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:
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, 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 year ended
December 31, 1997, 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/ J. C. Overbaugh
Date: June 29, 1998 By:_______________________________
Joseph C. Overbaugh
Treasurer
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, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1997 AND 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31,
1997 and 1996
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1997
Notes to Financial Statements
SCHEDULES:
Schedule I -- Item 27(a) -- Schedule of Investments as of December 31,
1997
Schedule II -- Item 27(d) -- Schedule of Reportable Transactions for the
Year Ended December 31, 1997
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, including the schedule of investments, of the AMP Incorporated
Employee Savings and Thrift Plan as of December 31, 1997 and 1996, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 1997. 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, 1997 and 1996, and the changes in net assets available for benefits
for the year ended December 31, 1997, 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 15, 1998
<TABLE>
<CAPTION>
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
| 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 $484,086,683 $19,226,750 $53,007,329 $190,121,782 $56,798,234 $95,478,987
Common stock 58,152,696 -- -- -- -- --
Participant loans
(Note 1) 33,628,801 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
575,868,180 19,226,750 53,007,329 190,121,782 56,798,234 95,478,987
------------ ----------- ----------- ------------ ----------- -----------
DEPOSITS WITH
INSURANCE COMPANIES,
at contract value
(Notes 2 and 4) 174,838,675 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
Total investments 750,706,855 19,226,750 53,007,329 190,121,782 56,798,234 95,478,987
------------ ----------- ----------- ------------ ----------- -----------
RECEIVABLES:
Employer contributions
(Note 1) 250,518 6,345 17,890 42,456 17,824 31,023
Employee deposits
(Note 1) 794,063 19,821 63,638 165,363 65,597 114,917
Accrued interest and
dividends 4,373 -- -- -- -- --
Other 490,104 -- -- -- -- --
------------ ----------- ----------- ------------ ----------- -----------
Total receivables 1,539,058 26,166 81,528 207,819 83,421 145,940
------------ ----------- ----------- ------------ ----------- -----------
TOTAL ASSETS 752,245,913 19,252,916 53,088,857 190,329,601 56,881,655 95,624,927
------------ ----------- ----------- ------------ ----------- -----------
LIABILITIES
-----------
PAYABLES:
Investments purchased (681,381) -- -- -- -- --
------------ ----------- ----------- ------------ ------------ -----------
NET ASSETS AVAILABLE
FOR BENEFITS $751,564,532 $19,252,916 $53,088,857 $190,329,601 $56,881,655 $95,624,927
============ =========== =========== ============ ============ ===========
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
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 $39,710,055 $5,893,731 $10,425,464 $ 12,334,738 $ 1,089,613 $ --
Common stock -- -- -- -- 58,152,696 --
Participant loans
(Note 1) -- -- -- -- -- 33,628,801
----------- ---------- ---------- ------------ ----------- -----------
39,710,055 5,893,731 10,425,464 12,334,738 59,242,309 33,628,801
----------- ---------- ---------- ------------ ----------- -----------
DEPOSITS WITH
INSURANCE COMPANIES,
at contract value
(Notes 2 and 4) -- -- -- 174,838,675 -- --
----------- ---------- ---------- ------------ ----------- -----------
Total investments 39,710,055 5,893,731 10,425,464 187,173,413 59,242,309 33,628,801
----------- ---------- ---------- ------------ ----------- -----------
RECEIVABLES:
Employer contributions
(Note 1) 14,081 3,272 5,489 75,154 36,984 --
Employee deposits
(Note 1) 50,019 10,425 17,780 254,615 31,888 --
Accrued interest and
dividends -- -- -- -- 4,373 --
Other -- -- -- -- 418,467 71,637
----------- ---------- ---------- ------------ ----------- -----------
Total receivables 64,100 13,697 23,269 329,769 491,712 71,637
----------- ---------- ---------- ------------ ----------- -----------
TOTAL ASSETS 39,774,155 5,907,428 10,448,733 187,503,182 59,734,021 33,700,438
----------- ---------- ---------- ------------ ----------- -----------
LIABILITIES
-----------
PAYABLES:
Investments purchased -- -- -- -- (681,381) --
----------- ---------- ---------- ------------ ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $39,774,155 $5,907,428 $10,448,733 $187,503,182 $59,052,640 $33,700,438
=========== ========== =========== ============ =========== ===========
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, 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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
| 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 $ 85,614,684 $ -- $ 4,965,705 $ 42,113,570 $ 8,209,608 $17,906,678
Interest and dividends 36,476,717 1,356,573 4,409,050 3,818,051 5,124,122 3,366,565
------------ ----------- ----------- ------------ ----------- -----------
122,091,401 1,356,573 9,374,755 45,931,621 13,333,730 21,273,243
------------ ----------- ----------- ------------ ----------- -----------
Contributions and deposits
(Note 1)
Employer 12,043,633 706,534 890,783 2,050,706 872,935 1,378,939
Employee 48,085,577 3,518,702 3,991,919 10,067,890 4,046,217 6,399,779
------------ ----------- ----------- ------------ ----------- -----------
60,129,210 4,225,236 4,882,702 12,118,596 4,919,152 7,778,718
------------ ----------- ----------- ------------ ----------- -----------
Total additions 182,220,611 5,581,809 14,257,457 58,050,217 18,252,882 29,051,961
------------ ----------- ----------- ------------ ----------- -----------
DEDUCTIONS:
Payments to participants
(Note 1) 40,485,651 1,245,796 2,348,004 7,367,148 1,805,686 3,111,740
Loan maintenance fees 130,207 18,290 19,200 22,420 11,560 3,630
------------ ----------- ----------- ------------ ----------- -----------
Total deductions 40,615,858 1,264,086 2,367,204 7,389,568 1,817,246 3,115,370
INTERFUND TRANSFERS--NET -- (3,389,962) 2,413,284 5,366,557 2,967,836 16,169,303
------------ ----------- ----------- ------------ ----------- -----------
Net additions
(deductions) 141,604,753 927,761 14,303,537 56,027,206 19,403,472 42,105,894
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 609,959,779 18,325,155 38,785,320 134,302,395 37,478,183 53,519,033
------------ ----------- ----------- ------------ ----------- -----------
End of year $751,564,532 $19,252,916 $53,088,857 $190,329,601 $56,881,655 $95,624,927
============ =========== =========== ============ =========== ===========
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
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 $ 6,548,183 ($ 120,725) $ 599,845 $ -- $ 5,391,820 $ --
Interest and dividends 1,516,364 249,217 245,179 12,423,768 1,237,279 2,730,549
----------- ---------- ---------- ------------ ----------- -----------
8,064,547 128,492 845,024 12,423,768 6,629,099 2,730,549
----------- ---------- ---------- ------------ ----------- -----------
Contributions and deposits
(Note 1)
Employer 740,436 156,394 297,587 2,953,447 1,995,872 --
Employee 3,342,631 622,551 1,221,976 12,847,118 2,026,794 --
----------- ---------- ---------- ------------ ----------- -----------
4,083,067 778,945 1,519,563 15,800,565 4,022,666 --
----------- ---------- ---------- ------------ ----------- -----------
Total additions 12,147,614 907,437 2,364,587 28,224,333 10,651,765 2,730,549
----------- ---------- ---------- ------------ ----------- -----------
DEDUCTIONS:
Payments to participants 1,389,001 257,461 271,238 19,126,604 2,192,651 1,370,322
(Note 1)
Loan maintenance fees 5,060 2,000 16,872 30,060 1,115 --
----------- ---------- ---------- ------------ ----------- -----------
Total deductions 1,394,061 259,461 288,110 19,156,664 2,193,766 1,370,322
----------- ---------- ---------- ------------ ----------- -----------
INTERFUND TRANSFERS--NET (1,450,445) 1,181,606 (1,132,353) (23,232,954) (807,036) 1,914,164
----------- ---------- ---------- ------------ ----------- -----------
Net additions
(deductions) 9,303,108 1,829,582 944,124 (14,165,285) 7,650,963 3,274,391
----------- ---------- ---------- ------------ ----------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 30,471,047 4,077,846 9,504,609 201,668,467 51,401,677 30,426,047
----------- ---------- ---------- ------------ ----------- -----------
End of year $39,774,155 $5,907,428 $10,448,733 $187,503,182 $59,052,640 $33,700,438
=========== ========== =========== ============ =========== ===========
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, 1997 and 1996
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 July 1, 1998.
The Plan is a contributory defined contribution plan covering all employees
of the Company and certain subsidiaries. Effective July 1, 1998,
eligibility requirements of one year of service and at least age 21 were
eliminated. 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. Effective January 1, 1998, the Plan was
amended to increase participants' "deferred supplemental deposit"
percentage to up to 16% of their gross earnings, and to increase the
Company's matching contribution to the Plan to include 30% of up to 2% of
gross earnings in excess of the "deferred basic deposit" deferred under
the Plan.
Forfeitures in any given year are used to reduce Company matching
contributions to the Plan in the following year. Forfeitures from 1996
reducing 1997 Company contributions amounted to $175,292. Forfeitures from
1997 amounted to $306,051 and will be applied against Company contributions
in 1998.
Investment Elections
--------------------
Participants may elect to invest their deferred basic deposits, deferred
supplemental deposits and Company matching contributions on the "deferred
basic deposit" 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, Vanguard
Bond Index Fund - Total Bond Market (effective January 1, 1998), AMP Fixed
Income and AMP Stock Fund. The Company matching contribution on up to 2%
of the gross earnings deferred in excess of the "deferred basic deposit"
may only be deposited into the AMP Stock Fund and no inter-fund transfers
are permitted.
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, 1997 and 1996 is 5,089
and 3,984 of the total 20,177 and 19,012, respectively.
Vesting
-------
Participants are immediately vested in their deferred basic deposits 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 deferred 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.
Participant Loans
-----------------
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 whether prepayment of
a loan is allowed. All loans requested prior to December 31, 1997 were
disbursed to participants by that date.
Participant Rollovers
---------------------
Effective January 1, 1998, participants with accounts in previous
employers' qualified plans, or in rollover IRA accounts including funds
from previous employers' qualified plans, may make a rollover of those
qualified monies into the Plan. This may be accomplished by a direct
rollover, an indirect 60-day rollover, or an indirect 60-day rollover from
a conduit IRA if the respective requirements are met.
Administrative Expenses
-----------------------
All expenses incurred in the administration of the Plan are paid by the
Company and amounted to $350,834 for the year ended December 31, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Basis of Accounting
-------------------
The accompanying financial statements have been prepared using the accrual
basis of accounting.
Valuation of Investments
------------------------
Investments, except deposits with insurance companies, are stated at market
value, which is equivalent to current value as of the statement date.
Deposits with insurance companies held by the Plan are accounted for under
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).
Under SOP 94-4, as all of the guaranteed investment contracts held by the
Plan are fully benefit-responsive, they are valued at contract value. 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.
Tax Status
----------
The trust established under the 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, 1997 and 1996.
DESCRIPTION OF
SECURITY DECEMBER 31, 1997 DECEMBER 31, 1996
-------------- --------------------------- ----------------------------
No. of No. of
Shares or Market or Shares or Market or
Principal Contract Principal Contract
Amount Value Amount Value
------------ -------------- ------------- --------------
Money Market Prime 32,651,101 $ 32,651,101 37,311,509 $ 37,311,509
Wellington 1,799,909 53,007,329 1,480,644 38,718,829
Index Trust 500 Fund 2,110,822 190,121,782 1,939,449 134,132,303
Windsor II 1,984,564 56,798,234 1,570,015 37,413,464
PrimeCap 2,412,914 95,478,987 1,775,744 53,414,376
AMP Common Stock 1,384,588 58,152,696 1,335,214 51,238,837
World Fund U.S. Growth 1,383,626 39,710,055 1,281,144 30,414,357
Loan Fund 33,628,801 33,628,801 30,410,484 30,410,484
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, 1997 and 1996 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, 1997 was
$176,338,185. The aggregate average yield for the Plan's guaranteed
investment contract portfolio was 6.14% and 5.97% for the years ended
December 31, 1997 and 1996, respectively. The crediting interest rate for
the Plan's guaranteed investment contract portfolio was 6.26% and 5.91% as
of December 31, 1997 and 1996, respectively. There were no valuation
allowances against contract values as of December 31, 1997 and 1996.
Included in the Plan's guaranteed investment contract portfolio as of
December 31, 1997, are seven synthetic investment contracts. These
contracts 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 $69,245,592 at December 31, 1997. The market value
of the underlying assets held in trust at December 31, 1997 was
$71,116,659.
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 provided for a rate of return of 6.16%, and matured on
June 29, 1997.
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. At the date of seizure,
the Plan's GIC investment with Confederation Life had a gross recorded
contract value of $10,082,223. No interest has been paid under the Plan's
Confederation Life contract since this time.
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 during 1997,
and the amount received through the end of 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, 1997 and 1996.
<TABLE>
<CAPTION>
Schedule I
AMP INCORPORATED EMPLOYEE SAVINGS AND THRIFT PLAN
EIN #23-0332575
PIN #003
ITEM 27(a) -- SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
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 32,651,101 $ 32,651,101 $ 32,651,101
Wellington Fund 1,799,909 44,431,853 53,007,329
Index Trust 500 Fund 2,110,822 113,620,742 190,121,782
Windsor II Fund 1,984,564 44,554,613 56,798,234
PrimeCap Fund 2,412,914 70,405,454 95,478,987
World Fund--U.S. Growth 1,383,626 30,012,426 39,710,005
International Growth 359,593 6,125,003 5,893,731
T. Rowe Price - New Horizons 447,444 10,178,303 10,425,464
AMP Common Stock 1,384,588 52,903,242 58,152,696
------------ ------------
Total Commingled Trusts & Common Stock $404,882,737 $542,239,379
Deposits with Insurance Companies:
AIG Life, 5.00%, due 8/31/98 4,064,680 $ 4,064,680 $ 4,064,680
AIG Life, 7.01%, due 3/31/02 10,480,170 10,480,170 10,480,170
CNA, 6.3%, due 5/29/98 6,788,623 6,788,623 6,788,623
Deutsche Bank, 6.11%, due on demand 11,605,398 11,605,398 11,605,398
Metropolitan Life, 5.09%, due 3/23/98 6,336,858 6,336,858 6,336,858
Metropolitan Life, 6.18%, due 6/30/00 9,297,692 9,297,692 9,297,692
Morgan Guaranty, 6.41%, due 3/31/01 10,341,534 10,341,534 10,341,534
NY Life, 5.20%, due 11/2/98 14,822,571 14,822,571 14,822,571
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 12,861,484 12,861,484 12,861,484
Principal, 5.13%, due 4/30/98 6,317,130 6,317,130 6,317,130
Principal, 5.73%, due 6/25/98 10,291,514 10,291,514 10,291,514
Principal, 8.12%, due 10/31/99 8,963,603 8,963,603 8,963,603
Prudential, 5.31%, due 12/31/98 6,146,999 6,146,999 6,146,999
Rabobank, 6.77%, due 12/31/01 8,327,176 8,327,176 8,327,176
Sun Life, 5.86%, due 8/31/98 10,238,029 10,238,029 10,238,029
Union Bank of Switzerland, 6.56%, 14,254,688 14,254,688 14,254,688
due on demand
Union Bank of Switzerland, 6.77%, 11,178,887 11,178,887 11,178,887
due on demand
WestDeutsche Landesbank, 6.41%, 3,057,742 3,057,742 3,057,742
9/30/01 ------------ ------------
Total Deposits with Insurance Companies 174,838,675 174,838,675
------------ ------------
Participant Loans (7% to 11.5%) 33,628,801 33,628,801 33,628,801
------------ ------------
TOTAL $613,350,213 $750,706,855
============ ============
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, 1997
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 368 402 $108,978,589 $113,782,487 $ 113,782,487 $ --
Vanguard Index Trust 500 Fund 253 253 60,031,712 46,155,926 36,730,452 9,425,474
AMP Common Stock 89 91 28,092,925 26,335,822 22,380,787 3,955,035
Vanguard PrimeCap Fund 253 253 51,859,684 27,706,015 23,992,444 3,713,571
Vanguard Windsor II 248 253 25,774,541 14,599,373 12,349,261 2,250,112
Vanguard World Fund US Growth 238 253 17,061,951 14,314,754 12,316,469 1,998,285
Vanguard Wellington Fund 241 253 21,100,147 11,777,426 10,202,379 1,575,047
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, 1998
