SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(mark one)
[XX] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
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
(Exact name of registrant as specified in charter,
and state of incorporation)
********************************
Employer Identification No. 23-0332575
Harrisburg, Pennsylvania 17105-3608
(Address of principal executive offices of registrant)
(717) 564-0100
(Registrant's telephone number, including area code)
********************************
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X]. NO [ ].
The number of shares of AMP Common Stock (without Par Value) outstanding at
May 10, 1996 was 219,347,585.
Includes an Exhibit Index.
AMP Incorporated & Subsidiaries
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Consolidated Statements of Income and the Consolidated Statements of
Cash Flows for the three months ended March 31, 1996 and 1995, and the
Consolidated Balance Sheets at March 31, 1996 and December 31, 1995, are
presented below. See the notes to these condensed consolidated financial
statements at the end thereof.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands,
except per share data)
For the Three Months
Ended March 31,
1996 1995(1)
----------- -----------
Net Sales .................... $ 1,362,975 $ 1,295,769
Cost of Sales ................ 932,585 874,857
----------- -----------
Gross income ............. 430,390 420,912
Selling, General and
Administrative Expenses ..... 245,429 228,212
----------- -----------
Income from operations ... 184,961 192,700
Interest Expense ............. (7,982) (9,071)
Other Income (Deductions), net 3,561 (14,137)
----------- -----------
Income before income taxes 180,540 169,492
Income Taxes ................. 64,092 64,177
----------- -----------
Net Income ................... $ 116,448 $ 105,315
=========== ===========
*Per Share - Net income...... $.53 $.48
Cash dividends....... $.25 $.23
*Weighted average number of shares.218,762,121 217,169,900
=========== ===========
*Per share data and weighted average shares have been retroactively
restated to reflect the 2-for-1 stock split on March 2, 1995.
(1) Figures have been restated to reflect the pooling of interests with
M/A-COM on June 30, 1995.
AMP Incorporated & Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and Unaudited)
(dollars in thousands)
For the Three Months
Ended March 31,
1996 1995(1)
--------- ---------
Cash and Cash Equivalents at January 1 ............... $ 212,538 $ 244,568
Operating Activities:
Net Income ..................................... 116,448 105,315
Noncash adjustments -
Depreciation and amortization ............... 98,303 83,748
Changes in operating assets and liabilities . (87,714) (67,642)
Change in subsidiary's year-end ................ -- 3,164
Other, net ..................................... 24,517 9,845
--------- ---------
Cash provided by operating activities ....... 151,554 134,430
========= =========
Investing Activities:
Additions to property, plant and equipment ..... (136,442) (143,561)
Purchase of subsidiary -
Net of cash and cash equivalents acquired ... (2,000) --
Other, net ..................................... (27,921) 219
--------- ---------
Cash used for investing activities ............. (166,363) 143,342
--------- ---------
Financing Activities:
Changes in short-term debt ..................... 51,696 50,670
Additions to long-term debt .................... 1,312 10,466
Reductions of long-term debt ................... (11,491) (13,743)
Purchases of treasury stock .................... (65) (112)
Dividends paid ................................. (54,409) (48,261)
Other, net ..................................... 108 409
--------- ---------
Cash used for financing activities .......... (12,849) (571)
--------- ---------
Effect of Exchange Rate Changes on Cash .............. 930 6,929
--------- ---------
Cash and Cash Equivalents at March 31 ................ 185,810 242,014
========= =========
Changes in Operating Assets and Liabilities:
Receivables .......................................... (72,878) (61,869)
Inventories .......................................... (41,373) (18,468)
Other current assets ................................. (23,326) (20,188)
Payables, trade and other ............................ (3,143) (15,254)
Accrued payrolls and benefits ........................ 35,361 28,741
Other accrued liabilities ............................ 17,645 19,396
--------- ---------
(87,714) (67,642)
========= =========
Interest paid during the periods was approximately equal to amounts charged
to expense.
(1) Figures have been restated to reflect the pooling of interests
with M/A-COM on June 30, 1995.
AMP Incorporated & Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Condensed, Unaudited)
(dollars in thousands)
March 31, December 31,
1996 1995
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents ......... $ 185,810 $ 212,538
Securities available for sale ..... 60,453 58,197
Receivables ....................... 1,078,166 1,011,460
Inventories---
Finished goods and work in
process ....................... 428,742 411,504
Purchased and manufactured parts 281,767 263,926
Raw materials ................... 93,213 87,373
---------- ----------
Total inventories ............. 803,722 762,803
Other current assets .............. 247,993 232,910
---------- ----------
Total current assets .......... 2,376,144 2,277,908
---------- ----------
Property, Plant and Equipment ....... 4,439,242 4,352,026
Less - Accumulated depreciation ... 2,464,902 2,413,760
---------- ----------
Property, plant and equipment,
net .......................... 1,974,340 1,938,266
---------- ----------
Investments and Other Assets ........ 305,409 288,565
---------- ----------
TOTAL ASSETS ........................ $ 4,655,893 $4,504,739
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt ................... $ 369,082 $ 318,169
Payables, trade and other ......... 454,107 460,892
Accrued liabilities ............... 541,229 487,032
---------- ----------
Total current liabilities ....... 1,364,418 1,266,093
Long-Term Debt ...................... 208,599 212,485
Other Liabilities and
Deferred Credits .................. 258,125 258,133
---------- ----------
Total liabilities ............... 1,831,142 1,736,711
Shareholders' Equity ................ 2,824,751 2,768,028
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY ............................. $4,655,893 $4,504,739
========== ==========
AMP Incorporated & Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(March 31, 1996, Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the Company's
latest annual report and Form 10-K.
The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
HIGHLIGHTS
- ----------
FIRST QUARTER 1996
SALES - Record $1.36 billion; up 5% from $1.30 billion in the year-earlier and
fourth quarter 1995
EARNINGS - 53 cents/share; up 10% from 48 cents/share in first quarter 1995
and up slightly from the 52 cents/share in fourth quarter 1995
BOOKINGS - $1.41 billion, up from $1.24 billion in fourth quarter 1995
ORDER BACKLOG - Up $42 million during quarter to $1.04 billion
EMPLOYMENT - Increased 1,050 during quarter to 41,850 through acquisitions and
international expansion
CAPITAL EXPENDITURES - $136 million in first quarter; total for year expected
to be similar to $713 million in 1995
DIVIDEND ACTION
On Wednesday, April 24, 1996, the Board of Directors declared a regular
quarterly dividend of 25 cents per share, payable June 3, 1996 to holders of
record May 6, 1996. The current indicated annual rate of $1.00 per share is up
from 92 cents per share in 1995 and 84 cents in 1994 - and is the 43rd
consecutive annual increase.
ANNUAL MEETING REPORT
- ---------------------
The AMP Incorporated Annual Meeting was held April 24, 1996, at 10:30 a.m.
at the AMP Incorporated Global Executive Leadership Center, 411 South 40th
Street, Harrisburg, Pennsylvania.
FORMAL BUSINESS
Chairman James E. Marley stated that 81% of the stock was represented in
person or by proxy. The following Directors were elected: D.F. Baker, H.A.
McInnes, R.D. DeNunzio, J.J. Meyer, B.H. Franklin, J.C. Morley, J.M. Hixon, W.F.
Raab, W.J. Hudson, P.G. Schloemer, J.E. Marley, and T. Shiina. Each of the
directors received over 98% of the votes cast.
NEWS RELEASE
- ------------
A news release on current results and outlook was made Wednesday, April 24,
1996:
SALES AND EARNINGS
Sales rose 5% to a record $1.36 billion from the $1.30 billion of the
year-earlier and prior quarters. The modest rate of growth reflects the effects
of slow economic growth in the U.S., Japan, and Europe, and the slowdown in
some of the markets we serve such as personal computers and cellular phones. In
our Preliminary Year End Report in January, we stated that we expected sales
growth to be rather modest in the first part of this year, and confirmed this
expectation in a March 27, 1996 news release.
Earnings of 53 cents/share were up 10% from 48 cents in the year-earlier
quarter (restated to include M/A-COM) and up slightly from the 52 cents in the
fourth quarter of 1995. This is closely in line with current analyst
expectations.
The strengthening of the U.S. dollar reduced first quarter sales $9
million from the year-earlier quarter and $17 million from the prior quarter.
Exchange rates staying at current levels the rest of this year would reduce
second quarter sales by over $50 million and the full year by approximately
$125 million.
The Americas, aided by solid growth in our Global Interconnect Business
Group and M/A-COM operations, were up 10% in sales compared to the year-earlier
first quarter. Sales in the U.S. (44% of the worldwide total) were up 10%.
Sales growth in the U.S. was strongest in the automotive and communications
markets.
European sales (33% of the worldwide total) were up 2% in local currencies
and up 4% in U.S. dollars. Strongest country growth was in Spain and Great
Britain. Best sales growth by markets was in automotive, communications, and
computer/office equipment.
Asia/Pacific sales (18% of the worldwide total) grew 4% in local
currencies and declined 3% in U.S. dollars. Strongest country growth was in
China, Korea, and Singapore; strongest sales growth by markets was in
communications and consumer goods. Still affected by slow economic growth, our
sales in Japan were essentially flat.
Pretax profit margins held steady despite continuing product price
erosion, product mix changes, and higher costs - including unusually high
weather-related costs.
OUTLOOK
We believe the outlook is for continued AMP growth during the rest of the
year. We are assuming stronger economic growth in the U.S. and Japan, continued
strong economic growth in the rest of the Asia/Pacific region, and modest
economic growth in Europe. We expect an improved demand picture from markets we
serve such as personal computers and cellular phones that have slowed in recent
months and are apparently going through an inventory correction period. We also
have a strong flow of new products and a growing contribution from the
faster-growing businesses that we are building.
Negative factors include continuing price erosion in the connector
industry, reflecting intense global competition in the entire electronics
industry, and the strengthening U.S. dollar, which reduces our international
results when translated into dollars.
We continue to expect earnings to grow faster than sales for the full year
because of cost reduction efforts combined with the effects of improving
margins at M/A-COM and the diminishing loss in our Global Interconnect Systems
Business group where most of our product/market diversification is
concentrated.
We continue to build our capabilities for growth in pursuit of our Vision
2000 goal of $10 billion sales by the end of this decade. We are making good
progress in our diversification into logically related product and market
segments - areas such as cable and cable assemblies, printed circuit boards,
panel assemblies, electro-optic products, networking/premises wiring products,
sensors, and components for wireless communications systems. We are steadily
expanding our presence in international markets - with companies now in 39
countries outside the U.S. We continue to spend heavily on research,
development, and engineering (11% of sales for many years), and are achieving a
steady flow of new products. For eight consecutive years AMP has been rated the
top performing connector supplier in independent customer surveys.
So looking beyond the current period of slow growth, we believe we have
laid an excellent foundation for continued good longer-term growth assuming a
reasonably favorable business environment during the rest of this decade.
EXPANSION
We now have over 15 million sq. ft. of floor space. Last year we increased
floor space 2.6 million sq. ft. - partly through extensive expansion of AMP
facilities and partly through acquisitions. Capital expenditures were a record
$713 million up from $473 million in 1994. Expansion continues in the U.S. and
several other countries in 1996, although the floor space likely to be added
will be a more modest amount. Total capital spending in 1996 is expected to be
similar to 1995 as we add more equipment to improve capacity, quality, and
productivity and tool up new products.
ACQUISITION
In February we completed the pooling of interests with Madison Cable
Corporation, a leading producer of computer cables, and issued 1.6 million AMP
shares in an exchange of stock.
ANNUAL MEETING
Comments at the annual meeting included a review of 1995 by President and
CEO William J. Hudson on our good growth in sales and earnings, significant
expansion of our facilities and capabilities, and steady progress of our
product/market diversification efforts. He was followed by brief reviews of
M/A-COM by its President, Richard P. Clark, and of the home automation market
by G. Russell Knerr, Vice President-AMP Building Systems.
FORTUNE 500 RANKINGS
(based on 1995 results)
Overall** Electronics*
--------- ------------
Sales ........................... 254 11
Net Income ...................... 170 10
Net Income as % of Sales (8.2%) . 145 18
Net Income as % of Assets (9.5%) 70 16
Net Income as % of Equity (15.4%) 202 22
10-Year Earnings Per Share
Growth Rate (14.6%) ..... 78 11
*43 Companies
**Now includes both industrial and service companies
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR"
- --------------------------------------------------------
Statements in this Report on Form 10-Q that are not strictly historical
facts are "forward-looking" statements which should be considered as subject to
uncertainties that exist in the Company's operations and business environment.
These uncertainties which include economic and currency conditions, market
demand and pricing, competitive and cost factors, and the like, are set forth in
the Company's Report on Form 10-K for the year ended December 31, 1995 filed
with the Securities and Exchange Commission on or about March 29, 1996.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Annual Meeting of Shareholders of AMP Incorporated was held on
Wednesday, April 24, 1996 beginning at 10:30 a.m., local time, at the AMP
Global Executive Leadership Center, 441 South Fortieth Street, Harrisburg,
Pennsylvania. As of the record date (March 8, 1995) for the Annual Meeting,
219,313,134 shares of Common Stock were outstanding and entitled to vote.
178,671,101 shares, representing over 81% of the outstanding Common Stock
eligible to vote, were represented at the Annual Meeting either in person or by
proxy.
* All of the directors of the Company, twelve in number, were elected at the
Annual Meeting, each by an affirmative vote of at least 98% of the votes
cast. The results of the vote tabulation for each director are as follows:
Director Votes For Votes Withheld
-------- --------- --------------
Dexter F. Baker ...... 177,878,976 792,125
Ralph D. DeNunzio .... 177,969,600 701,501
Barbara H. Franklin .. 177,990,806 680,295
Joseph M. Hixon III .. 177,997,662 673,439
William J. Hudson, Jr 177,974,462 696,639
James E. Marley ...... 178,003,351 667,750
Jerome J. Meyer ...... 177,966,901 704,200
Harold A. McInnes .... 177,880,064 791,037
John C. Morley ....... 177,892,091 779,010
Walter F. Raab ....... 177,832,511 838,590
Paul G. Schloemer .... 177,983,773 687,328
Takeo Shiina ......... 176,543,062 2,128,039
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits --
Exhibit
Number Description
------- -----------
10 - AMP Incorporated Management Incentive Plan
(January 1, 1996 Restatement)
27 - Financial Data Schedule
(B) Reports on Form 8-K --
There were no reports on Form 8-K for the three months ended
March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 14, 1996 AMP INCORPORATED
(Registrant)
By: /s/ W. J. Hudson
__________________________________
William J. Hudson
Chief Executive Officer
and President
By: /s/ W. S. Urkiel
__________________________________
William S. Urkiel
Controller
**
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -----------
10 - AMP Incorporated Management Incentive Plan
(January 1, 1996 Restatement)
27 - Financial Data Schedule
AMP INCORPORATED
(the "Corporation")
Management Incentive Plan
(the "Plan")
For the purpose of (a) providing additional incentive to key
employees to achieve a high level of performance, (b) attracting
and retaining key employees, and (c) furthering the identity of
interest of such employees with the business objectives of AMP
Incorporated and its subsidiaries, the Corporation will pay a
Cash Bonus to Participant pursuant to the terms and conditions of
the Plan. This document is an amendment and restatement in its
entirety of the Corporation's original Management Incentive Plan
first adopted effective January 1, 1991.
Article I. Definitions
1.1 "Annual Base Salary" means the aggregate base salary paid to
Participant by the Corporation or any of its subsidiaries during
the Designation Year.
1.2 "Bonus Certificate" means the document issued by the
Corporation to a Participant relating to a Designation Year that
specifies the Participant's Bonus Potential Range, Bonus
Calculation Provision, Bonus Component Weighting, and Financial
Measures Weighting for such year.
1.3 "Bonus Component Weighting" means the percentage weighting
applied to those Corporate, Region, Business Unit, and Individual
performance objectives applicable to Participant, as designated
by the Committee and set forth on the Bonus Certificate.
1.4 "Bonus Computation Date" means the close of business of the
Corporation on the 31st day of December of the Designation Year.
1.5 "Bonus Potential Range" means the range of percentages of
Annual Base Salary (stated as a minimum, target, and a maximum)
within which the Cash Bonus of Participant is to be computed
based upon achievement of Corporate, Region, Business Unit and
Individual performance objectives, as applicable and set forth on
the Bonus Certificate.
1.6 "Business Unit" means the division, group or organization
within the Corporation or subsidiary of the Corporation to which
Participant is assigned, as set forth on the Bonus Certificate.
1.7 "Cash Bonus" means a cash bonus in the amount computed in
accordance with the relevant Exhibit to this Plan, as designated
by the Committee and set forth on the Bonus Certificate. Cash
Bonus shall not exceed in the aggregate the Bonus Potential Range
maximum percentage of Participant's Annual Base Salary as set
forth on such Bonus Certificate.
1.8 "Committee" means the committee designated in Section 6.1 of
the Plan.
1.9 "Designation Year" means the full calendar year with respect
to which a Cash Bonus is computed under the Plan, as set forth on
the Bonus Certificate.
1.10 "Distribution Date" means on or about the first day of
March of the calendar year following the Bonus Computation Date.
1.11 "Financial Measures Weighting" means the percentage
weighting applied to each Corporate, Region, and Business Unit
financial measure applicable to Participant, as designated by the
Committee and set forth on the Bonus Certificate.
1.12 "Minimum Performance Level" means the minimum actual
Corporate, Region, Business Unit and individual performance
results for the Designation Year, as so determined by the office
of the Corporate Controller, that must be achieved in order for a
Cash Bonus calculation to be made.
1.13 "Participant" means an employee of the Corporation or any of
its subsidiaries who has been designated by the Committee to
participate in the Plan.
1.14 "Region" means the geographic region or major global
business sector under or within which Participant's Business Unit
is maintained, as set forth on the Bonus Certificate.
1.15 "Termination of Employment" means the termination of
employment by the Corporation or by a subsidiary as provided in
Sections 5.2, 5.3, or 5.4, but not the transfer of employment
from the Corporation to a subsidiary of the Corporation or vice
versa or from one subsidiary of the Corporation to another such
subsidiary.
Article II. Designation
2.1 "Designation of a Participant" During or prior to the month
of January each Designation Year, the Committee shall designate
for the Designation Year (a) Participants in the Plan; (b) Bonus
Potential Ranges and Performance Levels applicable to each such
Participant; and (c) the Business Unit to which each Participant
is assigned.
Article III. Computation
3.1 "Computation of Cash Bonus" As promptly as practicable, but
not later than on or about the 1st day of March after the end of
the Designation Year, the Cash Bonus, if any, shall be computed
as of the Bonus Computation Date, and the amount so determined
shall be distributed to Participant in accordance with the
provisions of the Plan.
Article IV. Distribution of Bonus
4.1 "Distribution of Cash Bonus" The computed Cash Bonus shall
be distributed in a single installment on the Distribution Date,
subject to all the terms and conditions of the Plan.
Article V. Transfer or Termination of Employment
5.1 "Transfer" If Participant is transferred during the
Designation Year, and Participant remains an employee of the
Corporation (or a subsidiary of the Corporation) for the entire
Designation Year, Participant's Cash Bonus (to the extent based
on Region/Business Unit Performance) shall be equal to the Cash
Bonus for Region/Business Unit Performance paid by that
Region/Business Unit to which Participant was assigned during the
Designation Year that paid the largest Cash Bonus.
5.2 "Retirement, Death or Involuntary Termination of Employment
Without Fault" If Termination of Employment occurs during or
after the Designation Year, the Cash Bonus not paid to
Participant prior to the date of such Termination of Employment,
shall be distributed as follows:
(a) In case of death, disability or illness of Participant,
payment shall be made to the person or persons determined by
the Committee and distribution to the person or persons
designated by the Committee shall relieve the Corporation
from any and all further responsibility under the Plan.
(b) In case of retirement of Participant pursuant to the
provisions of a retirement plan of the Corporation or
because of reasons not of Participant's own choosing and not
due to any fault on Participant's part, payment shall be
made on the Distribution Date following Termination of
Employment.
5.3 "Other Termination of Employment" In case of Termination of
Employment of Participant during the Designation Year or after
the end of the Designation Year but prior to the Distribution
Date, except as provided in Section 5.2, Participant shall upon
Termination of Employment have no rights whatsoever under this
Plan to a Cash Bonus with respect to the Designation Year.
Notwithstanding the foregoing sentence, however, the Committee
may in its sole and absolute discretion authorize the computation
and payment of such Participant's Cash Bonus or any portion
thereof.
5.4 "Limitation on What Constitutes Termination of Employment"
If the Committee in its sole and absolute discretion so
determines, employment shall not be considered as terminated for
purposes of Sections 5.2 or 5.3 of this Plan so long as
Participant continues to perform services for the Corporation or
a subsidiary thereof on either a full or part time basis either
as an independent contractor or on a consulting basis.
Article VI. Administration of Plan
6.1 "Committee" The Compensation and Management Development
Committee of the Board of Directors of the Corporation shall
administer the Plan and make all final decisions with respect
thereto. The Committee shall have full power to construe and
interpret the Plan and each provision thereof, and its
constructions and interpretations shall be in all respects final,
conclusive and binding upon all Participants and all persons
claiming under or through them or under the Plan.
Article VII. Miscellaneous
7.1 "Continuance of Employment" Nothing herein contained shall
in any way restrict the right of the Corporation or any
subsidiary thereof to terminate the employment of the Participant
at any time or be construed as evidence of an agreement or
understanding as to employment or continued employment in any
position or at any rate of remuneration.
7.2 "Non-Alienation of Benefits" No right or benefit under this
Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to do
so shall be void. No right or benefit under the Plan shall in
any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the person entitled to such benefit. If
the Participant under the Plan should become bankrupt or attempt
to anticipate, alienate, sell, assign, pledge, encumber or charge
any right or benefit under the Plan, then such right or benefit
shall, in the sole discretion of the Committee, cease and
determine, and in such event, the Corporation may hold or apply
the same or any part thereof for the benefit of the Participant,
Participant's spouse, children, dependents, or other person(s),
or any of them in such manner and in such proportion as the
Committee may deem proper.
7.3 "Legal Holiday" If and when the date on which a distribution
is to be made or other action is to be taken under the Plan falls
on a Saturday, Sunday, or a legal holiday, such distribution
shall be made on the next succeeding business day.
7.4 "Management, Accounting and Financial Decisions" Nothing in
this Plan shall affect the authority of the management of the
Corporation to make management, business, accounting and
financial decisions concerning the Corporation, a Region, or any
Business Unit, including, without limitation, decisions
concerning write-offs, the timing of or recognition of income or
loss, or changes in accounting principles.
7.5 "Corporate Restructuring, Product Line or Account Transfers"
In the event of a restructuring of the Business Unit, or a
transfer of product lines or accounts into or out of the Business
Unit, or the addition or deletion of, or change in, any indirect
sales program during a Designation Year, the Chief Financial
Officer or Controller of the Corporation shall make any
adjustments to the annual budget, forecast, and annual statement
of income of the affected Region or Business Unit that may be
necessary or appropriate to reflect those organizational changes,
and any resultant adjustments, up or down, shall be deemed
substituted where applicable into the Bonus Certificates of
effected Participants and applied in making Cash Bonus
calculations for such Designation Year.
7.6 "Non-Uniform Determinations" The Committee's determinations
under this Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to
receive, awards under the Plan, whether or not such persons are
similarly situated.
MIPPLAN.DOC
Rev. (03/25/96)
Exhibit A
AMP INCORPORATED
(the "Corporation")
Management Incentive Plan
(the "Plan")
Bonus Calculation Provisions
for
Headquarters Personnel
This Exhibit A to the Plan sets forth the bonus calculation
provisions applicable to any Participant whose Cash Bonus is to be
calculated in accordance with Exhibit A, as shown on the Bonus
Certificate issued by the Corporation to Participant. All terms
used in this Exhibit have the same meaning ascribed to them in the
Plan and, for purposes of this Exhibit A, all terms and all
calculations contained herein shall be expressed in U.S. dollars.
Article VIII. Special Definitions
8.1 "AMP Value Added Percentage (AVA)" means an operating return
on assets generated by the Corporation in the Designation Year,
calculated as operating income divided by the average operating
assets employed. Operating assets will normally include accounts
receivable, inventory and property, plant and equipment.
8.2 "Discretionary Award Percentage" means an award
percentage, not to exceed 100%, as determined by Participant's
management, which indicates completion or attainment of individual
performance objectives established between Participant and his/her
management.
8.3 "Operating Income" means the amount of profit or loss by
the Corporation in the Designation Year at the Operating Income
line (i.e., sales less the cost of operations) as shown in the
Management Reporting P&L Statement. Cost of operations will
normally include all manufacturing, logistic, engineering, R&D,
sales, marketing and general and administrative expenses.
8.4 "Trade Sales" means sales to trade customers by the
Corporation in the Designation Year as reported to the Corporate
Controller. These sales are to unaffiliated third parties and
exclude all intercompany transfers of product (intercompany sales).
8.5 "Cash Bonus Percentage Corresponding to the Financial
Measure Performance Level" shall be the Cash Bonus percentage
determined as follows: For each applicable financial measure
(e.g., AVA, Operating Income, or Trade Sales), the range of
financial measure performance levels from the minimum financial
measure performance level to the target financial measure
performance level to the maximum financial measure performance
level shall be mapped linearly onto the Participant's Bonus
Potential Range from the minimum Cash Bonus percentage to the
target Cash Bonus percentage to the maximum Cash Bonus percentage,
with the minimum financial measure performance level corresponding
to the minimum Cash Bonus percentage, the target financial measure
performance level corresponding to the target Cash Bonus
percentage, and the maximum financial measure performance level
corresponding to the maximum Cash Bonus percentage. With respect
to each applicable financial measure, performance for a Designation
Year below the minimum financial measure performance level will
result in a corresponding Cash Bonus percentage of 0%; performance
for a Designation Year greater than or equal to the minimum
financial measure performance level and less than or equal to the
maximum financial measure performance level will result in a
corresponding Cash Bonus percentage derived from the linear mapping
described in the previous sentence; and performance for a
Designation Year greater than the maximum financial measure
performance level will result in a Cash Bonus percentage equal to
the maximum Cash Bonus percentage.
Article IX. Calculation of Cash Bonus
9.1 "Composition of Cash Bonus". The Cash Bonus may be comprised
of two components as specified in the applicable Bonus
Certificate: (a) a Cash Bonus component based on the Corporation's
worldwide performance; and/or (b) a discretionary Cash Bonus
component based on Participant's individual job performance.
9.2 "Calculation of Cash Bonus Percentage Based on Corporate
Worldwide Performance". With respect to the Corporate Cash Bonus
component, the Participant's Bonus Certificate shall specify the
financial measures applicable to Participant for the Designation
Year and the weighting to be applied to each. For each applicable
financial measure, the Cash Bonus Percentage Corresponding to the
Financial Measure Performance Level for the Designation Year shall
be determined, such Cash Bonus percentage weighted based on the
assigned weighting factor, and then further weighted by the Bonus
Component Weighting factor shown on the Bonus Certificate. All
such weighted Cash Bonus percentages shall be totaled to arrive at
the aggregate Cash Bonus percentage for the Corporate Cash Bonus
component.
9.3 "Calculation of Cash Bonus Component Based on Individual
Performance". In addition, irrespective of the financial measure
performance during the Designation year, the Committee shall have
the power, in its absolute and sole discretion, to approve an award
to any Participant a bonus to be determined as follows:
Participant shall be awarded a Cash Bonus equal to the
Discretionary Award Percentage times the maximum bonus award level
times the Bonus Component Weighting for individual performance, as
set forth on Participant's Bonus Certificate.
9.4 "Calculation of Cash Bonus". The total Cash Bonus award for
the Designation Year shall be calculated as follows: Participant
shall be awarded a Cash Bonus equal to Participant's Annual Base
Salary times the sum of the Cash Bonus components for the
Corporation's Worldwide Performance and Individual Performance.
MIPEXA.DOC
Rev. (03/25/96)
Exhibit B
AMP INCORPORATED
(the "Corporation")
Management Incentive Plan
(the "Plan")
Bonus Calculation Provisions
for
Regional/Business Unit Personnel
This Exhibit B to the Plan sets forth the bonus calculation
provisions applicable to any Participant whose Cash Bonus is to be
calculated in accordance with Exhibit B, as shown on the Bonus
Certificate issued by the Corporation to Participant. All terms
used in this Exhibit have the same meaning ascribed to them in the
Plan and, for purposes of this Exhibit B, all terms and all
calculations contained herein shall be expressed in U.S. dollars.
Article VIII. Special Definitions
8.1 "AMP Value Added Percentage (AVA)" means an operating return
on assets generated by the Corporation, a Region, or a Business
Unit (as applicable) in the Designation Year, calculated as
operating income (adjusted for intercompany activity) divided by
the average operating assets employed. Operating assets will
normally include accounts receivable, inventory and property, plant
and equipment.
8.2 "Discretionary Award Percentage" means an award
percentage, not to exceed 100%, as determined by Participant's
management, which indicates completion or attainment of individual
performance objectives established between Participant and his/her
management.
8.3 "Operating Income" means the amount of profit or loss by
the Corporation, Region, or Business Unit (as applicable) in the
Designation Year at the Operating Income line (i.e., sales less the
cost of operations) as shown in the Management Reporting P&L
Statement. Cost of operations will normally include all
manufacturing, logistic, engineering, R&D, sales, marketing and
general and administrative expenses.
8.4 "Sales Cost Ratio" means the percentage figure that results
from dividing the Business Unit's actual total selling costs by
total billings generated by the Business Unit in the Designation
Year as reported to the Corporate Controller.
8.5 "Trade Sales" means sales to trade customers by the
Corporation, Region, or Business Unit (as applicable) in the
Designation Year as reported to the Corporate Controller. These
sales are to unaffiliated third parties and exclude all
intercompany transfers of product (intercompany sales).
8.6 "Cash Bonus Percentage Corresponding to the Financial
Measure Performance Level" shall be the Cash Bonus percentage
determined as follows: For each applicable financial measure
(e.g., AVA, Operating Income, Trade Sales, or Sales Cost Ratio),
the range of financial measure performance levels from the minimum
financial measure performance level to the target financial measure
performance level to the maximum financial measure performance
level shall be mapped linearly onto the Participant's Bonus
Potential Range from the minimum Cash Bonus percentage to the
target Cash Bonus percentage to the maximum Cash Bonus percentage,
with the minimum financial measure performance level corresponding
to the minimum Cash Bonus percentage, the target financial measure
performance level corresponding to the target Cash Bonus
percentage, and the maximum financial measure performance level
corresponding to the maximum Cash Bonus percentage. With respect
to each applicable financial measure, performance for a Designation
Year below the minimum financial measure performance level will
result in a corresponding Cash Bonus percentage of 0%; performance
for a Designation Year greater than or equal to the minimum
financial measure performance level and less than or equal to the
maximum financial measure performance level will result in a
corresponding Cash Bonus percentage derived from the linear mapping
described in the previous sentence; and performance for a
Designation Year greater than the maximum financial measure
performance level will result in a Cash Bonus percentage equal to
the maximum Cash Bonus percentage.
Article IX. Calculation of Cash Bonus
9.1 "Composition of Cash Bonus". The Cash Bonus may be comprised
of up to four components as specified in the applicable Bonus
Certificate: (a) a Cash Bonus component based on the Corporation's
worldwide performance; and/or (b) a Cash Bonus component based on
the Region's performance; and/or (c) a Cash Bonus based on the
Business Unit's performance; and/or (d) a discretionary Cash Bonus
component based on Participant's individual job performance.
9.2 "Calculation of Cash Bonus Components Based on Corporate
Worldwide or Region or Business Unit Performance". With respect to
each Cash Bonus component (i.e., Corporate, Region or Business
Unit), the Participant's Bonus Certificate shall specify the
financial measures applicable to Participant for the Designation
Year and the weighting to be applied to each. For each applicable
financial measure, the Cash Bonus Percentage Corresponding to the
Financial Measure Performance Level for the Designation Year shall
be determined, such Cash Bonus percentage weighted based on the
assigned weighting factor, and then further weighted by the
applicable Bonus Component Weighting factor shown on the Bonus
Certificate. All such weighted Cash Bonus percentages shall then be
totaled to arrive at the aggregate weighted Cash Bonus percentage
for the Cash Bonus component.
9.3 "Calculation of Cash Bonus Component Based on Individual
Performance". In addition, irrespective of the financial measure
performance during the Designation Year, the Committee shall have
the power, in its absolute and sole discretion, to approve an award
to any Participant a bonus to be determined as follows: Participant
shall be awarded a Cash Bonus equal to the Discretionary Award
Percentage times the maximum bonus award level times the Bonus
Component Weighting for individual performance, as set forth on
Participant's Bonus Certificate.
9.4 "Calculation of Cash Bonus". The total Cash Bonus award for
the Designation Year shall be calculated as follows: Participant
shall be awarded a Cash Bonus equal to Participant's Annual Base
Salary times the sum of the Cash Bonus components for the
Corporation's Worldwide Performance, Region and/or Business Unit
Performance, and Individual Performance.
MIPEXB.DOC
Rev. (03/25/96)
Exhibit C
AMP INCORPORATED
(the "Corporation")
Management Incentive Plan
(the "Plan")
Bonus Calculation Provisions
for
Global Strategic Planning Committee Personnel
This Exhibit C to the Plan sets forth the bonus calculation
provisions applicable to any Participant whose Cash Bonus is to be
calculated in accordance with Exhibit C, as shown on the Bonus
Certificate issued by the Corporation to Participant. All terms
used in this Exhibit have the same meaning ascribed to them in the
Plan and, for purposes of this Exhibit C, all terms and all
calculations contained herein shall be expressed in U.S. dollars.
Article VIII. Special Definitions
8.1 "EPS" means the Corporation's worldwide earnings per share as
shown in the Corporation's Annual Report to Shareholders for the
Designation Year, such EPS arising solely from income from
continuing operations. Excluded therefrom are net income or loss
from investments accounted for by the equity method, any income or
loss from discontinued operations, and any extraordinary gain or
loss; provided that the foregoing exclusions are deemed to be of
material significance by the Committee.
8.2 "Discretionary Award Percentage" means an award
percentage, not to exceed 100%, as determined by Participant's
management, which indicates completion or attainment of individual
performance objectives established between Participant and his/her
management.
8.3 "Cash Bonus Percentage Corresponding to the EPS
Performance Level" shall be the Cash Bonus percentage determined as
follows: For the EPS measure, the range of performance levels from
the minimum EPS performance level to the target EPS performance
level to the maximum EPS performance level shall be mapped linearly
onto the Participant's Bonus Potential Range from the minimum Cash
Bonus percentage to the target Cash Bonus percentage to the maximum
Cash Bonus percentage, with the minimum EPS performance level
corresponding to the minimum Cash Bonus percentage, the target EPS
performance level corresponding to the target Cash Bonus
percentage, and the maximum EPS performance level corresponding to
the maximum Cash Bonus percentage. Performance for a Designation
Year below the minimum EPS performance level will result in a
corresponding Cash Bonus percentage of 0%; performance for a
Designation Year greater than or equal to the minimum EPS
performance level and less than or equal to the maximum EPS
performance level will result in a corresponding Cash Bonus
percentage derived from the linear mapping described in the
previous sentence; and performance for a Designation Year greater
than the maximum EPS performance level will result in a Cash Bonus
percentage equal to the maximum Cash Bonus percentage.
Article IX. Calculation of Cash Bonus
9.1 "Composition of Cash Bonus". The Cash Bonus may be comprised
of two components as specified in the applicable Bonus
Certificate: (a) a Cash Bonus component based on the Corporation's
EPS performance; and/or (b) a discretionary Cash Bonus component
based on Participant's individual job performance.
9.2 "Calculation of Cash Bonus Component Based on Corporate EPS
Performance". The Cash Bonus Percentage Corresponding to the EPS
Performance Level for the Designation Year shall be determined, and
then such Cash Bonus percentage weighted by the Bonus Component
Weighting factor shown on the Bonus Certificate to arrive at the
Cash Bonus percentage for the Corporate EPS Cash Bonus component.
9.3 "Calculation of Cash Bonus Component Based on Individual
Performance". In addition, irrespective of the Corporate EPS
performance during the Designation year, the Committee shall have
the power, in its absolute and sole discretion, to approve an award
to any Participant a bonus to be determined as follows:
Participant shall be awarded a Cash Bonus equal to the
Discretionary Award Percentage times the maximum bonus award level
times the Bonus Component Weighting for individual performance, as
set forth on Participant's Bonus Certificate.
9.4 "Calculation of Cash Bonus". The total Cash Bonus award for
the Designation Year shall be calculated as follows: Participant
shall be awarded a Cash Bonus equal to Participant's Annual Base
Salary times the sum of the Cash Bonus components for the
Corporation's EPS Performance and Individual Performance.
MIPEXC.DOC
Rev. (04/01/96)
AMP INCORPORATED
(the "Corporation")
MANAGEMENT INCENTIVE PROGRAM
(the "Plan")
BONUS CERTIFICATE
for
MIN TARGET MAX
--- ------ ---
BONUS POTENTIAL RANGE: % % %
PERFORMANCE LEVEL: 90% 100% 120%
(% of Target)
REGION:
BUSINESS UNIT:
BONUS CALCULATION PROVISION Exhibit _
DESIGNATION YEAR 1996
- --------------------------------------------------------------------------------
BONUS COMPONENT WEIGHTING
CORPORATE: %
REGION: %
BUSINESS UNIT: %
INDIVIDUAL PERFORMANCE: %
- --------------------------------------------------------------------------------
FINANCIAL MEASURES WEIGHTING
CORPORATE REGION BUSINESS UNIT
This Bonus Certificate evidences that the Committee has
designated you as a Participant under the Plan and has also
designated the above as applicable to participation hereunder,
subject, however, to written acceptance hereof by such
Participant as hereinafter provided.
Date:_________________ AMP Incorporated By:___________________________
Participant hereby acknowledges receipt of this Bonus Certificate
and accepts the designation as a Participant under and subject to
all the terms and conditions set forth in said Plan. Participant
further acknowledges the applicability of the provisions and
obligations under the Limited Non-Competition Agreement, which
has either been signed by Participant concurrently herewith, or
has been signed by Participant heretofore and Participant
acknowledges that said agreement continues to be in effect.
___________________________
Participant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS
CONTAINED IN THE COMPANY'S 1996
FIRST QUARTER REPORT TO SHAREHOLDERS
AND IS QUALIFIED BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 185,810
<SECURITIES> 60,453
<RECEIVABLES> 1,078,166
<ALLOWANCES> 0
<INVENTORY> 803,722
<CURRENT-ASSETS> 2,376,144
<PP&E> 4,439,242
<DEPRECIATION> 2,464,902
<TOTAL-ASSETS> 4,655,893
<CURRENT-LIABILITIES> 1,364,418
<BONDS> 0
<COMMON> 80,647
0
0
<OTHER-SE> 2,744,104
<TOTAL-LIABILITY-AND-EQUITY> 4,655,893
<SALES> 1,362,975
<TOTAL-REVENUES> 1,362,975
<CGS> 932,585
<TOTAL-COSTS> 932,585
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,982
<INCOME-PRETAX> 180,540
<INCOME-TAX> 64,092
<INCOME-CONTINUING> 116,448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,448
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
</TABLE>
