
health, employee training, regulatory compliance, marketing,
customer service, engineering and administrative continued to
increase in absolute dollars and as a percent of total costs.
Selling, General and Administrative Expenses were 17.9% of sales,
up slightly from 1992's 17.5%. Since 1988, SG&A costs expressed
as a percentage of sales have been within the narrow range of
17.5% to 18.0%. Depreciation and amortization expense amounted to
$282 million in 1993, down slightly from $288 million in the
previous year. Depreciation is expected to increase in 1994 in
response to higher capital spending in the United States.
The year-to-year pretax income margin decline, 14.4% in 1992
to 14.1% in 1993, was less than the decrease in operating income
margin due to reduced interest expense and lower deductions in
Other Income (Deductions), net. Interest expense decreased $9.9
million through a combination of lower interest rates and reduced
outstanding debt. Other Income (Deductions), net, which is a
combination of numerous unrelated nonoperating items of both
income and expense, provided a deduction in 1993 that was lower
by $5.5 million than in 1992. Gains on sales from the investment
portfolio, including the November 1993 sale of a portion of the
Company's holdings in the stock of BroadBand Technologies, Inc.,
more than offset larger translation losses in Brazil, whose
economy is defined as highly inflationary under accounting rules.
The income tax rate on pretax income decreased from 39.4% in
1992 to 39.0% in 1993. Effective tax planning offset the 5(cents
symbol) per share reduction resulting from the increase in the
U.S. corporate income tax rate retroactive to the beginning of
the year. The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," in the first
quarter of 1993. Adoption resulted in additional income tax
expense in the Asia/Pacific segment and reduced income tax
expense in the European segment. In the aggregate, adoption of
SFAS No. 109 did not materially affect net income.
The Company continued to expend nearly 12% of its sales
revenues on the functions of research, development and
engineering. Of this expenditure, $258 million qualified as that
for the creation and application of new and improved products and
processes in conformance with the requirements of SFAS No. 2,
"Accounting for Research and Development Costs."
In order to measure the effectiveness of RD&E activity
related to new product development, the Company measures new
product sales as a percent of total sales. Another indication of
effectiveness of the Company's technology and new product focus
is the number of new patents it is awarded. The Company is among
the leaders in patents issued in the U.S.
U.S. segment sales to unaffiliated customers benefited from
broad-based sales growth, with the strongest growth in automotive
and networking/premise wiring. The slowdown in the incoming
orders experienced in the computer and other capital goods
markets from mid-October through November ended in December. U.S.
sales in 1993 were $1.49 billion, up 10% from 1992's $1.36
billion. Pretax income increased 10% to $281.9 million and
reflected a margin to sales of 15.7%, similar to 1992's 15.9%.
U.S. segment sales growth in 1993 was not significantly
influenced by acquisitions during the current year.
European segment sales to unaffiliated customers were up 1%
in local currencies in 1993 despite difficult economic conditions
throughout the region. However, due to the strengthening of the
U.S. dollar, European sales were down 10% in U.S. dollars. Sales
growth in Europe was strongest in the computer and
networking/premise wiring markets. The introduction of new
products, together with the increasing electronic content,
enabled sales to the automotive market to decline less than the
reduction in unit production during the year. Reflecting price
erosion and excess manufacturing capacity, European pretax
margins declined from 12.2% in 1992 to 11.5% in 1993.
Asia/Pacific segment sales to unaffiliated customers grew 2%
in local currencies and 11% in U.S. dollars in 1993. Sales in
Japan were down modestly in local currency due to the recession;
however, favorable exchange rate effects resulted in increased
sales in Japan in U.S. dollars. Sales growth outside of Japan was
very strong and broad-based. Asia/Pacific pretax margins declined
.4% to 9.4% in 1993 as a result of Japan experiencing lower local
currency sales and because of modest price erosion in this highly
competitive, fast-growing market.
[narrative text on page 21 of Annual
Report, including a pie chart: the
left and center columns:]
The Americas segment sales to unaffiliated customers
increased 15% in 1993 with strong growth in Argentina and Brazil.
However, the ongoing exchange rate deterioration of the Brazilian
cruzeiro against the U.S. dollar resulted in large translation
losses. As a result, the 1993 pretax profit margin for the
segment was only 1%, down from 3% in 1992 when the currency
situation was much the same.
The Company's outlook varies with economic conditions in each
of the regions where it does business. The Company's stated goal
is to grow more than 1.5 times the average growth of the markets
it serves. Capital spending in recent years, along with new and
improved products, should support profitable market share growth.
The United States economy is expected to continue to strengthen
in 1994. Continued low inflation, together with low interest
rates and improved industrial productivity, should produce an
improved business climate, with 1994 equal to or stronger than
1993.
The outlook for Europe and Japan in the near term is
cautious. The Company anticipates some economic recovery in
Europe in the second half of 1994, but may have to wait until
1995 for recovery to begin in Japan. In spite of these unsettled
conditions, the Company continues to move forward with its
geographic expansion into Eastern Europe and Asia/Pacific.
In recent years, approximately 60% of the Company's
unaffiliated customer sales have originated outside the United
States. Therefore, the exchange value of the U.S. dollar has a
significant impact on both sales and earnings.
Results of Operations
1992 compared with 1991
After improving sequentially and year-to-year through the
first nine months of 1992, quarterly sales and earnings dipped
modestly in the fourth quarter due to a strengthening U. S.
dollar and a decline in orders from the European automotive
market. Nonetheless, for the entire year, sales rose 7.8% to a
record $3.34 billion. After adjusting for the positive effects of
exchange rate changes and acquisitions, the real rate of growth
was 4.4%. Net income per share increased 12.2% to $2.75. Lower
shares outstanding as a result of the repurchase of 1,166,000
shares of stock in 1992 had the effect of adding 2(cents symbol)
to earnings per share. Sales gains were achieved in each of the
four geographic segments, but net income increased in only the
United States and European segments.
Despite continuing pressure on selling prices, particularly
in the computer/office market, gross and operating margins
improved in 1992. Productivity gains, stable commodity prices and
effective cost controls were the primary contributing factors.
Selling, General and Administrative Expenses declined to 17.5% of
sales, matching the level last achieved in the peak earnings year
of 1988.
Capital expenditures exceeded $300 million in 1992 for the
third consecutive year. This level of expenditures, together with
the Company's conservative accounting practices, caused
depreciation and amortization expense to increase to 8.6% of
sales in 1992 from 8.2% in 1991 and 7.2% in 1990. This percentage
has more than doubled in the past decade as the Company targeted
spending for continued broadening of its technical capabilities
and improvement in productivity and quality.
Pretax margins improved somewhat less than operating margins
as a decrease in interest expense was more than offset by higher
other deductions, primarily attributable to translation losses in
Brazil and a decline in passive investment income.
The effective income tax rate increased from 38.7% in 1991 to
39.4% in 1992. The Company's composite effective tax rate would
have been unchanged from 1991 if the effects of 1992's
non-deductible translation losses were excluded.
Research and development expense, as reported, increased from
$265 million in 1991 to $272 million in 1992, but decreased as a
percentage of sales from 8.6% to 8.2%. Although not reflected in
the reported numbers, expenditures in technical
[the right column of page 21, including
the pie chart:]
Sales Dollar Use
(percent)
[reference Appendix, 2)]
1993
1993 1992 1991 1990 1989
- - Wages, benefits 34.2 33.0 32.5 31.6 31.5
- - Materials, services 42.4 42.5 43.7 44.1 44.4
- - Depreciation/
amortization 8.2 8.6 8.2 7.2 6.4
- - Interest .6 .9 1.3 1.3 .8
- - Taxes 6.0 6.3 5.8 6.3 6.7
- - Dividends 4.9 4.8 4.9 4.8 4.6
- - Reinvested 3.7 3.9 3.6 4.7 5.6
------------------------------------
100.0 100.0 100.0 100.0 100.0
Key Ratios
1993 1992
Current Ratio
(Current Assets (divided-by symbol)
Current Liabilities) 2.19 to 1 1.91 to 1
Long-Term Debt
as a percentage of
Shareholders' Equity 6.4% 2.2%
Total Debt as a
percentage of
Shareholders' Equity 15.3% 18.2%
[narrative text on page 22 of Annual
Report: the left column, including
two pie charts:]
1991-1993
Cash Flow
(dollars in millions)
[reference Appendix, 3)]
Sources
- - Net Income $ 847
- - Depreciation and
Other Operating
Sources, Net 875
- - Decrease in
Cash and Equivalents 145
------
$1,867
[reference Appendix, 3)]
Uses
- - Additions to Property,
Plant and Equipment,
and Other Investments $1,163
- - Dividends 481
- - Purchase of
Treasury Stock 82
- - Reduction of
Debt, Net 141
--------
$1,867
[the center and right columns of page 22:]
functions continued to keep pace with the Company's sales growth.
Restructuring of development and engineering functions, including
retention within such functions of certain manufacturing and
marketing activities that fail to meet the SFAS No. 2 definition
of R&D, makes year-to-year comparisons less meaningful.
U. S. segment sales were up 11%, with 2-3% of this growth due
to inclusion of Precision Interconnect following its acquisition
in December 1991. Strongest sales growth in 1992 was in the
automotive and appliance markets, followed by computer and
certain industrial/commercial markets such as medical
electronics. Sales to the aerospace/military market were down
modestly. Pretax income rose 32%, with most of the improvement
attributable to increased manufacturing capacity utilization.
European sales were up 8% in U. S. dollars and 4% in local
currencies, despite an economic slowdown late in the year. Growth
in sales to the automotive market was strong in both 1991 and
through most of 1992. Pretax profits increased in line with
sales.
Asia/Pacific sales increased 1% in U. S. dollars, but were
down 4% in local currencies. In 1992, segment sales grew in
virtually all countries outside Japan, while Japanese sales were
down modestly. Segment pretax profit fell 21% from 1991 primarily
due to the economic conditions in Japan and capacity
underutilization in start-up operations elsewhere in the region.
In the Americas segment, pretax profits fell 61% despite
sales growth of 6%. The most significant declines in
profitability were in Brazil, where exchange rate deterioration
produced large translation losses, and in Canada, where economic
conditions continued to be sluggish.
Prices and Costs
During the years 1991-1993, the Company experienced
moderately increasing costs for labor and services and relatively
stable costs for materials. Sales prices generally declined in
1993. In the aggregate, the Company estimates annual price
erosion at 2-3% during the 1991-1993 period. Wage rate increases
moderated slightly in 1993 in conjunction with declining rates of
inflation in many of the countries in which the Company operates.
Raw material prices were fairly stable in 1993. While prices
for copper, brass, zinc and other industrial metals were
generally lower, precious metals prices were higher. The
Company's exposure to sharp movements in metals prices is
somewhat mitigated by contractual arrangements with certain
suppliers and customers. Due in part to declining petroleum
prices, plastic resin prices were also marginally lower in 1993.
Although rising commodity prices would have an adverse effect,
the Company should be able to capitalize on its significant size
advantage over other companies in the connector industry. The
Company believes the availability of the materials and labor
skills it requires will remain adequate during 1994.
Each year the Company reviews the key economic assumptions
used in the determination of net periodic pension cost as
prescribed by SFAS No. 87, "Employers' Accounting for Pensions."
Selection of an end-of-year settlement or discount rate for
pension plans is required to reflect the movement in long-term
interest rates during the year. Consideration is limited to fixed
income investments that receive one of the two highest ratings
given by a recognized rating agency. The Company reduced the
year-end discount rate assumption for its U.S. plan from 8.25% in
1992 to 7.00% in 1993. The Company also changed the assumption
for the expected long-term rate of return for the U.S. plan in
1993. This assumption focuses on longer-term expectations and is
therefore less susceptible to annual fluctuations. The investment
profile of the U.S. plan is weighted significantly toward
equities, both domestic and international, with the fund return
averaging 11.6% annually for the past five years. As a result,
the Company raised the expected long-term rate of return from
9.00% in 1992 to 9.50% in 1993. Reflecting recent trends in U.S.
salary movements, the assumption for the rate of increase in
compensation.
[page 23 of Annual Report:]
levels was reduced from 5.00% to 4.50%. International pension
plan assumptions are also reviewed each year by country and
appropriately adjusted. Changes in pension plan assumptions will
reduce reported earnings in 1994 by several cents per share, but
will not have a material effect on the Company's financial
condition.
In the first quarter of 1993, the Company adopted SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," which requires expensing of such benefits over
the working lives of eligible employees. Adoption did not have a
significant impact on 1993's net income, as the Company limits
postretirement medical benefits to eligible early retirees for
the period between their retirement date and the normal
retirement age. Prior to adoption of SFAS No. 106, the Company
established liabilities sufficient to cover all future benefits
payable to qualifying employees who had retired and not attained
age 65.
SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," will be adopted in the first quarter of 1994. Similar
to SFAS No. 106, this standard requires use of the accrual method
for benefits such as salary continuation, severance pay and
health care continuation provided during the period after
employment and before the normal retirement age.
Worker's Compensation Insurance is the most significant
postemployment benefit provided by the Company. The estimated
future costs of benefits provided under this insurance have been
voluntarily accounted for using the accrual method prior to 1994,
therefore adoption will not have a significant impact on 1994's
net income.
Another accounting standard, SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," also will be
adopted in the first quarter of 1994. This standard requires that
certain debt and equity securities be adjusted to market value at
the end of each accounting period. Differences between cost and
market value are to be charged against earnings if the securities
are bought and sold for short-term profit. Otherwise, such
differences will be charged or credited to a separate component
of Shareholders' Equity. Based on the Company's past investment
strategies, charges against earnings are not anticipated to have
a material effect on reported results.
Liquidity
Cash and equivalents and marketable securities exceeded total
debt by $92 million at December 31, 1993. This represents a
decrease from a net cash position of $124 million at year-end
1992 and is due primarily to a decline in cash provided by
operating activities as a result of higher Accounts Receivable
and Inventory balances at year-end 1993. Receivable balances were
up 11% over year-end 1992's abnormally low balances, reflecting
more normal historical levels. Although inventory increased 6%,
inventory turns nearly doubled since 1980.
The Company's current ratio improved from 1.91 at year-end
1992 to 2.19, its highest level since 1983, primarily as a result
of a shift of a significant portion of short-term debt to term
financing. The first quarter 1994 report will reflect a further
shift from short to long-term debt via a private placement
borrowing of six billion Japanese yen with bullet repayment in 20
years. Nearly all of the Company's debt has been incurred by its
international companies. Total debt at year-end 1993 was equal to
15.3% of Shareholders' Equity, down from 18.2% at year-end 1992.
Long-term debt as a percent of equity increased from 2.2% to
6.4%.
During 1994, internal cash flows should be sufficient to
finance working capital needs, dividends and expansion. The
Company maintains bank credit lines and can also issue commercial
paper, which when used in the past has carried the highest
possible rating. In addition, the Company's low debt-to-equity
ratio would permit it substantially more leverage in the event
there were good business reasons for additional debt financing.
Although only 67,500 shares of stock were repurchased in
1993, the Company has repurchased over 5,300,000 shares since a
repurchase plan was announced in 1988. The Company plans to
continue repurchasing its outstanding stock, depending upon
current market conditions and the absence of a higher priority
for the use of its cash resources.
The Company has a comprehensive program for managing current
and emerging environmental issues. During 1992-1993, the Company
commissioned benchmarking reviews of its emergency response and
audit programs and its entire environmental management system.
Recommendations from these studies were implemented in 1993 and
additional steps will be taken in 1994. These enhancements
include establishment and training of business unit and country
environmental coordinators, initiation of a global environmental
training program, revisions to the existing environmental
procedures manual to apply to operations worldwide, and
incorporation of environmental matters in business unit and
international operations' strategic plans. These measures are
intended to enhance a uniform, worldwide environmental management
system that ensures all self-imposed and required environmental
responsibilities are met, thereby minimizing financial and other
risks.
Audits and assessments conducted in 1993 under the
comprehensive program described above identified various matters
that required follow-up action by facilities and business units.
In 1993 the Company also initiated a "baseline" program for
conducting environmental studies of existing facilities as part
of its proactive approach of evaluating the environmental impact
of the Company's operations and other pre-existing conditions,
and taking corrective action where necessary. All facilities
reviewed under this baseline program will become part of an
annual groundwater monitoring program beginning in 1994. The
costs associated with implementing all of the above programs and
addressing audit items are not expected to have a material effect
on the Company's financial results, liquidity, or capital
expenditures.
[narrative text on page 24 of Annual
Report: the left and center columns:]
Potential liabilities exist for investigative and remedial
costs at several sites, including two National Priorities List
(NPL) sites in the U.S. At one Company-owned site, which is
subject to a Corrective Action Order under the Resource
Conservation and Recovery Act, the Company has spent
approximately $1.6 million since 1984. Future costs are expected
to be $150,000-$210,000 annually for at least the next five
years. At another site, the Company shares liability as a
"generator" of wastes with at least seven other parties.
Approximately $350,000 was spent by the Company in connection
with this latter site during 1991-1993. The United States EPA is
expected to issue a decision on the required cleanup during 1994.
Currently, the Company expects the final amount it will be
required to pay for the cleanup to be less than $4 million, to be
incurred primarily in 1995-1996.
The Company is also involved in six other cleanup actions in
the U.S., where it is considered a "de minimis" contributor.
Costs incurred for these sites were minimal in 1993. During 1993,
the Company also resolved its liability at two sites in
settlement agreements reached with the government. Several
additional sites are in the investigative stage and liability and
cost assessments have not been made, although the Company
anticipates being named as a potentially responsible party at
some of those sites.
In addition, the Company has been working voluntarily on
investigation and remediation at approximately sixteen of its own
current or former facilities in the U.S. The Company has spent
approximately $12.5 million on these sites since 1984. Future
costs are expected to be $1-2 million annually for the next
several years. Several of these sites are believed to have been
impacted by third parties, and the Company is taking appropriate
legal action. All cleanups are conducted in coordination with
appropriate governmental agencies to the maximum extent possible.
It is the Company's policy to accrue future remedial expenses to
the extent known and determinable.
Capital Resources
Capital expenditures were $330 million in 1993, exceeding
$300 million for the fourth consecutive year. As has been the
pattern for the last several years, 80-85% of the spending was
for machinery and equipment intended to increase productivity,
quality of manufacturing and support activities.
Floor space increased to 10.1 million square feet from 9.5
million square feet at year-end 1992. About 13% of this space is
leased. The Company's facilities are maintained in excellent
condition and are capable of supporting higher sales volumes,
especially through more extensive use of multi-shift operations.
Capital expenditures are expected to be in the $350-$375
million range in 1994, exceeding the previous record high of $338
million in 1990. Major projects include completion of new
facilities in North Carolina and Pennsylvania, South Korea,
China, India, Great Britain and Spain, as well as plant expansion
in Japan. During 1993, the Company made ten small acquisitions or
new minority interest investments, which consumed $28 million of
free cash.
[the right column of page 24:]
----------------------
Financial Table
of Contents
25 Consolidated Statements
of Income
25 Consolidated Statements
of Shareholders' Equity
26 Consolidated
Balance Sheets
27 Consolidated Statements
of Cash Flows
28 Notes to Consolidated
Financial Statements
35 Statement of Management
Responsibility
35 Report of Independent
Public Accountants<PAGE>
[page 25 of Annual Report:]
FINANCIAL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CONSOLIDATED Year Ended December 31,
STATEMENTS OF --------------------------------------
INCOME (dollars in thousands except per share data) 1993 1992 1991
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AMP Incorporated Net Sales................................................$3,450,586 $3,337,145 $3,094,951
and subsidiaries Cost of Sales............................................ 2,309,256 2,218,898 2,069,526
----------- ----------- -----------
Gross income........................................... 1,141,330 1,118,247 1,025,425
Selling, General and Administrative Expenses............. 616,568 584,913 555,662
----------- ----------- -----------
Income from operations................................. 524,762 533,334 469,763
Interest Expense......................................... (19,549) (29,489) (41,561)
Other Income (Deductions), net........................... (19,277) (24,737) (4,608)
----------- ----------- -----------
Income before income taxes............................. 485,936 479,108 423,594
Income Taxes............................................. 189,280 188,770 163,850
----------- ----------- -----------
Net Income...............................................$ 296,656 $ 290,338 $ 259,744
=========== =========== ===========
Net Income Per Share..................................... $2.83 $2.75 $2.45
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED
STATEMENTS OF Cumulative Treasury Stock
SHAREHOLDERS' Common Other Translation Retained ------------------
EQUITY (in thousands) Stock Capital Adjustments Earnings Shares Amount
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AMP Incorporated Balance at January 1, 1991......... $ 12,480 $ 77,766 $114,108 $1,765,396 6,389 $176,992
and subsidiaries Net income......................... 259,744
Cash Dividends -- $1.44 per share... (152,443)
Purchases of treasury stock........ 260 12,618
Distributions of treasury stock
under Bonus Plans............. 329 (47) (2,063)
Treasury stock issued for
purchase of business.......... 1,938 (316) (14,667)
Translation adjustments............ 6,605
-------- -------- --------- ----------- ------- ---------
Balance at December 31, 1991....... 12,480 80,033 120,713 1,872,697 6,286 172,880
Net income......................... 290,338
Cash dividends -- $1.52 per share... (160,417)
Purchases of treasury stock........ 1,166 65,773
Distributions of treasury stock
under Bonus Plans............. 1,233 (62) (2,665)
Translation adjustments............ (37,807)
-------- -------- --------- ----------- ------- ---------
Balance at December 31, 1992....... 12,480 81,266 82,906 2,002,618 7,390 235,988
Net income......................... 296,656
Cash dividends -- $1.60 per share... (167,838)
Purchases of treasury stock........ 68 3,771
Distributions of treasury stock
under Bonus Plans............ 134 (44) (2,431)
Translation adjustments............ (14,539)
-------- -------- -------- ----------- ------- ---------
Balance at December 31, 1993....... $ 12,480 $ 81,400 $ 68,367 $2,131,436 7,414 $237,328
======== ======== ========= =========== ======= =========
</TABLE>
25
<PAGE>
[page 26 of Annual Report:]
<TABLE>
<CAPTION>
CONSOLIDATED ----------------------------
BALANCE SHEETS ASSETS
----------------------------
AMP Incorporated December 31,
and subsidiaries -----------------------
(dollars in thousands) 1993 1992
------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents.................$ 257,678 $ 370,753
Marketable securities..................... 149,317 107,224
Receivables............................... 625,180 561,038
Inventories............................... 459,302 435,091
Deferred income taxes..................... 88,483 85,204
Other current assets...................... 64,398 54,794
----------- -----------
Total current assets.................... 1,644,358 1,614,104
----------- -----------
Property, Plant and Equipment............... 2,954,936 2,715,244
Less -- Accumulated depreciation.......... 1,709,811 1,536,483
----------- -----------
Property, plant and equipment, net..... 1,245,125 1,178,761
----------- -----------
Investments and Other Assets................ 228,436 212,264
----------- -----------
Total Assets................................$ 3,117,919 $ 3,005,129
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------
<S> <C> <C>
Current Liabilities:
Short-term debt........................$ 183,625 $ 310,944
Payables, trade and other.............. 236,697 234,177
Accrued payrolls and employee
benefits............................. 115,461 109,729
Accrued income taxes................... 164,154 143,835
Other accrued liabilities.............. 52,426 46,767
----------- -----------
Total current liabilities............ 752,363 845,452
Long-Term Debt.............................. 130,982 42,870
Deferred Income Taxes....................... 53,719 75,153
Other Liabilities........................... 124,500 98,372
----------- -----------
Total liabilities.................... 1,061,564 1,061,847
----------- -----------
Shareholders' Equity:
Common stock, without par value
Authorized 350,000,000 shares,
issued 112,320,000 shares............ 12,480 12,480
Other capital.......................... 81,400 81,266
Cumulative translation adjustments..... 68,367 82,906
Retained earnings...................... 2,131,436 2,002,618
Treasury stock, at cost................ (237,328) (235,988)
------------ -------------
Total shareholders' equity........... 2,056,355 1,943,282
------------ -------------
Total Liabilities and Shareholders' Equity..$ 3,117,919 $ 3,005,129
============ =============
</TABLE>
26
<PAGE>
[page 27 of Annual Report:]
<TABLE>
<CAPTION>
CONSOLIDATED Year Ended December 31,
STATEMENTS OF ------------------------------------
CASH FLOWS (dollars in thousands) 1993 1992 1991
------------------------------------------------------------------------------------
<S> <C> <C> <C>
AMP Incorporated Cash and Cash Equivalents at January 1...... $ 370,753 $ 370,829 $414,493
and subsidiaries ----------- ---------- ---------
Operating Activities:
Net income............................. 296,656 290,338 259,744
Noncash adjustments --
Depreciation and amortization........ 282,217 288,001 255,219
Deferred income taxes................ (21,155) (2,423) (14,185)
Increase to other liabilities........ 18,554 29,081 36,672
Other, net........................... 21,523 32,510 32,098
Changes in operating assets
and liabilities net of effects
of acquisitions of businesses..... (65,061) (2,869) (14,589)
----------- ---------- ---------
Cash provided by operating
activities........................ 532,734 634,638 554,959
----------- ---------- ---------
Investing Activities:
Additions to property, plant and
equipment........................... (330,405) (312,463) (313,334)
Increase in marketable securities...... (41,593) (27,057) (34,493)
Acquisitions of businesses,
less cash acquired.................. (16,230) (10,582) (1,113)
Other, net............................. (23,361) (23,640) (28,945)
----------- ---------- ---------
Cash used for investing activities. (411,589) (373,742) (377,885)
----------- ---------- ---------
Financing Activities:
Changes in short-term debt............. (138,839) (21,657) (48,059)
Proceeds from long-term debt........... 107,265 4,808 13,368
Repayments of long-term debt........... (22,341) (13,430) (22,405)
Purchases of treasury stock............ (3,771) (65,773) (12,618)
Dividends paid......................... (167,838) (160,417) (152,443)
----------- ---------- ---------
Cash used for financing activities. (225,524) (256,469) (222,157)
----------- ---------- ---------
Effect of Exchange Rate Changes on Cash...... (8,696) (4,503) 1,419
----------- ---------- ---------
Cash and Cash Equivalents at December 31..... $ 257,678 $ 370,753 $370,829
=========== ========== =========
Changes in Operating Assets and Liabilities:
Receivables............................ $ (51,971) $ 6,447 $(29,825)
Inventories............................ (24,367) (4,985) 43,824
Other current assets................... (14,672) (10) (4,842)
Payables, trade and other.............. (9,126) (6,968) 5,606
Accrued payrolls and employee benefits. 14,487 (8,770) (12,709)
Other accrued liabilities.............. 20,588 11,417 (16,643)
---------- ---------- ---------
$ (65,061) $ (2,869) $(14,589)
========== ========== =========
</TABLE>
27
<PAGE>
[page 28 of Annual Report:]
- ---------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ---------------------------------------------
[1]--------------------------------------------------------------------------
SUMMARY OF PRINCIPLES OF CONSOLIDATION -- The consolidated financial
ACCOUNTING statements include the accounts of the Company and its
PRINCIPLES wholly owned subsidiaries. Investments representing
ownership of 20% to 50% in affiliates and corporate joint
ventures are accounted for using the equity method.
Asia/Pacific and Americas subsidiaries are included on the
basis of years ending November 30.
CASH AND CASH EQUIVALENTS -- Cash and cash equivalents are
comprised of cash in banks, time deposits and marketable
securities having maturities of 91 days or less on their
acquisition date. Securities with original maturities of more
than 91 days are classified as marketable securities. All
marketable securities are carried at the lower of cost or
market value.
INVENTORIES -- Inventories, consisting of material, labor
and overhead, are stated at the lower of first-in, first-out
(FIFO) cost or market.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION -- Property,
plant and equipment is stated at cost, adjusted to current
exchange rates where applicable. Depreciation is computed by
applying principally the straight-line method to individual
items. Depreciation rate ranges are substantially as follows:
Buildings........................ 5%
Leasehold improvements........... Life of lease
Machinery and equipment.......... 7 1/2% to 33 1/3%
Machines and tools with customers. 20% to 33 1/3%
Where different depreciation methods or lives are used for
tax purposes, deferred income taxes are recorded.
Maintenance and repairs are charged to expense as incurred.
Major repairs and improvements are capitalized and
depreciated at applicable straight-line rates.
The cost and accumulated depreciation of items of plant and
equipment retired or otherwise disposed of are removed from
the related accounts, and any residual values are charged or
credited to operating income.
GOODWILL -- The excess of cost over the fair value of assets
acquired is amortized over periods not exceeding 15 years.
PER SHARE DATA -- The weighted average number of shares
outstanding used to compute net income per share was
104,898,122 in 1993, 105,496,092 in 1992 and 105,882,591 in
1991. The effect of shares issuable under stock options is
not significant.
[2]----------------------------------------------------------------------------
PAMCOR On September 4, 1992, the Company terminated the Pamcor Stock
Trust Agreement among the Company, Pamcor, Inc. and Bankers
Trust Company. As a result, Pamcor, formerly an affiliate of
the Company by way of common shareholders, became a wholly
owned subsidiary. Certificates for shares of the Company's
common stock no longer represent a proportional interest in
the shares of Pamcor, nor bear the endorsement of Trustee to
that effect.
The termination of the Trust has been accounted for in a
manner similar to a pooling of interests and, accordingly, the
financial statements for all prior periods have been restated
to reflect the elimination of $20,000 of par value of Pamcor
common stock previously held in trust. The transaction had no
impact upon previously reported net income of the combined
entities.
[3]----------------------------------------------------------------------------
INTERNATIONAL Net income from international operations was $117,898,000 in
OPERATIONS 1993, $127,768,000 in 1992 and $144,105,000 in 1991.
Availability of remittances to the parent company is subject
to exchange controls and other restrictions of the various
countries.
Foreign currency transaction gains and losses, after
adjustment for income taxes to the extent appropriate, decreased
net income by $2,665,000 (3(cents symbol) per share) in 1993;
$1,507,000 (1(cents symbol) per share) in 1992 and $3,332,000
(3(cents symbol) per share) in 1991.
[4]----------------------------------------------------------------------------
INVENTORIES At December 31, inventories were comprised of the following:
(dollars in thousands) 1993 1992
-------------------------------------------------------------
Finished goods and work in process...... $255,472 $243,450
Purchased and manufactured parts........ 153,643 145,670
Raw materials........................... 50,187 45,971
---------------------
$459,302 $435,091
======== ========
28
<PAGE>
[page 29 of Annual Report:]
[5]----------------------------------------------------------------------------
PROPERTY, At December 31, property, plant and equipment was comprised of
PLANT AND the following:
EQUIPMENT
(dollars in thousands) 1993 1992
--------------------------------------------------------------
Land.................................. $ 54,931 $ 50,783
Buildings and leasehold improvements.. 600,062 547,673
Machinery and equipment............... 1,961,683 1,777,320
Machines and tools with customers..... 338,260 339,468
----------- -----------
$2,954,936 $2,715,244
=========== ==========
<PAGE>
[6]----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEBT
At December 31, debt was comprised of the following:
1993 1992
--------------------- ----------------------
Long- Due Within Long- Due Within
(dollars in thousands) Term One Year Term One Year
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International bank loans, 5.5% weighted
interest rate (1992 -- 7.2%), repayable
in varying amounts through 2007.............$130,551 $ 20,321 $41,575 $ 11,268
Mortgages and other indebtedness,
8.7% weighted interest rate
(1992 -- 7.0%), repayable through 1996...... 431 819 1,295 3,556
International overdrafts and demand loans,
5.7% weighted interest rate (1992 -- 7.1%).. --- 162,485 --- 296,120
-------- -------- -------- --------
$130,982 $183,625 $42,870 $310,944
======== ======== ======= ========
</TABLE>
The payment schedule of debt due after one year is as
follows: $10,167,000 in 1995, $14,318,000 in 1996, $11,474,000
in 1997, $36,662,000 in 1998 and $58,361,000 in 1999 and
beyond.
The majority of the Company's domestic bank credit lines are
on a fee basis of 1/8% per year. The Company did not borrow
against the lines during 1993. Under informal agreements, the
Company maintains compensating balances for certain of its
international operations. These balances averaged $10,537,000
during 1993.
[7]----------------------------------------------------------------------------
INTEREST The Company capitalizes interest costs associated with the
construction of certain assets. These costs are not
significant. Interest paid during the periods was approximately
equal to amounts charged to expense.
Interest income for the year ended December 31 was
$15,677,000 in 1993, $17,703,000 in 1992 and $21,895,000 in
1991.
[8]----------------------------------------------------------------------------
LEASES The Company leases certain buildings and transportation and
other equipment. Capital leases are not significant.
Total rental expense under operating leases was $55,906,000
in 1993, $52,261,000 in 1992 and $47,750,000 in 1991. Minimum
rental commitments at December 31, 1993, under leases with
initial terms in excess of one year were:
1994...................$31,020,000
1995...................$23,376,000
1996...................$11,122,000
1997...................$ 6,752,000
1998...................$ 3,208,000
1999 and beyond........$16,718,000
29
<PAGE>
[page 30 of Annual Report:]
[9]----------------------------------------------------------------------------
EMPLOYEE EMPLOYEE RETIREMENT PLANS -- The Company has defined benefit
RETIREMENT pension plans for substantially all U.S. employees. During
PLANS AND the reported period, pension benefits were based on the higher
RETIREE of an employee's career earnings or years of service and
MEDICAL earnings near retirement. Assets of the plans are comprised
BENEFITS principally of equity securities and fixed income investments.
The U.S. plan includes a provision to increase benefit
obligations in the event of a change in control of the
Company, as defined. It is the Company's policy to fund at
least the minimum amounts required by Federal law and
regulation. During 1992, the Company settled a portion of its
retirement benefit obligation to certain retirees through the
purchase of annuity contracts.
Certain international subsidiaries also have pension plans.
In most cases, the plans are defined benefit in nature. Assets
of the plans are comprised of insurance contracts and equity
securities -- or book reserves are maintained. Benefit
formulas are similar to those used by the U.S. plans. It is
the policy of these subsidiaries to fund at least the minimum
amounts required by local law and regulation.
EMPLOYEE SAVINGS AND THRIFT PLAN -- U.S. employees may
participate in the defined contribution 401(k) plan which has
been established as a supplemental retirement program. Under
this program, the Company contributes 60(cents symbol) for
each dollar contributed by an employee up to 4% of an
employee's base pay. At December 31, 1993 approximately
12,000 employees were participating in the program out of the
15,000 who were eligible.
RETIREE MEDICAL BENEFITS -- In addition to providing pension
and 401(k) benefits, the Company also provides health care
coverage continuation for qualifying U.S. retirees from date
of retirement to age 65.
On January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" (SFAS No.
106). SFAS No. 106 requires that the Company accrue the cost
of benefits which may become payable to employees, over their
related service periods. Prior to adoption of SFAS No. 106,
the Company established liabilities sufficient to cover all
future benefits payable to qualifying employees who had
retired and not attained age 65. SFAS No. 106 was adopted on
a prospective basis and its impact on 1993 earnings was not
significant.
Components of net periodic pension and retiree medical costs
for the year ended December 31 were:
<TABLE>
<CAPTION>
Retirement Plans Retiree
-------------------------------------------------------------------- Medical
U.S. Plans International Plans Plan
------------------------------- --------------------------------- ---------
(dollars in thousands) 1993 1992 1991 1993 1992 1991 1993
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost -- benefits
earned during
the period................ $ 17,690 $ 16,575 $ 14,098 $ 12,988 $ 11,544 $ 9,840 $ 1,957
Interest cost on
projected benefit
obligation................ 34,813 33,049 34,819 13,293 12,864 10,772 2,245
Actual return on
plan assets............... (69,507) (27,299) (98,605) (15,457) (13,700) (10,271) ---
Net amortization
and deferral.............. 22,759 (14,313) 54,389 3,339 1,990 (719) 1,071
--------- --------- --------- --------- --------- --------- --------
Net periodic
plan cost................. $ 5,755 $ 8,012 $ 4,701 $ 14,163 $ 12,698 $ 9,622 $ 5,273
======== ========= ========= ========= ========= ========= =========
</TABLE>
30
<PAGE>
[page 31 of Annual Report:]
The funded status of these plans at December 31 was:
<TABLE>
<CAPTION>
Retirement Plans Retiree
----------------------------------------------- Medical
U.S. Plans International Plans Plan
------------------- ------------------ ---------
(dollars in thousands) 1993 1992 1993 1992 1993
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Plan assets at fair value................... $ 523,972 $ 468,065 $ 201,697 $ 173,057 $ ---
========== ========== ========== ========== =========
Actuarial present value of
benefit obligations:
Vested benefits......................... 384,946 323,300 145,490 121,606 ---
Nonvested benefits...................... 50,467 35,161 25,393 24,805 ---
Retirees................................ --- --- --- --- 11,712
Employees eligible to retire............ --- --- --- --- 4,546
Employees not eligible to retire........ --- --- --- --- 15,132
---------- ---------- ---------- ---------- ---------
Accumulated benefit obligation.............. 435,413 358,461 170,883 146,411 31,390
Additional benefits based on projected
future salary increases................... 110,606 64,832 21,113 34,190 ---
---------- ---------- ---------- ---------- ---------
Projected benefit obligation................ $ 546,019 $ 423,293 $ 191,996 $ 180,601 $ 31,390
========== ========== ========== ========== =========
Plan assets greater (less) than
projected benefit obligation.............. $ (22,047) $ 44,772 $ 9,701 $ (7,544) $(31,390)
========== ========== ========== ========== =========
Accrued liability at year end.............. $ (54,264) $ (46,794) $ (12,440) $ (13,558) $ (8,733)
Unrecognized net gain.................... 28,277 65,016 34,921 18,941 (2,309)
Unrecognized prior service cost.......... (12,792) 9,109 (99) (110) ---
Unrecognized transition
amount, net of amortization............ 16,732 17,441 (12,681) (12,817) (20,348)
---------- ---------- ---------- ---------- ---------
Plan assets greater (less) than
projected benefit obligation............. $ (22,047) $ 44,772 $ 9,701 $ (7,544) $(31,390)
========== ========== ========== ========== =========
</TABLE>
Key economic assumptions used in these determinations were:
<TABLE>
<CAPTION>
Retirement Plans
---------------------------------------
U.S. Plans International Plans
--------------- -------------------
1993 1992 1993 1992
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Settlement rate --
January 1................................ 8.25% 8.25% 7.25% 8.00%
December 31.............................. 7.00% 8.25% 6.25% 7.25%
Rates of increase in compensation levels... 4.50% 5.00% 4.25% 5.50%
Expected long-term rate of return.......... 9.50% 9.00% 6.50% 7.25%
</TABLE>
Retiree medical benefits expense was computed using a
medical cost trend rate of 14% graded to 5.5% in year 2002 and
later. For each increase of 1% in the medical cost trend rate
the benefit obligation and annual expense would increase
by approximately 6%. The settlement rate used to compute the
obligation was 8.25% at January 1, 1993 and 7.00% at December
31, 1993.
Expenses for these plans for the year ended December 31 were:
(dollars in thousands) 1993 1992 1991
-------------------------------------------------------------
Pension...................... $19,918 $20,710 $14,323
Savings and Thrift........... 8,903 8,245 6,609
Retiree Medical Benefits..... 5,273 1,999 1,916
31
<PAGE>
[page 32 of Annual Report:]
[10]---------------------------------------------------------------------------
BONUS PLANS In April of 1993, the shareholders approved the 1993 Long-Term
Equity Incentive Plan (the "Plan"). The Plan provides for the
continuation, with certain modifications, of the Company's
Stock Plus Cash Plan and establishes a stock option plan
whereby Incentive Stock Options ("ISOs") and/or Non-Qualified
Stock Options ("NQSOs") may be issued to key employees. Awards
of up to 5,000,000 shares of the Company's Common Stock may be
made under the Plan.
STOCK OPTION PLAN -- The Board of Directors determines the
terms and conditions applicable to each Stock Option award.
The option price per share of Common Stock will not be less
than 100% of the fair value of the stock on the award date.
Options expire no later than ten years from date of grant and
may not be exercised earlier than twelve months from such date.
At December 31, 1993, 279,000 options were outstanding at an
option price of $60.50 per share and none are exercisable until
July 27, 1996.
STOCK BONUS UNITS -- Stock Bonus Units may be granted to
participants with or without a Supplemental Cash Bonus, at the
discretion of the Board of Directors. The designated value of
each Stock Bonus Unit may not be less than 95% of the average
fair value of the stock over the 10 days preceding the award
date. Awards are computed by multiplying vested Bonus Units by
the excess of the market price of the Company's Common Stock
over the designated value of the Stock Bonus Unit.
Approximately 102,000 shares would be distributed in the
years 1994 through 1999 for Stock Bonus Units granted before
and outstanding at December 31, 1993, based on the market
price at that date.
CASH (OR STOCK) PLAN -- Key employees, designated by the
Board of Directors, participate in the Cash (or Stock) Plan.
Compensation under the plan is related to the achievement of
specified performance objectives. Payments are made in cash
or in shares of the Company's Common Stock, at the election
of the participant.
Charges to income before income taxes for current and future
distributions under the aforementioned Plans totaled
$12,194,000 in 1993, $12,534,000 in 1992 and $8,924,000 in
1991.
[11]---------------------------------------------------------------------------
SHAREHOLDER On October 25, 1989, the Board of Directors adopted a
RIGHTS PLAN Shareholder Rights Plan and declared a dividend of one Common
Stock Purchase Right (a "Right") for each outstanding share of
Common Stock. Such Rights only become exercisable, or
transferable apart from the Common Stock, ten business days
after a person or group (an "Acquiring Person") acquires
beneficial ownership of, or commences a tender or exchange
offer for, 20% or more of the Company's Common Stock.
Each Right then may be exercised to acquire one share of the
Company's Common Stock at an exercise price of $175, subject
to adjustment. Thereafter, upon the occurrence of certain
events (for example, if the Company is the surviving
corporation of a merger with an Acquiring Person), the Rights
entitle holders other than the Acquiring Person to acquire
Common Stock having a value of twice the exercise price of the
Rights. Alternatively, upon the occurrence of certain other
events (for example, if the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation), the Rights would entitle
holders other than the Acquiring Person to acquire Common Stock
of the Acquiring Person having a value twice the exercise price
of the Rights.
The Rights may be redeemed by the Company at a redemption
price of $.01 per Right at any time until the tenth business
day following public announcement that a 20% position has been
acquired or ten business days after commencement of a tender
or exchange offer. The Rights will expire on November 6, 1999.
32
<PAGE>
[page 33 of Annual Report:]
[12]---------------------------------------------------------------------------
INCOME TAXES On January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting For Income Taxes"
(SFAS No. 109). SFAS No. 109 requires that the Company change
its method of accounting for income taxes from the deferred
method to the liability method. The liability method attempts
to recognize the future tax consequences of temporary
differences between the book and tax bases of assets and
liabilities. SFAS No. 109 was adopted prospectively, and its
impact on 1993 earnings was not significant.
Components of income tax expense for the year ended December
31 were:
<TABLE>
<CAPTION>
(dollars in thousands) 1993 1992 1991
-------------------------------------------------------------------------------
<S> <C> <C> <C>
U. S. Federal:
Taxes currently payable..................... $103,656 $ 75,946 $ 61,646
Deferred taxes.............................. (14,414) 271 (8,260)
Foreign:
Taxes currently payable..................... 85,549 94,417 96,868
Deferred taxes.............................. (2,166) (2,115) (4,099)
Other:
Taxes currently payable..................... 21,230 20,830 19,521
Deferred taxes.............................. (4,575) (579) (1,826)
--------- --------- ---------
$189,280 $188,770 $163,850
========= ========= =========
</TABLE>
At December 31, 1993, gross deferred tax assets were
approximately $126,292,000 comprised mainly of Inventories -
$70,588,000 and Pensions - $19,586,000. Gross deferred tax
liabilities were approximately $91,528,000 comprised mainly of
Depreciation - $55,756,000 and U. S. taxes provided on
undistributed earnings of subsidiaries - $21,940,000. There
was no valuation reserve for deferred tax assets.
The Company's effective tax rate varied from the U. S. Federal
income tax rate for the following reasons:
<TABLE>
<CAPTION>
1993 1992 1991
-------------------------------------------------------------------------------
<S> <C> <C> <C>
U. S. Federal income tax rate................... 35.0% 34.0% 34.0%
State income taxes, net of federal tax benefit.. 2.6 2.8 2.7
Foreign income taxes............................ 2.7 3.5 2.9
Other items not individually significant........ (1.3) (0.9) (0.9)
----- ----- -----
Effective tax rate.............................. 39.0% 39.4% 38.7%
===== ===== =====
Income before income taxes, after allocation of eliminations, is as follows:
1993 1992 1991
-------------------------------------------------------------------------------
United States operations........................ $284,769 $258,790 $186,664
International operations........................ 201,167 220,318 236,930
-------- -------- --------
Worldwide income before income taxes............ $485,936 $479,108 $423,594
======== ======== ========
</TABLE>
Income tax payments were $174,073,000 in 1993, $162,105,000 in
1992 and $188,536,000 in 1991.
[13]----------------------------------------------------------------------------
RESEARCH AND Research and development expenditures for the creation and
DEVELOPMENT application of new and improved products and processes were
$258,000,000 in 1993, $272,000,000 in 1992 and $265,000,000
in 1991.
33
<PAGE>
[page 34 of Annual Report:]
[14]----------------------------------------------------------------------------
BUSINESS The Company's business is concentrated almost entirely in one
SEGMENTS product area--electrical and electronic connection, switching
and programming devices--which are sold throughout many diverse
markets. It is not possible, therefore, to divide AMP's
business into meaningful industry segments.
However, the Company's operations are worldwide and can be
grouped into several geographic segments. Operations outside
the United States are conducted through wholly owned subsidiary
companies that function within assigned, principally national,
markets. The subsidiaries manufacture locally where required
by market conditions and/or customer demands, and where
permitted by economies of scale. Most are also self-financed.
However, while they operate fairly autonomously, there are
substantial intersegment and intrasegment sales.
Pertinent financial data by major geographic segments for
1993, 1992 and 1991 are:
<TABLE>
<CAPTION>
Sales to Inter-
Unaffiliated segment Total Pretax Net Total
(dollars in thousands) Customers Sales Sales Income Income Assets
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
United States: 1993......... $1,490,798 $ 306,448 $ 1,797,246 $ 281,888 $ 179,360 $ 1,963,136
1992......... 1,357,936 258,768 1,616,704 256,962 161,471 1,759,348
1991......... 1,221,433 255,286 1,476,719 195,124 121,699 1,672,865
Europe: 1993......... $1,053,125 $ 34,706 $ 1,087,831 $ 125,360 $ 81,914 $ 655,813
1992......... 1,164,634 29,808 1,194,442 145,553 87,637 702,748
1991......... 1,073,937 24,629 1,098,566 134,726 84,902 769,340
Asia/Pacific: 1993......... $ 741,187 $ 44,767 $ 785,954 $ 73,681 $ 35,313 $ 755,840
1992......... 670,324 39,026 709,350 69,410 39,041 671,318
1991......... 663,630 26,064 689,694 88,339 53,606 649,510
Americas: 1993......... $ 165,476 $ 9,206 $ 174,682 $ 2,126 $ 671 $ 87,152
1992......... 144,251 12,816 157,067 5,355 1,090 79,517
1991......... 135,951 15,351 151,302 13,865 5,597 83,912
Eliminations: 1993......... $ -- $ (395,127) $ (395,127) $ 2,881 $ (602) $ (344,022)
1992......... -- (340,418) (340,418) 1,828 1,099 (207,802)
1991......... -- (321,330) (321,330) (8,460) (6,060) (168,732)
Total: 1993......... $3,450,586 $ -- $ 3,450,586 $ 485,936 $ 296,656 $ 3,117,919
1992......... 3,337,145 -- 3,337,145 479,108 290,338 3,005,129
1991......... 3,094,951 -- 3,094,951 423,594 259,744 3,006,895
</TABLE>
Transfers between geographic segments are generally priced at
"large quantity customer prices less a discount" for items not
requiring further manufacture and at "cost plus a percentage"
for items subject to further processing.
Included in the assets of the United States segment are
short-term investments at December 31: 1993--$325,618,000;
1992--$389,298,000 and 1991--$379,779,000; which generated
interest income of approximately $11,465,000, $13,449,000 and
$17,542,000, respectively.
[15]---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUMMARIZED For the 3 Months Ended
QUARTERLY --------------------------------------------------------
FINANCIAL (dollars in thousands
DATA except per share data) March 31 June 30 September 30 December 31
(unaudited) ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993: Net sales................. $837,956 $882,737 $857,439 $872,454
Gross income.............. 278,146 296,830 286,636 279,718
Net income................ 72,523 75,738 77,402 70,993
Net income per share...... 69(cents 72(cents 74(cents 68(cents
symbol) symbol) symbol) symbol)
1992: Net sales................. $818,576 $826,980 $847,075 $844,514
Gross income.............. 274,538 278,252 290,578 274,879
Net income................ 70,157 72,050 77,817 70,314
Net income per share...... 66(cents 68(cents 74(cents 67(cents
symbol) symbol) symbol) symbol)
</TABLE>
34
<PAGE>
<PAGE>
[page 35 of Annual Report:]
- -------------------------------------------------------------------------------
STATEMENT OF The financial statements and other financial information
MANAGEMENT contained in this Annual Report are the responsibility of
RESPONSIBILITY management. They have been prepared in accordance with
generally accepted accounting principles applied on a
materially consistent basis and are deemed to present fairly
the consolidated financial position of AMP Incorporated and
subsidiaries, and the consolidated results of their operations.
Where necessary, management has made informed judgements and
estimates of the outcome of events and transactions, with due
consideration given to materiality.
As a means of fulfilling its responsibility for the
integrity of financial information included in this Annual
Report, management relies on the Company's system of internal
controls. This system has been established to ensure, within
reasonable limits, that assets are safeguarded, that
transactions are properly recorded and executed in accordance
with management's authorization and that the accounting records
provide a solid foundation from which to prepare the financial
statements. It is recognized that no system of internal
controls can detect and prevent all errors and irregularities.
Management believes that the established system provides an
acceptable balance between benefits to be gained and their
related costs.
It has always been the policy and practice of the Company
to conduct its affairs ethically and in a socially responsible
manner. Employee awareness of these objectives is achieved
through regular and continuing key written policy statements.
Management maintains a systematic program to ensure compliance
with these policies.
As part of their audit of the financial statements, the
Company's independent public accountants review and assess the
effectiveness of selected internal accounting controls to
establish a basis for reliance thereon in determining the
nature, timing and extent of audit tests to be applied. In
addition, the Company maintains a staff of internal auditors
who work with the independent public accountants to ensure
adequate auditing coverage of the Company and who conduct
operational audits of their own design. Management emphasizes
the need for constructive recommendations as part of the
auditing process and implements a high proportion of their
suggestions.
The Audit Committee of the Board of Directors meets with
the independent public accountants, internal auditors and
management periodically, to review their respective activities
and the discharge of each of their responsibilities. Both the
independent public accountants and the internal auditors have
free access to the Audit Committee, with or without management,
to discuss the scope of their audits and the adequacy of the
system of internal controls.
- -------------------------------------------------------------------------------
REPORT OF To the Shareholders and Board of Directors of AMP Incorporated:
INDEPENDENT
PUBLIC We have audited the accompanying consolidated balance sheets
ACCOUNTANTS of AMP INCORPORATED (a Pennsylvania Corporation) and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, shareholders' equity and
cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of AMP Incorporated and subsidiaries
as of December 31, 1993 and 1992, and the consolidated
results of their operations and their cash flows for each of
the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.
Philadelphia, PA
February 18, 1994 Arthur Andersen & Co.
35
<PAGE>
[Stock Information section of the Corporate
Data set forth on page 36 of Annual Report:]
[columns one and two of the Stock Information
section:]
- --------------------------------------------------------------------------
STOCK INFORMATION
LISTED STATE OF INCORPORATION
NY Stock Exchange Pennsylvania
STOCK TRADED PRINCIPAL TRANSFER
NY, Boston, Cincinnati, Midwest, AGENT/REGISTRAR
Pacific, Philadelphia Exchanges Chemical Bank
J.A.F. Building
OPTIONS TRADED P.O. Box 3068
Chicago Exchange New York, NY 10116-3068
SYMBOL Information on stockholdings,
AMP dividends, Dividend Reinvestment
Plan, write: Chemical Bank
SHAREHOLDERS OF RECORD Securityholder Relations Dept.
9200 or AMP Incorporated, Shareholder
Over 80% of shares held by Services, P.O. Box 3608, MS 176-042
over 500 institutions Harrisburg, PA 17105-3608
Phone: 717-780-4869.
STOCK CERTIFICATE CUSIP NUMBER
031897101
[columns three and four of the Stock Information
section:]
DIVIDENT REINVESTMENT PLAN Available are:
Permits cost-free invesment Annual and quarterly reports;
of dividends; voluntary cash article reprints from publications
payments of $50 to $5,000 in including ELECTRONIC BUSINESS,
any month. ELECTRONIC BUYERS NEWS, BUSINESS
WEEK, CENTRAL PENN BUSINESS JOURNAL,
INFORMATION, REPORTS, REPRINTS DESIGN NEWS, FORTUNE, INDUSTRY WEEK,
AMP Incorporated THE QUALITY EXECUTIVE, STANDARD &
Investor Relations Dept. POORS, WALL STREET TRANSCRIPT, VALUE
Mail Stop 176-043 LINE; broker reports; and a new
P.O. Box 3608 AMP publication, "ENVIRONMENTAL
Harrisburg, PA 17105-3608 PROGRESS REPORT" which describes our
Phone: 717-780-4483 widely recognized environmental
FAX: 717-780-6348 protection program.
- -----------------------------------------------------------------------------
36
<PAGE>
[the top two-thirds of the inside-back cover
of Annual Report, where the officers and
divisional vice presidents are identified:]
CORPORATE DIRECTORY
[columns one, two and three of the OFFICERS
section of page 37:]
- -----------------------------------------------------------------------------
OFFICERS
William J. Hudson Ted L. Dalrymple Philip G. Guarneschelli
President and Chief Vice President, Vice President, Global
Executive Officer, Global Marketing Human Resources
and Director
Charles W. Goonrey John E. Gurski
James E. Marley Vice President, Vice President, Europe
Chairman of the Board General Legal
Counsel Javad K. Hassan
Benjamin Savidge Vice President, Global
Executive Vice President Jean Gorjat Strategic Businesses
and Chief Financial Vice President,
Officer, and Director Asia/Pacific
[column four of the OFFICERS section of page 37:]
David C. Cornelius
Controller
David F. Henschel
Secretary
Joseph C. Overbaugh
Treasurer
[columns one, two and three of the DIVISIONAL
VICE PRESIDENTS section of page 37:]
- ------------------------------------------------------------------------------
DIVISIONAL VICE PRESIDENTS
CORPORATE SERVICES Merrill A. Yohe MARKETING
John H. Kegel Public Affairs G. Russell Knerr, Jr.
Logistics Global Sales and
Anthony Zettlemoyer Marketing, Strategic
Lincoln S. Miller, Jr. Global Planning Businesses
Supplier Relations
BUSINESS UNITS Joseph L. Maher, Jr.
Howard R. Peiffer Herbert M. Cole Industrial Sales
Technology Capital Goods
Business Group Neal J. Spatz
Carol A. Ritter Distributor Marketing
Environmental Programs, Rudolf Gassner
General Services Capital Goods INTERNATIONAL
Business Unit J. Keith Drysdale
Paul Timashenka Business and Operations
Global Quality Earl Hennenhoefer Planning, Europe
Cable Interconnections
Larry C. Walker Arthur Gerlinger
Taxes August P. Kastel Latin American and
Aerospace/Government Canadian Operations
Paul E. Workinger Systems
Operations and
General Services H. Chester Timmins
Automotive/Consumer
[column four of the DIVISIONAL VICE PRESIDENTS
section of page 37:]
Hermann Gilissen
Development Engineering,
Europe
Peter Glaser
Manufacturing, Europe
Jurgen Gromer
Central Europe
Alan S. Keizer
Strategic Businesses,
Europe
Nazario Proietto
Marketing, Europe
Richard D. Seall
International Finance
and Administration
J. C. Tan
Asia/Pacific South
- -----------------------------------------------------------------------------
[the back cover page of Annual Report:]
- -----------------------------AMP COMPANIES------------------------------------
All subsidiaries and branches included in consolidated results. All wholly
owned except AMP Shanghai Ltd. which is majority owned.
[columns one and two of the back cover:]
THE AMERICAS EUROPE
- --------------------------------------------------------------------
REGIONAL CENTER REGIONAL CENTER
AMP AMP
Harrisburg, PA, USA 17105 Stoke Poges SL2-4JL, England
- ----------------------------- ---------------------------------
AMP S.A. ARGENTINA C.I.Y.F. AMP OSTERREICH HANDELSGES.m.b.H.
Buenos Aires, Argentina Vienna, Austria
AMP DO BRASIL Ltda. AMP BELGIUM
Sao Paulo, Brazil Brussels, Belgium
AMP OF CANADA, Ltd. AMP CZECH s.r.o.
Toronto, Canada Brno, Czech Republic
AMP DE MEXICO, S.A. AMP DANMARK
Mexico City, D.F. Mexico Viby, Denmark
AMP FINLAND Oy
[reference Appendix, 7)] Helsinki, Finland
AMP De FRANCE S.A.
Paris France
AMP DEUTSCHLAND G.m.b.H.
Frankfurt, Germany
AMP OF GREAT BRITAIN LIMITED
London, England
AMP-HOLLAND B.V.
's-Hertogenbosch, The Netherlands
AMP HUNGARY CO. Ltd.
Budapest, Hungary
AMP IRELAND LIMITED
Dublin, Ireland
AMP ITALIA S.p.A.
Turin, Italy
CORPORATE AMP NORGE A/S
HEADQUARTERS Oslo, Norway
- -----------------------
AMP INCORPORATED AMP POLSKA Sp.z.o.o.
Harrisburg, PA 17105-3608 Poznan, Poland
Phone: 717-564-0100 AMP PORTUGAL, Lda.
TWX: 510-657-4110 Lisbon, Portugal
FAX: 717-780-6348
AMP ESPANOLA, S.A.
Barcelona, Spain
AMP SVENSKA AB
Stockholm, Sweden
AMP (SCHWEIZ) A.G.
Steinach, Switzerland
DECOLLETAGE S.A. ST.-MAURICE
St.-Maurice, Switzerland
AMP TURKEY
Istanbul, Turkey
[columns three and four of the back cover:]
ASIA/PACIFIC
- ------------------------------------
REGIONAL CENTER
AMP
Kawasaki, Kanagawa 213, Japan
- -------------------------------------
AUSTRALIAN AMP Pty. Ltd.
Sydney, Australia
AMP SHANGHAI Ltd.
Shanghai, Peoples Republic of China
AMP PRODUCTS PACIFIC Ltd.
Hong Kong
AMP INDIA PRIVATE LIMITED
Bangalore, India
AMP (JAPAN), Ltd.
Kawasaki-shi, Japan
UNITED STATES
CARROLL TOUCH INTERNATIONAL, Ltd. ----------------------------------
Japan Branch, Tokyo ACSYS Incorporated
Burlington, MA
JWP BUSINESSLAND JAPAN K.K.
Tokyo, Japan AMP Packaging Systems, Inc.
Austin, TX
AMP KOREA LIMITED
Seoul, South Korea Carroll Touch, Inc.
Austin, TX
AMP PRODUCTS (MALAYSIA) Sdn. Bhd.
Kuala Lumpur, Malaysia Connectware, Inc.
Richardson, TX
NEW ZEALAND AMP Ltd.
Auckland, New Zealand Kaptron, Inc.
Palo Alto, CA
AMP PHILIPPINES Inc.
Manila, Philippines Matrix Science Corporation
Torrance, CA
AMP SINGAPORE Pte. Ltd.
Singapore Microwave Signal, Inc.
Clarksburg, MD
AMP TAIWAN B.V.
Taipei, Taiwan Precision Interconnect Corporation
Portland, OR
AMP (THAILAND) LIMITED
Bangkok, Thailand The Whitaker Corporation
Wilmington, DE
[referenence Appendix, 7)]
JOINT VENTURE
------------------------------------
AMP-AKZO Company
Chadds Ford, PA
(recycle symbol) Printed on recycled paper.
EX-21
SUBSIDIARIES AND BRANCHES OF AMP INCORPORATED
(all wholly owned and included in consolidated results)
ACSYS Incorporated AMP do Brasil Ltda.
Burlington, Massachusetts Sao Paulo, Brazil
(Delaware, U.S.A.)
AMP de Mexico, SA.
AMP Investments, Inc. Mexico City, D.F. Mexico
Wilmington, Delaware
AMP Osterreich Handelsgesellschaft .m.b.H.
AMP Packaging Systems, Inc. Vienna, Austria
Round Rock, Texas
(Delaware, U.S.A.) AMP Belgium
Brussels, Belgium
Carroll Touch, Inc. (Branch of AMP Holland B.V.)
Round Rock, Texas
(Illinois, U.S.A.) AMP Czech s.r.o.
Brno, Czech Republic
Emerald Computers, Inc.
Portland, Oregon AMP Danmark
Viby, Denmark
Connectware, Inc. (Branch of AMP-Holland B.V.)
Richardson, Texas
(Delaware, U.S.A.) AMP Finland Oy
Helsinki, Finland
Kaptron, Inc.
Palo Alto, California AMP de France S.A.
Paris, France
Matrix Science Corporation
Torrance, California AMP Deutschland G.m.b.H.
(Delaware, U.S.A.) Frankfurt, Germany
Microwave Signal, Inc. AMP of Great Britain Limited
Clarksburg, Maryland London England
(Delaware, U.S.A.)
AMP Hungary Manufacturing Co. Ltd.
Precision Interconnect Corporation Esztergom, Hungary
Portland, Oregon
(Delaware, U.S.A.) AMP Hungary Trading Co. Ltd.
Budapest, Hungary
RL Acquistion Corp.
d/b/a/ Raylan AMP Ireland Limited
Palo Alto, California Dublin, Ireland
(Delaware, U.S.A.)
AMP Italia S.p.A.
The Whitaker Corporation Collegno, Italy
Wilmington, Delaware
AMP Italia SUD S.p.A.
AMP of Canada, Ltd. Pozzilli, Italy
Toronto, Canada
(Delaware, U.S.A.) AMP Italia Products S.p.A.
San Salvo, Italy
AMP S.A. Argentina C.I.Y.F.
Buenos Aires, Argentina AMP-Holland B.V.
's-Hertongenbosch, The Netherlands
1
<PAGE>
AMP Norge A/S Carroll Touch International, Ltd.
Oslo, Norway Tokyo, Japan
(Delaware, U.S.A.)
AMP Polska Sp.z.o.o.
Poznan, Poland Businessland Japan Company, Ltd.
Tokyo, Japan
AMP Portugal, Lda.
Lisbon, Portugal AMP Korea Limited
Seoul, South Korea
AMP Espanola, S.A.
Barcelona, Spain AMP Manufacturing Korea, Ltd.
Seoul, South Korea
AMP Svenska AB
Stockholm, Sweden AMP Products (Malaysia) Sdn. Bhd.
Kuala Lumpur, Malaysia
AMP (Schweiz) A.G.
Steinach, Switzerland New Zealand AMP Ltd.
Auckland, New Zealand
Decolletage S.A. St.-Maurice
St.-Maurice, Switzerland AMP Philippines Inc.
Manila, Philippines
Australian AMP Pty. Ltd.
Sydney, Australia AMP Singapore Pte. Ltd.
Singapore
AMP Products Pacific Ltd.
Hong Kong AMP Manufacturing Singapore Pte., Ltd.
Singapore
AMP India Private Limited
Bangalore, India AMP Taiwan B.V.
Taipei, Taiwan
AMP Tools (India) Pvt. Ltd. (The Netherlands)
Cochin, India
AMP Manufacturing Taiwan, Ltd.
AMP (Japan), Ltd. Taipei, Taiwan
Tokyo, Japan
AMP (Thailand) Limited
AMP Technology Japan Ltd. Bangkok, Thailand
Tokyo, Japan
AMP Elektrik-Elektronik Baglanti
Sistemleri Ticaret Limited Sirketi
Istanbul, Turkey
2
<PAGE>
JOINT VENTURES
AMP-AKZO Company AMP Shanghai Ltd.
Chadds Ford, Pennsylvania Shanghai, Peoples Republic of China
(New York, U.S.A. general
partnership) Building Technology Associates
Wilmington, Delaware
AMP-AKZO Corporation
Newark, Delaware AMP-AKZO LinLam VoF
Arnhem, The Netherlands
(Dutch vof partnership)
Note: Subsidiaries and joint ventures are incorporated in the country/state
of location except where indicated otherwise.
3
EX-23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AMP Incorporated:
As independent public accountants, we hereby consent to the incorporation of
our report dated February 18, 1994 incorporated by reference in this Form
10-K, into the Company's previously filed Form S-8 Registration Statements,
Registration Nos. 33-22676, 33-55318 and 33-65048.
/s/ Arthur Andersen & Co.
Arthur Andersen & Co.
Philadelphia, PA
March 29, 1994
