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.
For the fiscal year ended December 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
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:
MERIT Plan of Benefits
M/A-COM Division
1011 Pawtucket Boulevard
Lowell, MA 01853-3295
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 MERIT Plan of Benefits (the "Plan") of the M/A-COM Division of AMP
Incorporated 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,
1997 and December 31, 1996, and audited statements of changes in net assets
available for benefits for the fiscal year ended December 31, 1997.
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 years ended
December 31, 1997 and December 31, 1996, respectively, 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.
MERIT Plan of Benefits (the "Plan")
M/A-COM Benefits Committee (Plan Administrator)
/s/ Russell Tremblay
Date: June 29, 1998 By:_______________________________
Russell Tremblay
Chairman
Benefits Committee
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
1 Audited financial statements for MERIT Plan
of Benefits
2 Consent of Independent Public Accountants
EXHIBIT 1
AUDITED FINANCIAL STATEMENTS FOR
MERIT PLAN OF BENEFITS
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Financial Statements
As of December 31, 1997 and 1996
Together with Auditors' Report
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Index to Financial Statements and Supplemental Schedules
===============================================================================
Report of Independent Public Accountants
Financial Statements:
Statement of Net Assets Available for Plan Benefits:
December 31, 1997
December 31, 1996
Statement of Changes in Net Assets Available for Plan Benefits:
Year Ended December 31, 1997
Year Ended December 31, 1996
Notes to Financial Statements
Supplemental Schedules:
Schedule I - Item 27(a) - Assets Held for Investment Purposes at
December 31, 1997
Schedule II - Item 27(d) - Reportable Transactions for the Year Ended
December 31, 1997
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Participants and Administrator of the
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits:
We have audited the accompanying statements of net assets available for plan
benefits of the M/A-COM, a Division of AMP Incorporated MERIT Plan of Benefits
as of December 31, 1997 and 1996, and the related statements of changes in net
assets available for plan benefits for the years then ended. 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 plan benefits of the
M/A-COM, a Division of AMP Incorporated MERIT Plan of Benefits as of December
31, 1997 and 1996, and the changes in net assets available for plan benefits for
the years then ended 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 of assets held
for investment purposes and reportable transactions 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 plan benefits and the statements of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and the 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.
Philadelphia, Pa.,
May 1, 1998
<TABLE>
<CAPTION>
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Statement of Net Assets Available for Plan Benefits
December 31, 1997
Vanguard
Money Market Vanguard Vanguard Vanguard
Reserves - Vanguard/ Index International Bond Vanguard
Prime Wellington Trust - Growth Index U.S. Growth
ASSETS Portfolio Fund 500 Portfolio Portfolio Fund Portfolio
<S> <C> <C> <C> <C> <C> <C>
Shares of registered investment
companies, fair value $ 31,777,319 $ 30,868,353 $ 29,200,320 $ 8,324,673 $ 5,950,200 $17,370,313
Company Stock Fund, fair value -- -- -- -- -- --
Participant loans receivable,
fair value -- -- -- -- -- --
Other receivables:
Employees' contributions 149,820 114,688 124,377 46,354 26,565 79,269
Employer's contribution -- -- -- -- -- --
Loan and interest payments 94,845 56,867 49,251 21,661 11,361 32,569
------------ ------------ ------------ ----------- ----------- -----------
Net Assets Available for
Benefits $ 32,021,984 $ 31,039,908 $ 29,373,948 $ 8,392,688 $ 5,988,126 $17,482,151
============ ============ ============ =========== =========== ===========
Statement of Net Assets Available for Plan Benefits
December 31, 1997 - CONTINUED
Vanguard
Asset Vanguard Participant
Allocation Vanguard/ Explorer Company Loans
ASSETS Fund Windsor II Fund Stock Fund Receivable Total
<C> <C> <C> <C> <C> <C>
Shares of registered investment
companies, fair value $ 5,709,827 $ 9,970,748 $ 2,689,371 $ -- $ -- $141,861,124
Company Stock Fund, fair value -- -- -- 19,658,839 -- 19,658,839
Participant loans receivable,
fair value -- -- -- -- 6,554,860 6,554,860
Other receivables:
Employees' contributions 27,707 60,438 19,157 9,547 -- 657,922
Employer's contribution -- -- -- 448,023 -- 448,023
Loan and interest payments 7,764 19,918 5,624 3,176 -- 303,036
------------ ----------- ----------- ----------- ----------- ------------
Net Assets Available for
Benefits $ 5,745,298 $10,051,104 $ 2,714,152 $20,119,585 $ 6,554,860 $169,483,804
============ =========== =========== =========== =========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<TABLE>
<CAPTION>
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Statement of Net Assets Available for Plan Benefits
December 31, 1996
Vanguard
Money Market Vanguard Vanguard Vanguard
Reserves - Vanguard/ Index International Bond Vanguard
Prime Wellington Trust - Growth Index U.S. Growth
ASSETS Portfolio Fund 500 Portfolio Portfolio Fund Portfolio
<S> <C> <C> <C> <C> <C> <C>
Shares of registered investment
companies, fair value $ 33,458,386 $ 24,503,755 $ 19,534,767 $ 8,123,218 $ 5,420,565 $12,711,704
Company Stock Fund, fair value -- -- -- -- -- --
Participant loans receivable,
fair value -- -- -- -- -- --
Other receivables:
Employees' contributions 144,825 100,361 92,047 41,332 24,673 63,650
Employer's contribution -- -- -- -- -- --
Loan and interest payments 83,930 44,337 33,274 19,472 9,344 24,859
------------ ------------ ------------ ----------- ----------- -----------
Net Assets Available for
Benefits $ 33,687,141 $ 24,648,453 $ 19,660,088 $ 8,184,022 $ 5,454,582 $12,800,213
============ ============ ============ =========== =========== ===========
Statement of Net Assets Available for Plan Benefits
December 31, 1996 - CONTINUED
Vanguard
Asset Vanguard Participant
Allocation Vanguard/ Explorer Company Loans
ASSETS Fund Windsor II Fund Stock Fund Receivable Total
<C> <C> <C> <C> <C> <C>
Shares of registered investment
companies, fair value $ 2,756,799 $ 5,240,208 $ 2,361,528 $ -- $ -- $114,110,930
Company Stock Fund, fair value -- -- -- 15,652,557 -- 15,652,557
Participant loans receivable,
fair value -- -- -- -- 6,244,714 6,244,714
Other receivables:
Employees' contributions 19,905 38,327 21,572 2,962 -- 549,654
Employer's contribution -- -- -- 344,011 -- 344,011
Loan and interest payments 3,907 10,163 6,097 932 -- 236,315
------------ ----------- ----------- ----------- ----------- ------------
Net Assets Available for
Benefits $ 2,780,611 $ 5,288,698 $ 2,389,197 $16,000,462 $ 6,244,714 $137,138,181
============ =========== =========== =========== =========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<TABLE>
<CAPTION>
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1997
Vanguard
Money Market Vanguard Vanguard Vanguard
Reserves - Vanguard/ Index International Bond Vanguard
Prime Wellington Trust - Growth Index U.S. Growth
Portfolio Fund 500 Portfolio Portfolio Fund Portfolio
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest and dividends $ 1,748,847 $ 2,629,189 $ 596,831 $ 352,579 $ 351,905 $ 677,880
Net appreciation
of investments -- 3,114,781 6,253,904 8,236 139,338 2,788,906
------------ ------------ ----------- ---------- ---------- -----------
1,748,847 5,743,970 6,850,735 360,815 491,243 3,466,786
------------ ------------ ----------- ---------- ---------- -----------
Contributions:
Employer -- -- -- -- -- --
Employee (see Note 3) 1,773,453 1,359,832 1,508,331 623,608 321,855 997,551
------------ ------------ ----------- ---------- ---------- -----------
1,773,453 1,359,832 1,508,331 623,608 321,855 997,551
------------ ------------ ----------- ---------- ---------- -----------
Total additions 3,522,300 7,103,802 8,359,066 984,423 813,098 4,464,337
------------ ------------ ----------- ---------- ---------- -----------
Deductions:
Benefit payments to beneficiaries
and participants 3,048,012 1,705,757 1,182,145 320,116 348,003 784,374
Administrative expenses 16,513 8,631 4,938 2,248 1,165 3,443
------------ ------------ ----------- ---------- ---------- -----------
Total deductions 3,064,525 1,714,388 1,187,083 322,364 349,168 787,817
------------ ------------ ----------- ---------- ---------- -----------
Net increase 457,775 5,389,414 7,171,983 662,059 463,930 3,676,520
Net interfund transfers (2,122,932) 1,002,041 2,541,877 (453,393) 69,614 1,005,418
Net assets available for benefits:
Beginning of year 33,687,141 24,648,453 19,660,088 8,184,022 5,454,582 12,800,213
------------ ------------ ----------- ---------- ---------- -----------
End of year $ 32,021,984 $ 31,039,908 $29,373,948 $8,392,688 $5,988,126 $17,482,151
============ ============ =========== ========== ========== ===========
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1997 - CONTINUED
Vanguard
Asset Vanguard Company Participant
Allocation Vanguard/ Explorer Stock Loans
Fund Windsor II Fund Fund Receivable Total
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest and dividends $ 412,963 $ 900,748 $ 270,863 $ 424,349 $ 570,390 $ 8,936,544
Net appreciation
of investments 480,978 1,226,718 59,587 2,164,704 -- 16,237,152
---------- ----------- ---------- ----------- ---------- ------------
893,941 2,127,466 330,450 2,589,053 570,390 25,173,696
---------- ----------- ---------- ----------- ---------- ------------
Contributions:
Employer -- -- -- 4,403,811 -- 4,403,811
Employee (see Note 3) 312,811 730,120 290,021 4,117,045 -- 12,034,627
---------- ----------- ---------- ----------- ---------- ------------
312,811 730,120 290,021 8,520,856 0 16,438,438
---------- ----------- ---------- ----------- ---------- ------------
Total additions 1,206,752 2,857,586 620,471 11,109,909 570,390 41,612,134
---------- ----------- ---------- ----------- ---------- ------------
Deductions:
Benefit payments to beneficiaries
and participants 164,263 338,362 67,568 894,374 362,654 9,215,628
Administrative expenses 1,277 2,265 1,210 9,193 -- 50,883
---------- ----------- ---------- ----------- ---------- ------------
Total deductions 165,540 340,627 68,778 903,567 362,654 9,266,511
---------- ----------- ---------- ----------- ---------- ------------
Net increase 1,041,212 2,516,959 551,693 10,206,342 207,736 32,345,623
Net interfund transfers 1,923,475 2,245,447 (226,738) (6,087,219) 102,410 --
Net assets available for benefits:
Beginning of year 2,780,611 5,288,698 2,389,197 16,000,462 6,244,714 137,138,181
---------- ----------- ---------- ----------- ---------- ------------
End of year $5,745,298 $10,051,104 $2,714,152 $20,119,585 $6,554,860 $169,483,804
========== =========== ========== =========== ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<TABLE>
<CAPTION>
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1996
Vanguard
Money Market Vanguard Vanguard Vanguard
Reserves - Vanguard/ Index International Bond Vanguard
Prime Wellington Trust - Growth Index U.S. Growth
Portfolio Fund 500 Portfolio Portfolio Fund Portfolio
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest and dividends $ 1,731,762 $ 1,946,958 $ 431,304 $ 347,472 $ 366,005 $ 931,112
Net appreciation (depreciation)
of investments -- 1,610,593 3,282,249 737,512 (153,792) 1,629,396
------------ ------------ ----------- ---------- ---------- -----------
1,731,762 3,557,551 3,713,553 1,084,984 212,213 2,560,508
------------ ------------ ----------- ---------- ---------- -----------
Contributions:
Employer -- -- -- -- -- --
Employee 1,983,319 1,256,039 1,151,878 541,920 337,721 763,849
------------ ------------ ----------- ---------- ---------- -----------
1,983,319 1,256,039 1,151,878 541,920 337,721 763,849
------------ ------------ ----------- ---------- ---------- -----------
Total additions 3,715,081 4,813,590 4,865,431 1,626,904 549,934 3,324,357
------------ ------------ ----------- ---------- ---------- -----------
Deductions:
Benefit payments to beneficiaries
and participants 3,067,107 2,618,388 1,846,321 799,960 582,099 966,616
Administrative expenses 17,058 6,403 3,976 3,519 1,349 2,984
------------ ------------ ----------- ---------- ---------- -----------
Total deductions 3,084,165 2,624,791 1,850,297 803,479 583,448 969,600
------------ ------------ ----------- ---------- ---------- -----------
Net increase (decrease) 630,916 2,188,799 3,015,134 823,425 (33,514) 2,354,757
Net interfund transfers (1,524,589) (808,229) 507,126 (158,029) (83,090) 560,161
Net assets available for benefits:
Beginning of year 34,580,814 23,267,883 16,137,828 7,518,626 5,571,186 9,885,295
------------ ------------ ----------- ---------- ---------- -----------
End of year $ 33,687,141 $ 24,648,453 $19,660,088 $8,184,022 $5,454,582 $12,800,213
============ ============ =========== ========== ========== ===========
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1996 - CONTINUED
Vanguard
Asset Vanguard Company Participant
Allocation Vanguard/ Explorer Stock Loans
Fund Windsor II Fund Fund Receivable Total
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest and dividends $ 247,564 $ 368,352 $ 126,110 $ 337,198 $ 478,876 $ 7,312,713
Net appreciation (depreciation)
of investments 126,848 541,692 91,611 (15,162) -- 7,850,947
---------- ---------- ---------- ----------- ---------- ------------
374,412 910,044 217,721 322,036 478,876 15,163,660
---------- ---------- ---------- ----------- ---------- ------------
Contributions:
Employer -- -- -- 3,991,065 -- 3,991,065
Employee 232,799 406,644 245,487 22,023 -- 6,941,679
---------- ---------- ---------- ----------- ---------- ------------
232,799 406,644 245,487 4,013,088 -- 10,932,744
---------- ---------- ---------- ----------- ---------- ------------
Total additions 607,211 1,316,688 463,208 4,335,124 478,876 26,096,404
---------- ---------- ---------- ----------- ---------- ------------
Deductions:
Benefit payments to beneficiaries
and participants 338,346 413,564 105,123 907,093 366,357 12,010,974
Administrative expenses 711 1,236 957 8,844 780 47,817
---------- ---------- ---------- ----------- ---------- ------------
Total deductions 339,057 414,800 106,080 915,937 367,137 12,058,791
---------- ---------- ---------- ----------- ---------- ------------
Net increase (decrease) 268,154 901,888 357,128 3,419,187 111,739 14,037,613
Net interfund transfers (56,571) 1,477,345 394,440 (975,043) 666,479 --
Net assets available for benefits:
Beginning of year 2,569,028 2,909,465 1,637,629 13,556,318 5,466,496 123,100,568
---------- ---------- ---------- ----------- ---------- ------------
End of year $2,780,611 $5,288,698 $2,389,197 $16,000,462 $6,244,714 $137,138,181
========== ========== ========== =========== ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
</TABLE>
M/A-COM, a Division of AMP Incorporated
MERIT Plan of Benefits
Notes to Financial Statements
1. Description of the Plan
The following is a general description of the MERIT Plan of Benefits (the
Plan) established by M/A-COM, Inc. effective October 1, 1990 and most
recently amended and restated effective as of January 1, 1997. Refer to the
Plan document for more information.
Effective October 1, 1997, M/A-COM, Inc. merged with and into AMP
Incorporated (hereinafter referred to as the "Company"), pursuant to
which merger AMP Incorporated became the employer and plan sponsor under
the Plan.
Vanguard Fiduciary Trust Company (Trustee) is the trustee and recordkeeper
of the Plan.
The Plan is a defined contribution retirement benefit plan subject to the
Employee Retirement Income Security Act of 1974 (ERISA), as amended, and
administered by a Benefits Committee (the Committee) appointed by the Chief
Executive Officer of M/A-COM, a Division of the Company. The Plan is
designed to qualify as a profit-sharing plan for purposes of Sections
401(a), 402, 412 and 417 of the Internal Revenue Code of 1986 (the Code),
and to contain a cash or deferred arrangement intended to qualify under
Section 401(k) of the Code. The Plan covers all eligible employees of the
M/A-COM Division of the Company who meet certain requirements as to length
of service.
2. Summary of Significant Accounting Policies
BASIS OF ACCOUNTING
The accompanying financial statements of the Plan have been prepared on the
accrual basis of accounting.
INVESTMENTS
Participants may select from nine Vanguard investment options as well as
the Company Stock Fund. The investment options available are the Vanguard
Money Market Reserves - Prime Portfolio (pooled money market fund),
Vanguard Bond Index Fund (income fund), Vanguard/Wellington Fund (balanced
fund), Vanguard Index Trust - 500 Portfolio (growth and income fund),
Vanguard U.S. Growth Portfolio (growth fund), Vanguard International Growth
Portfolio (growth fund), Vanguard/Windsor II (growth and income fund),
Vanguard Explorer Fund (small company growth) and Vanguard Asset Allocation
Fund (balanced fund). The investments are stated at fair value determined
by quoted market prices which represent the net asset value of shares held
by the Plan at year-end, as reported by the Trustee.
The Company Stock Fund was established for the purpose of allowing Company
matching contributions to be made in the form of AMP common stock.
Effective July 1, 1996, the Plan was amended to include the Company Stock
Fund as an investment option for participant contributions. At any time,
this fund may consist of shares of AMP common stock, a receivable/payable
amount for transactions in process and a small balance in a money market
fund to meet current cash requirements. The value of the fund is expressed
in terms of a unit value which fluctuates with the value of AMP common
stock in the fund. The value of this fund is based on the unit closing
price at the Plan year end, as reported by the Trustee.
The fair value of participant loans receivable is unpaid principal balances
plus accrued interest at the Plan year end, as reported by the Trustee.
Purchases and sales of securities are recorded on the trade date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date. Net appreciation (depreciation) of investments
include realized and unrealized gains and losses on investment
transactions.
ACCOUNTING ESTIMATES
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,
disclosure of contingencies, and the reported amounts of changes in net
assets. Actual results could differ from these estimates.
ADMINISTRATIVE EXPENSES
All expenses incurred in the administration of the Plan, other than legal
and certain other expenses which are paid by the Company, are charged to
and paid by the Plan.
PAYMENT OF BENEFITS
Refer to Plan Document for the various methods of benefit payments.
Benefits are recorded when paid.
3. Contribution Policy
GENERAL
Benefits provided to participants under the Plan are based upon the level
of their Plan contributions and their investment selections. Non-highly
compensated Plan participants, as defined in Section 414 of the Code, may
contribute between 2% and 14% of their annual before-tax compensation to
the Plan subject to Internal Revenue Service (IRS) limitations. Highly
compensated participants, as defined in Section 414 of the Code, may
contribute between 2% and 6% of their annual before-tax compensation to the
Plan provided, however, that the Company reserves the right to increase or
decrease the maximum percentage within the range of 6% and 14% applicable
to such highly compensated employees from time to time during, and for the
remainder of, the Plan year subject to IRS limitations.
The Company makes matching contributions of 50% of participants'
contributions for participants with six months but less than five years of
service, 66 2/3% for five but less than ten years of service and 100% for
ten or more years of service, but only to the extent deductible for federal
income tax purposes and disregarding any contributions in excess of 6% of a
participant's annual before-tax compensation. Prior to 1997, participants
were assigned the applicable matching percentage on the first day of the
calendar year following their attainment of the appropriate number of years
of service. Effective July 1, 1997, the M/A-COM Benefits Committee voted to
amend the Plan to change the assignment of the increased match to the first
day of the calendar quarter following the participant's attainment of the
appropriate number of years of service. In order to maintain the Plan's tax
qualified status, the Plan Administrator retains the right, if necessary,
to reduce the contributions made on behalf of certain participants.
Contributions are recorded in the period in which payroll deductions are
made. Employee contributions for 1997 included $4,028,086 of rollover
contributions from the M/A-COM Inc. Employee Stock Ownership Plan. This
plan was terminated December 31, 1996.
VESTING
Contributions made by participants are fully vested at all times.
Company matching contributions are vested based on a participant's years
of credited service. Prior to 1997, a year of service was defined by the
Plan document as a year in whch the participant worked 1,000 hours or more.
Effective July 1, 1997, the M/A-COM Benefits Committee voted to amend the
Plan to define a year of service using the "Elapsed Time Method," where a
year is determined by the actual period of time worked. The vesting
schedule for Company contributions is as follows:
Years of credited service Percent vested
Less than 2 0%
2 25%
3 50%
4 75%
5 or more 100%
Forfeitures may be utilized to reduce the Company's matching contributions.
Forfeitures being held at December 31, 1997 and December 31, 1996 were
$66,600 and $90,200, respectively. The Company used $90,200 and $72,800 to
reduce matching contributions for the year ended December 31, 1997 and
December 31, 1996, respectively.
Although the Company has no intention to do so, it reserves the right to
terminate the Plan at any time. Upon Plan termination, participants become
100% vested in their account balances.
4. Participant Loan Program
Active Plan participants may borrow on their vested account balances. The
loan feature of the Plan includes the following provisions:
Minimum Loan: $500
Maximum Loan: Lesser of: 50% of the
participant's vested account
balance at the time of the
loan or $50,000 reduced by the
highest outstanding balance of
any loans to the participant
during the preceding 12
months.
Term of Loan: Five year maximum term; early
repayment without penalty is
allowed.
Interest: Reasonable rate of interest in
accordance with standards
established by the Committee.
Loans specifically attributed to the Plan at December 31, 1997 and December
31, 1996 were $6,554,860 and $6,244,714, respectively. Interest rates range
from 7.0% to 10.0% for loans outstanding at December 31, 1997 and December
31, 1996, respectively.
5. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated September 20, 1995, that the Plan is qualified under the
appropriate sections of the Code and the Plan as amended effective January
1, 1992 is in compliance with amendments required by the Tax Reform Act of
1986. The Plan has been amended since receiving the determination letter.
The Plan administrator and the Plan's tax counsel believe that the
Plan is currently designed and being operated in compliance with the
applicable requirements of the Code. Therefore, they believe that the Plan
continues to be qualified and the related trust was tax-exempt as of the
financial statement date. Accordingly, there is no provision for income
taxes in the accompanying financial statements.
6. Investments
All Plan investments are held by Vanguard Fiduciary Trust Company and
consist of shares of various Vanguard mutual funds, Company stock, and
participant notes receivables. The following is a list of assets which
exceed 5% of net assets at December 31, 1997 and 1996.
December 31, December 31,
1997 1996
------------ ------------
Vanguard Fiduciary Trust Company:
Vanguard Money Market Reserves -
Prime Portfolio $31,777,319 $33,458,386
Vanguard/Wellington Fund 30,868,353 24,503,755
Vanguard Index Trust -
500 Portfolio 29,200,320 19,534,767
Vanguard International
Growth Portfolio 8,324,673 8,123,218
Vanguard U.S. Growth Portfolio 17,370,313 12,711,704
Company Stock Fund 19,658,839 15,652,557
Vanguard/Windsor II Fund 9,970,748 5,240,208
M/A-COM, a Division of AMP Incorporated Supplemental
MERIT Plan of Benefits Schedule I
Item 27(a) - Assets Held for Investment Purposes EIN: 23-0332575
at December 31, 1997 PIN: 010
Shares/Units Current
of Participation Cost Value
Vanguard Fiduciary Trust Company:
* Vanguard Money Market Reserves -
Prime Portfolio 31,777,319 $31,777,319 $31,777,319
* Vanguard/Wellington Fund 1,048,161 23,296,941 30,868,353
* Vanguard Index Trust -
500 Portfolio 324,196 17,004,779 29,200,320
* Vanguard International
Growth Portfolio 507,912 6,954,203 8,324,673
* Vanguard Bond Index Fund 589,713 5,756,131 5,950,200
* Vanguard U.S. Growth
Portfolio 605,237 11,695,439 17,370,313
* Vanguard Asset Allocation
Fund 271,251 5,083,327 5,709,827
* Vanguard/Windsor II 348,384 8,264,810 9,970,748
* Vanguard Explorer Fund 48,632 2,584,200 2,689,371
Company Stock Fund 1,119,524 16,395,345 19,658,839
Participant loans receivable
maturing within six months to
five years with interest rates
ranging from 7.0% to 10.0% 904 6,554,860 6,554,860
------------ ------------
$135,367,354 $168,074,823
============ ============
* Represents a party in interest.
<TABLE>
<CAPTION>
M/A-COM, a Division of AMP Incorporated Supplemental
MERIT Plan of Benefits Schedule II
Item 27(d) - Reportable Transactions EIN: 23-0332575
for the Year Ended December 31, 1997 PIN: 010
Current
Value on
Party in Description No. of Purchase No. of Selling Cost of Transaction Net Gain
Interest of Assets Purchases Price Sales Price Asset Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vanguard Fiduciary Vanguard Money Market
Trust Company Reserves - Prime Portfolio 248 $16,088,867 245 $17,769,934 $17,769,934 $17,769,934 $ --
Vanguard Fiduciary Company Stock Fund 141 14,201,000 237 12,359,422 10,409,218 12,359,422 1,950,204
Trust Company
Vanguard Fiduciary Vanguard/Wellington Fund 188 7,674,712 211 4,424,894 3,508,530 4,424,894 916,364
Trust Company
Vanguard Fiduciary Vanguard Index Trust-500 208 7,647,401 205 4,235,754 3,211,491 4,235,754 1,024,263
Trust Company Portfolio
Vanguard Fiduciary Vanguard International 170 4,684,045 188 4,490,826 4,032,305 4,490,826 458,521
Trust Company Growth Portfolio
Vanguard Fiduciary Vanguard U. S. Growth 193 6,086,196 196 4,216,492 3,545,162 4,216,492 671,330
Trust Company Portfolio
Vanguard Fiduciary Vanguard Windsor II 200 5,255,466 153 1,751,643 1,526,377 1,751,643 225,266
Trust Company
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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. 333-06767.
/s/ Arthur Andersen LLP
Philadelphia, PA
June 26, 1998
