SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 11-K
--------------------------------
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]. For the transition period from ____________ to
____________.
Commission File Number 1-4235.
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
AMP Incorporated Employee Savings and Thrift Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
AMP Incorporated
470 Friendship Road
Harrisburg, Pennsylvania 17111
Includes an Exhibit Index
REQUIRED INFORMATION
The AMP Incorporated Employee Savings and Thrift Plan (the "Plan") is a plan
that is subject to the Employee Retirement Income Security Act of 1974
("ERISA"), and therefore the Plan is providing, as Exhibit 1 hereto, Plan
financial statements and schedules prepared in accordance with the financial
reporting requirements of ERISA. These financial statements include audited
statements of net assets available for benefits at December 31, 1996 and
December 31, 1995, and audited statements of changes in net assets available for
benefits for the fiscal year ended December 31, 1996.
The Plan financial statements have been examined by Arthur Andersen LLP. A
currently dated and manually signed written consent of Arthur Andersen LLP with
respect to the Plan financial statements that relate to the fiscal year ended
December 31, 1996, and the Plan financial statements themselves, have been
incorporated by reference in a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended. This written consent of Arthur Andersen LLP
is provided as Exhibit 2 to this annual report.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMP Incorporated Employee Savings
and Thrift Plan (the "Plan")
AMP Incorporated (Plan Administrator)
/s/ Philip G. Guarneschelli
Date: June 26, 1997 By:_______________________________
Philip G. Guarneschelli
Vice President,
Chief Human Resource Officer
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
1 Audited financial statements for AMP Incorporated
Employee Savings and Thrift Plan
2 Consent of Independent Public Accountants
AMP INCORPORATED EMPLOYEE SAVINGS AND
THRIFT PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31,
1996 and 1995
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1996
Notes to Financial Statements
SCHEDULES:
Schedule I -- Item 27(a) -- Schedule of Investments as of December 31,
1996
Schedule II -- Item 27(d) -- Schedule of Reportable Transactions for the
Year Ended December 31, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrator of the
AMP Incorporated Employee Savings and Thrift Plan:
We have audited the accompanying statements of net assets available for benefits
of the AMP Incorporated Employee Savings and Thrift Plan as of December 31, 1996
and 1995, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1996. These financial statements are
the responsibility of the Plan'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 net assets available for benefits of the Plan as of
December 31, 1996 and 1995, and the changes in net assets available for benefits
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
accompanying index are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Philadelphia, PA
June 23, 1997
<TABLE>
<CAPTION>
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
| The Vanguard Group Funds
------------------------
Money Market Index Trust
ASSETS Total Prime Wellington 500 Windsor II PrimeCap
------ ----- ------------- ------------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, at market
(Notes 2 and 3):
Commingled trusts $344,952,825 $18,299,459 $38,718,829 $134,132,303 $37,413,464 $53,414,376
Common stock 51,238,837 -- -- -- -- --
Participant loans
(Note 1) 30,410,484 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
426,602,146 18,299,459 38,718,829 134,132,303 37,413,464 53,414,376
------------ ----------- ----------- ------------ ----------- -----------
DEPOSITS WITH
INSURANCE COMPANIES,
at contract value
(Notes 2 and 4) 182,365,535 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
Total investments 608,967,681 18,299,459 38,718,829 134,132,303 37,413,464 53,414,376
------------ ----------- ----------- ------------ ----------- -----------
RECEIVABLES:
Employer contributions
(Note 1) 192,330 5,257 12,662 30,267 11,997 19,218
Employee deposits
(Note 1) 691,749 20,439 53,829 139,825 52,722 85,439
Accrued interest and
dividends 1,108 -- -- -- -- --
Other 642,866 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
Total receivables 1,528,053 25,696 66,491 170,092 64,719 104,657
------------ ----------- ----------- ------------ ----------- -----------
TOTAL ASSETS 610,495,734 18,325,155 38,785,320 134,302,395 37,478,183 53,519,033
------------ ----------- ----------- ------------ ----------- -----------
LIABILITIES
-----------
PAYABLES:
Investments purchased (535,955) -- -- -- -- --
------------ ----------- ----------- ------------ ------------ -----------
NET ASSETS AVAILABLE
FOR BENEFITS $609,959,779 $18,325,155 $38,785,320 $134,302,395 $37,478,183 $53,519,033
============ =========== =========== ============ ============ ===========
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
CONTINUED
The Vanguard Group Funds |
------------------------ |
World Fund International | T. Rowe Price AMP Fixed AMP Stock
ASSETS U.S. Growth Growth | New Horizons Income Fund Fund Loan Fund
------ ----------- ------------- | ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, at market
(Notes 2 and 3):
Commingled trusts $30,414,357 $4,068,563 $9,479,424 $ 19,012,049 $ 1 $ --
Common stock -- -- -- -- 51,238,837 --
Participant loans
(Note 1) -- -- -- -- -- 30,410,484
----------- ---------- ---------- ------------ ----------- -----------
30,414,357 4,068,563 9,479,424 19,012,049 51,238,838 30,410,484
----------- ---------- ---------- ------------ ----------- -----------
DEPOSITS WITH
INSURANCE COMPANIES,
at contract value
(Notes 2 and 4) -- -- -- 182,365,535 -- --
----------- ---------- ---------- ------------ ----------- -----------
Total investments 30,414,357 4,068,563 9,479,424 201,377,584 51,238,838 30,410,484
----------- ---------- ---------- ------------ ----------- -----------
RECEIVABLES:
Employer contributions
(Note 1) 10,839 2,032 5,179 58,490 36,389 --
Employee deposits
(Note 1) 45,851 7,251 20,006 232,393 33,994 --
Accrued interest and
dividends -- -- -- -- 1,108 --
Other -- -- -- -- 627,303 15,563
----------- ---------- ---------- ------------ ----------- -----------
Total receivables 56,690 9,283 25,185 290,883 698,794 15,563
----------- ---------- ---------- ------------ ----------- -----------
TOTAL ASSETS 30,471,047 4,077,846 9,504,609 201,668,467 51,937,632 30,426,047
----------- ---------- ---------- ------------ ----------- -----------
LIABILITIES
-----------
PAYABLES:
Investments purchased -- -- -- -- (535,955) --
----------- ---------- ---------- ------------ ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $30,471,047 $4,077,846 $9,504,609 $201,668,467 $51,401,677 $30,426,047
=========== ========== ========== ============ =========== ===========
The accompanying notes and schedules are an integral part of this statement.
</TABLE>
<TABLE>
<CAPTION>
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995
| The Vanguard Group Funds
------------------------
Money Market Index Trust
ASSETS Total Prime Wellington 500 Windsor II PrimeCap
------ ----- ------------ ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, at market
(Notes 2 and 3):
Commingled trusts $228,523,475 $16,694,265 $27,135,443 $100,840,348 $21,636,242 $43,572,956
Common stock 56,375,561 -- -- -- -- --
Participant loans
(Note 1) 27,578,514 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
312,477,550 16,694,265 27,135,443 100,840,348 21,636,242 43,572,956
------------ ----------- ----------- ------------ ----------- -----------
DEPOSITS WITH
INSURANCE COMPANIES,
at contract value
(Notes 2 and 4) 197,382,184 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
Total investments 509,859,734 16,694,265 27,135,443 100,840,348 21,636,242 43,572,956
------------ ----------- ----------- ------------ ----------- -----------
RECEIVABLES:
Employer contributions
(Note 1) 184,071 4,899 10,703 24,462 8,285 16,820
Employee deposits
(Note 1) 606,978 18,568 44,990 113,744 36,933 75,120
Accrued interest and
dividends 3,830 -- -- -- -- --
Other 528,975 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
Total receivables 1,323,854 23,467 55,693 138,206 45,218 91,940
------------ ----------- ----------- ------------ ----------- -----------
TOTAL ASSETS 511,183,588 16,717,732 27,191,136 100,978,554 21,681,460 43,664,896
------------ ----------- ----------- ------------ ----------- -----------
LIABILITIES
-----------
PAYABLES:
Investments purchased (744,887) -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $510,438,701 $16,717,732 $27,191,136 $100,978,554 $21,681,460 $43,664,896
============ =========== =========== ============ =========== ===========
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995
CONTINUED
The Vanguard Group Funds|
------------------------
World Fund AMP Fixed AMP Stock
U.S. Growth Income Fund Fund Loan Fund
----------- ----------- ---------- ---------
ASSETS
------
INVESTMENTS, at market
(Notes 2 and 3):
Commingled trusts $16,256,998 $ 1,844,368 $ 542,855 $ --
Common stock -- -- 56,375,561 --
Participant loans
(Note 1) -- -- -- 27,578,514
----------- ------------ ----------- -----------
16,256,998 1,844,368 56,918,416 27,578,514
----------- ------------ ----------- -----------
DEPOSITS WITH
INSURANCE COMPANIES,
at contract value
(Notes 2 and 4) -- 197,382,184 -- --
----------- ------------ ----------- -----------
Total investments 16,256,998 199,226,552 56,918,416 27,578,514
----------- ------------ ----------- -----------
RECEIVABLES:
Employer contributions
(Note 1) 6,999 75,622 36,281 --
Employee deposits
(Note 1) 30,261 253,649 33,713 --
Accrued interest and
dividends -- -- 3,830 --
Other -- -- 521,615 7,360
----------- ------------ ----------- -----------
Total receivables 37,260 329,271 595,439 7,360
----------- ------------ ----------- -----------
TOTAL ASSETS 16,294,258 199,555,823 57,513,855 27,585,874
----------- ------------ ----------- -----------
LIABILITIES
-----------
PAYABLES:
Investments purchased -- -- (744,887) --
----------- ------------ ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $16,294,258 $199,555,823 $56,768,968 $27,585,874
=========== ============ =========== ===========
The accompanying notes and schedules are an integral part of this statement.
</TABLE>
<TABLE>
<CAPTION>
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
| The Vanguard Group Funds
------------------------
Money Market Index Trust
Total Prime Wellington 500 Windsor II PrimeCap
----- ------------- ------------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Investment income-
Net appreciation
(depreciation) in
market value of
investments (Note 3) $ 38,808,400 $ -- $ 2,106,322 $ 21,497,190 $ 3,933,619 $ 6,545,496
Interest and dividends 29,425,512 820,349 2,957,095 2,898,595 2,582,057 1,610,755
------------ ----------- ----------- ------------ ----------- -----------
68,233,912 820,349 5,063,417 24,395,785 6,515,676 8,156,251
------------ ----------- ----------- ------------ ----------- -----------
Contributions and deposits
(Note 1)
Employer 11,833,692 707,398 818,122 1,800,752 679,533 1,230,964
Employees 45,184,478 3,267,003 3,630,966 8,881,708 3,168,939 5,787,774
------------ ----------- ----------- ------------ ----------- -----------
57,018,170 3,974,401 4,449,088 10,682,460 3,848,472 7,018,738
------------ ----------- ----------- ------------ ----------- -----------
Total additions 125,252,082 4,794,750 9,512,505 35,078,245 10,364,148 15,174,989
------------ ----------- ----------- ------------ ----------- -----------
DEDUCTIONS:
Payments to participants 26,321,594 944,975 1,429,555 4,543,676 1,071,867 1,525,881
Loan maintenance fees 76,220 10,560 8,590 13,470 3,110 2,040
------------ ----------- ----------- ------------ ----------- -----------
Total deductions 26,397,814 955,535 1,438,145 4,557,146 1,074,977 1,527,921
INTERFUND TRANSFERS--NET -- (2,249,964) 3,456,865 2,701,873 6,375,412 (3,904,350)
ASSETS TRANSFERRED IN 666,810 18,172 62,959 100,869 132,140 111,419
------------ ----------- ----------- ------------ ----------- -----------
Net additions
(deductions) 99,521,078 1,607,423 11,594,184 33,323,841 15,796,723 9,854,137
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 510,438,701 16,717,732 27,191,136 100,978,554 21,681,460 43,664,896
------------ ----------- ----------- ------------ ----------- -----------
End of year $609,959,779 $18,325,155 $38,785,320 $134,302,395 $37,478,183 $53,519,033
============ =========== =========== ============ =========== ===========
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
CONTINUED
The Vanguard Group Funds |
------------------------ |
World Fund International | T. Rowe Price AMP Fixed AMP Stock
U.S. Growth Growth | New Horizons Income Fund Fund Loan Fund
----------- ------------- | ------------- ----------- --------- ---------
<C> <C> <C> <C> <C> <C>
ADDITIONS:
Investment income-
Net appreciation
(depreciation) in
market value of
investments (Note 3) $ 3,096,238 $ 38,207 $ (685,142) $ -- $ 2,276,470 $ --
Interest and dividends 2,229,888 177,502 861,128 11,506,687 1,396,986 2,384,470
----------- ---------- ---------- ------------ ----------- -----------
5,326,126 215,709 175,986 11,506,687 3,673,456 2,384,470
----------- ---------- ---------- ------------ ----------- -----------
Contributions and deposits
(Note 1)
Employer 584,249 53,062 143,368 3,366,969 2,449,275 --
Employees 2,577,313 211,105 595,237 14,519,324 2,545,109 --
----------- ---------- ---------- ------------ ----------- -----------
3,161,562 264,167 738,605 17,886,293 4,994,384 --
----------- ---------- ---------- ------------ ----------- -----------
Total additions 8,487,688 479,876 914,591 29,392,980 8,667,840 2,384,470
----------- ---------- ---------- ------------ ----------- -----------
DEDUCTIONS:
Payments to participants 798,983 16,791 21,386 13,183,112 2,120,458 664,910
Loan maintenance fees 3,810 1,270 12,030 20,610 730 --
----------- ---------- ---------- ------------ ----------- -----------
Total deductions 802,793 18,061 33,416 13,203,722 2,121,188 664,910
----------- ---------- ---------- ------------ ----------- -----------
INTERFUND TRANSFERS--NET 6,426,604 3,616,031 8,623,434 (14,146,018) (11,967,142) 1,067,255
ASSETS TRANSFERRED IN 65,290 -- -- 69,404 53,199 53,358
----------- ---------- ---------- ------------ ----------- -----------
Net additions
(deductions) 14,176,789 4,077,846 9,504,609 2,112,644 (5,367,291) 2,840,173
----------- ---------- ---------- ------------ ----------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 16,294,258 -- -- 199,555,823 56,768,968 27,585,874
----------- ---------- ---------- ------------ ----------- -----------
End of year $30,471,047 $4,077,846 $9,504,609 $201,668,467 $51,401,677 $30,426,047
=========== ========== ========== ============ =========== ===========
The accompanying notes and schedules are an integral part of this statement.
</TABLE>
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. DESCRIPTION OF PLAN:
-------------------
The following description of the AMP Incorporated Employee Savings and
Thrift Plan (the Plan) provides only general information. Participants
should refer to the Plan document for a more complete description of the
Plan's provisions.
General
-------
The Plan was established effective January 1, 1982 for the benefit of the
employees of AMP Incorporated (the Company) and certain subsidiaries and
was subsequently amended on numerous occasions, most recently effective as
of October 1, 1996.
The Plan is a contributory defined contribution plan covering all employees
of the Company and certain subsidiaries who have attained age 21 and
completed one year of service. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended.
The Vanguard Fiduciary Trust Company is the trustee of the
Plan.
Contributions
-------------
Participants may defer up to 4% of their gross earnings as a "deferred
basic deposit" and up to an additional 11% as a "deferred supplemental
deposit." The Company's matching contribution to the Plan is 60% of the
participant's "deferred basic deposit" which is paid out of the Company's
current and accumulated earnings.
Forfeitures in any given year are used to reduce Company matching
contributions to the Plan in the following year. Forfeitures from 1995
reducing 1996 Company contributions amounted to $114,232. Forfeitures from
1996 amounted to $175,292 and will be applied against Company contributions
in 1997.
Investment Elections
--------------------
Participants may elect to invest their deferred basic, deferred
supplemental deposits and Company matching contributions in one or more of
the available funds, which are the Money Market Prime, Wellington, Index
Trust 500, Windsor II, PrimeCap, World Fund U.S. Growth, International
Growth, T. Rowe Price New Horizons, AMP Fixed Income and AMP Stock Fund.
Participant's Accounts
----------------------
Each participant's account is credited with the participant's deposits and
Company matching contributions and an allocation of the funds' earnings in
which the participant participates. Certain participants in the Plan are of
an inactive status at year end due to termination or retirement. The number
of inactive participants as of December 31, 1996 and 1995 is 3,984 and
3,114 of the total 19,012 and 17,587, respectively.
Vesting
-------
Participants are immediately vested in their deferred basic and deferred
supplemental deposits plus actual earnings thereon. Company matching
contributions and earnings become 100% vested after five years of service
by a participant. Immediate vesting of Company matching contributions
occurs upon a participant's termination by retirement, disability, death or
attainment of age 65.
Payments to Participants
------------------------
Deferred basic deposits and deferred supplemental deposits cannot be
withdrawn prior to the attainment of age 59 1/2, except in the case of a
"financial hardship." Vested Company matching contributions held under the
Plan for at least two years and earnings thereon can be withdrawn any time
at the request of the participant.
Partial or total withdrawal of pre-1983 basic deposits, supplemental
deposits, Company matching contributions and earnings by a participant is
permitted at his or her request, subject to a minimum withdrawal of $100.
Loans to Participants
---------------------
Loans against a participant's account balances are secured by a promissory
note which bears a fixed interest rate of 1% over the prime rate. The term
of the loan is limited to five years and repayment is made through payroll
deductions in level amounts over the life of the loan. There are
limitations as to the amount that may be borrowed, and prepayment of a loan
is allowed. All loans requested prior to December 31, 1996 and 1995 were
disbursed to participants by that date.
Administrative Expenses
-----------------------
All expenses incurred in the administration of the Plan are paid by the
Company and amounted to $392,465 for the year ended December 31, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Basis of Accounting
-------------------
The accompanying financial statements have been prepared using the accrual
basis of accounting.
On January 1, 1995, the Plan adopted The American Institute of Certified
Public Accountants' Statement of Position 94-4, "Reporting of Investment
Contracts Held by Health and Welfare Benefit Plans and Defined Contribution
Pension Plans" (SOP 94-4). The adoption of SOP 94-4 had no impact on the
accompanying financial statements as all of the guaranteed investment
contracts held by the Plan are fully benefit-responsive and are valued
under SOP 94-4 at contract value, which is the same basis used by the Plan
in prior years. A fully benefit-responsive investment contract is one that
provides a liquidity guarantee by a financially responsible third party of
principal and previously accrued interest for liquidations, transfers or
loans initiated by plan participants exercising their rights to withdraw or
borrow under the terms of the Plan.
Valuation of Investments
------------------------
Investments, except for the deposits with insurance companies that are
carried at contract value, are stated at market value, which is equivalent
to current value as of the statement date.
Tax Status
----------
The trust established under the AMP Incorporated Employee Savings and
Thrift Plan is qualified under the Internal Revenue Code as exempt from
federal income taxes under Section 501(a). The Plan has received a
favorable determination letter from the Internal Revenue Service (IRS)
maintaining the Plan's qualified status under applicable Internal Revenue
Code requirements. The Plan has been amended since receiving the
determination letter from the IRS; however, the Plan sponsor and legal
counsel are of the opinion that the Plan, as amended and administered,
meets the IRS requirements and, therefore, the trust continues to be tax
exempt.
Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. INVESTMENTS:
------------
All Plan investments are held by a trust company administered trust fund
and consist of shares of various mutual funds, AMP stock, loans receivable
and deposits with insurance companies (Note 4). The following is a list of
assets which exceed 5% of net assets at December 31, 1996 and 1995.
DESCRIPTION OF
SECURITY DECEMBER 31, 1996 DECEMBER 31, 1995
-------------- --------------------------- ----------------------------
No. of No. of
Shares or Market or Shares or Market or
Principal Contract Principal Contract
Amount Value Amount Value
------------ -------------- ------------- --------------
Money Market Prime 37,311,509 $ 37,311,509 19,081,488 $ 19,081,488
Wellington 1,480,644 38,718,829 1,110,743 27,135,443
Index Trust 500 Fund 1,939,449 134,132,303 1,750,700 100,840,348
Windsor II 1,570,015 37,413,464 1,047,253 21,636,242
PrimeCap 1,775,744 53,414,376 1,661,188 43,572,956
AMP Common Stock 1,335,214 51,238,837 1,469,070 56,375,561
Loans Receivable 30,410,484 30,410,484 27,578,514 27,578,514
4. DEPOSITS WITH INSURANCE COMPANIES:
----------------------------------
The Plan has entered into guaranteed investment contracts with various
insurance companies (Insurance Companies). Under the terms of the
contracts, which are all fully benefit-responsive contracts, the Insurance
Companies received all plan year Fixed Income Fund deposits and
contributions, or in the case of rollovers, a lump-sum deposit, which they
maintain in plan reserve accounts until maturity. At maturity, the balances
with interest will be returned to the Plan. The accounts are credited with
interest at fixed rates for the respective periods and charged for plan
withdrawals and loans. The contracts are included in the financial
statements as of December 31, 1996 and 1995 at contract values, as reported
to the Plan by the Insurance Companies. The estimated fair market value of
the guaranteed investment contract portfolio, as of December 31, 1996 was
$182,886,708. The aggregate average yield for the Plan's guaranteed
investment contract portfolio was 5.97% and 6.00% for the years ended
December 31, 1996 and 1995, respectively. The crediting interest rate for
the Plan's guaranteed investment contract portfolio was 5.91% and 6.01% as
of December 31, 1996 and 1995, respectively. There were no valuation
allowances against contract values as of December 31, 1996 and 1995.
Included in the Plan's guaranteed investment contract portfolio as of
December 31, 1996, are three synthetic investment contracts. These
contracts were entered in 1995 and 1996, with Deutsche Bank and Union Bank
of Switzerland, and operate in a manner similar to a guaranteed investment
contract, except that the assets are placed in a trust (with ownership by
the Plan) rather than in a separate account of the issuer. Also, a
financially responsible third party issues a wrapper contract that provides
that a participant execute Plan transactions at contract value. These
contracts are included in the financial statements at contract values
reported to the Plan of $34,806,269 at December 31, 1996. The market value
of the underlying assets held in trust at December 31, 1996 was
$35,243,220.
During 1992, the investment manager for the Plan's Fixed Income Fund
invested $10,000,000 in Confederation Life Insurance Company's
(Confederation Life) Guaranteed Investment Contract Number 62682. This
contract provides for a rate of return of 6.16%, and is due to mature on
June 29, 1997. As of December 31, 1996 and 1995, the Plan's GIC investment
with Confederation Life had a gross recorded contract value of $10,082,223.
On August 12, 1994, the U.S. assets of Confederation Life were placed under
the regulatory supervision of the Michigan Commissioner of Insurance, and
GIC payments by Confederation Life were suspended. No interest has been
paid under the Plan's Confederation Life contract since this time.
To enable the Plan's Trustee to continue to hold the Confederation Life GIC
as a non-segregated asset of the Fixed Income Fund and to permit Plan
participants to continue Fixed Income Fund transactions as usual, the
Company has agreed to back the GIC's gross recorded contract value,
provided such is approved by applicable governmental agencies.
On October 13, 1996, the Michigan Commissioner of Insurance reached a final
decision related to the settlement of this contract. Out of the five
settlement options, the Company selected a cash liquidation option worth
109% of August 12, 1994 contract value. Payouts were received on April 25,
1997, May 27, 1997 and May 30, 1997. The last payment comprised amounts due
to the Plan from the appropriate state guarantee associations. The total
amount received as of May 30, 1997 was $11,015,695.
5. PLAN TERMINATION:
----------------
The Company anticipates continuing the Plan indefinitely, but reserves the
right to reduce, suspend or discontinue its contributions at any time and
to discontinue or partially terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants will become 100%
vested in their accounts.
6. DISTRIBUTIONS TO PARTICIPANTS:
------------------------------
Distributions to participants are generally made as soon as practical after
a request is received by the trustee. There were no distributions due
participants at December 31, 1996 and 1995.
<TABLE>
<CAPTION>
Schedule I
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
EIN #23-0332575
PIN #003
ITEM 27(a) -- SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
Number of Shares Market Value
or or
DESCRIPTION OF SECURITY Principal Amount Cost Contract Value
- ----------------------- ---------------- ---- --------------
<S> <C> <C> <C>
Commingled Trusts and Common Stock:
Money Market Prime 37,311,509 $ 37,311,509 $ 37,311,509
Wellington Fund 1,480,644 33,520,492 38,718,829
Index Trust 500 Fund 1,939,449 90,196,842 134,132,303
Windsor II Fund 1,570,015 31,106,980 37,413,464
PrimeCap Fund 1,775,744 42,412,788 53,414,376
World Fund--U.S. Growth 1,281,144 25,248,736 30,414,357
International Growth 247,179 4,025,780 4,068,563
T. Rowe Price - New Horizons 435,435 10,058,698 9,479,424
AMP Common Stock 1,335,214 46,076,445 51,238,837
------------ ------------
Total Commingled Trusts & Common Stock $319,958,270 $396,191,662
Deposits with Insurance Companies:
AIG Life, 5.00%, due 8/31/98 4,064,136 $ 4,064,136 $ 4,064,136
CNA, 6.30%, due 5/29/98 6,386,287 6,386,287 6,386,287
Confederation, (Note 4) 10,082,223 10,082,223 10,082,223
Deutsche Bank, 5.77%, due on demand 10,952,982 10,952,982 10,952,982
Hartford, 6.56%, due 3/31/97 3,433,224 3,433,224 3,433,224
Metropolitan Life, 5.09%, due 3/23/98 6,029,934 6,029,934 6,029,934
Metropolitan Life, 6.18%, due 6/30/00 8,756,538 8,756,538 8,756,538
NY Life, 5.20%, due 11/2/98 14,089,897 14,089,897 14,089,897
NY Life, 7.02%, due 3/31/99 9,463,897 9,463,897 9,463,897
NY Life, 7.47%, due 6/30/99 11,967,511 11,967,511 11,967,511
Principal, 5.13%, due 4/30/98 6,008,875 6,008,875 6,008,875
Principal, 5.73%, due 6/25/98 9,733,769 9,733,769 9,733,769
Principal, 8.12%, due 10/31/99 8,290,421 8,290,421 8,290,421
Prudential, 6.01%, due 11/1/97 6,315,777 6,315,777 6,315,777
Prudential, 5.31%, due 12/31/98 5,837,052 5,837,052 5,837,052
Prudential, 6.34%, due 10/31/97 6,394,841 6,394,841 6,394,841
Sun Life, 7.12%, due 3/31/97 7,048,185 7,048,185 7,048,185
Sun Life, 7.62%, due 4/1/97 7,068,831 7,068,831 7,068,831
Sun Life, 7.47%, due 8/31/97 6,916,577 6,916,577 6,916,577
Sun Life, 5.86%, due 8/31/98 9,671,291 9,671,291 9,671,291
Union Bank of Switzerland, 6.43%, 13,384,019 13,384,019 13,384,019
due on demand
Union Bank of Switzerland, 6.61%, 10,469,268 10,469,268 10,469,268
due on demand ------------ ------------
Total Deposits with Insurance Companies 182,365,535 182,365,535
------------ ------------
Participant Loans 30,410,484 30,410,484 30,410,484
------------ ------------
TOTAL $532,734,289 $608,967,681
============ ============
The accompanying notes are an integral part of this schedule.
</TABLE>
<TABLE>
<CAPTION>
Schedule II
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
EIN #23-0332575
PIN #003
ITEM 27(d) -- SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
Number of Number of Cost of Net
Identity of Party Description of Transaction Purchases Sales Purchase Price Selling Price Items Sold Gain/(Loss)
- ----------------- -------------------------- --------- --------- -------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Vanguard Money Market Prime 391 418 $115,452,060 $96,544,544 $96,544,544 $ --
Vanguard Index Trust 500 Fund 253 253 37,884,198 26,089,467 21,476,905 4,612,562
AMP Common Stock 70 116 33,158,568 40,944,218 37,051,911 3,892,307
Vanguard PrimeCap Fund 247 253 24,300,318 21,004,392 18,566,110 2,438,282
Vanguard Windsor II 249 248 20,651,432 8,807,829 7,989,163 818,666
Vanguard World Fund US Growth 253 246 18,758,604 7,697,555 6,801,774 895,781
The purchase prices and selling prices of the above transactions represent
the current value of the assets on the transaction date.
The accompanying notes are an integral part of this schedule.
</TABLE>
EXHIBIT 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AMP Incorporated:
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into the Company's previously filed
Registration Statement File No. 33-55318.
/s/ Arthur Andersen LLP
Philadelphia, PA
June 26, 1997
