-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hI2m33FdjyqWjYiQLPrHuBdC1+t0yAYlk0f4Yu7VGR3/XD0eUg3qiRdayGHw6+gE c0ACriunmMglfG4jzT+/Vw== 0000006164-94-000018.txt : 19940815 0000006164-94-000018.hdr.sgml : 19940815 ACCESSION NUMBER: 0000006164-94-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMP INC CENTRAL INDEX KEY: 0000006164 STANDARD INDUSTRIAL CLASSIFICATION: 3679 IRS NUMBER: 230332575 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04235 FILM NUMBER: 94543642 BUSINESS ADDRESS: STREET 1: 470 FRIENDSHIP RD CITY: HARRISBURGH STATE: PA ZIP: 17105 BUSINESS PHONE: 7175640100 MAIL ADDRESS: STREET 1: PO BOX 3608 M.S. 176-41 CITY: HARRISBURG STATE: PA ZIP: 17105 FORMER COMPANY: FORMER CONFORMED NAME: AMP INC & PAMCOR INC DATE OF NAME CHANGE: 19890410 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN METAL PRODUCTS CO DATE OF NAME CHANGE: 19661211 10-Q 1 2ND QUARTER 1994 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (mark one) [XX] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1994 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ ******************************** Commission File No. 1-4235 AMP INCORPORATED a Pennsylvania corporation (Exact name of registrant as specified in charter, and state of incorporation) ******************************** Employer Identification No. 23-0332575 Harrisburg, Pennsylvania 17105-3608 (Address of principal executive offices of registrant) (717) 564-0100 (Registrant's telephone number, including area code) ******************************** Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X]. NO [ ]. The number of shares of AMP Common Stock (without Par Value) outstanding at August 10, 1994 was 104,835,185. AMP Incorporated & Subsidiaries PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The Consolidated Statements of Income for the three months and the six months ended June 30, 1994 and 1993, the Consolidated Statements of Cash Flows for the six months ended June 30, 1994 and 1993, and the Consolidated Balance Sheets at June 30, 1994 and December 31, 1993, are presented below. See the notes to these condensed consolidated financial statements at the end thereof. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in thousands, except per share data) For the Three Months Ended June 30, 1994 1993 ----------- ----------- Net Sales.......................... $ 1,003,985 $ 882,737 Cost of Sales...................... 659,503 585,907 ----------- ----------- Gross income................... 344,482 296,830 Selling, General and Administrative Expenses........... 177,187 160,395 ----------- ----------- Income from operations......... 167,295 136,435 Interest Expense................... (4,986) (5,202) Other Income (Deductions), net..... (7,725) (5,905) ----------- ----------- Income before income taxes..... 154,584 125,328 Income Taxes....................... 58,760 49,590 ----------- ----------- Net Income......................... $ 95,824 $ 75,738 =========== =========== Per Share - Net income............. $.91 $.72 Cash dividends.......... $.42 $.40 Weighted average number of shares... 104,857,158 104,891,889 =========== =========== CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in thousands, except per share data) For the Six Months Ended June 30, 1994 1993 ----------- ----------- Net Sales.......................... $ 1,910,108 $ 1,720,693 Cost of Sales...................... 1,263,470 1,145,717 ----------- ----------- Gross income................... 646,638 574,976 Selling, General and Administrative Expenses........... 339,360 311,520 ----------- ----------- Income from operations......... 307,278 263,456 Interest Expense................... (9,233) (10,584) Other Income (Deductions), net..... (14,241) (8,661) ----------- ----------- Income before income taxes..... 283,804 244,211 Income Taxes....................... 108,430 95,950 ----------- ----------- Net Income......................... $ 175,374 $ 148,261 =========== =========== Per Share - Net income............. $1.67 $1.41 Cash dividends.......... $ .84 $ .80 Weighted average number of shares... 104,881,145 104,896,690 =========== =========== AMP Incorporated & Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and Unaudited) (dollars in thousands) For the Six Months Ended June 30, 1994 1993 --------- --------- Cash and Cash Equivalents at January 1.................. $ 257,678 $ 370,753 Operating Activities: Net income................................ 175,374 148,261 Noncash adjustments - Depreciation and amortization........... 138,601 146,296 Changes in operating assets and liabilities........................ (56,397) (120,341) Other, net.............................. 12,894 7,583 --------- --------- Cash provided by operating activities........................... 270,472 181,799 --------- --------- Investing Activities: Additions to property, plant and equipment............................ (189,965) (136,313) Other, net................................ (8,375) (18,438) --------- --------- Cash used for investing activities........................... (198,340) (154,751) --------- --------- Financing Activities: Changes in short-term debt................ (68,550) (136,829) Additions to long-term debt............... 61,950 75,387 Reductions of long-term debt.............. (3,738) (4,256) Purchases of treasury stock............... (5,914) (3,771) Dividends paid............................ (88,095) (83,919) --------- --------- Cash used for financing activities........................... (104,347) (153,388) --------- ---------- Effect of Exchange Rate Changes on Cash.................................... 5,141 (8,248) --------- ---------- Cash and Cash Equivalents at June 30........ $ 230,604 $ 236,165 ========= ========== Changes in Operating Assets and Liabilities: Receivables............................... $(124,153) $(125,296) Inventories............................... (27,656) (23,435) Other current assets...................... (11,343) (23,884) Payables, trade and other................. 37,116 14,807 Accrued payrolls and benefits............. 29,716 18,137 Other accrued liabilities................. 39,923 19,330 --------- --------- $ (56,397) $(120,341) ========= ========= Income tax payments......................... $ 83,892 $ 93,278 Interest paid during the periods was approximately equal to amounts charged to expense. AMP Incorporated & Subsidiaries CONSOLIDATED BALANCE SHEETS (Condensed) (dollars in thousands) June 30, December 31, 1994 1993 ----------- ----------- ASSETS (unaudited) Current Assets: Cash and cash equivalents.......... $ 230,604 $ 257,678 Marketable securities.............. 120,817 149,317 Receivables........................ 804,184 625,180 Inventories--- Finished goods and work in process........................ 275,094 255,472 Purchased and manufactured parts. 164,533 153,643 Raw materials.................... 60,364 50,187 ----------- ----------- Total inventories.............. 499,991 459,302 Other current assets............... 172,439 152,881 ----------- ----------- Total current assets........... 1,828,035 1,644,358 ----------- ----------- Property, Plant and Equipment........ 3,162,843 2,954,936 Less - Accumulated depreciation.... 1,842,725 1,709,811 ----------- ----------- Property, plant and equipment, net........................... 1,320,118 1,245,125 ----------- ----------- Investments and Other Assets......... 276,846 228,436 ----------- ----------- TOTAL ASSETS......................... $ 3,424,999 $ 3,117,919 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt.................... $ 121,317 $ 183,625 Payables, trade and other.......... 312,767 236,697 Accrued liabilities................ 408,308 332,041 ----------- ----------- Total current liabilities........ 842,392 752,363 Long-Term Debt....................... 196,771 130,982 Other Liabilities and Deferred Credits................... 197,405 178,219 ----------- ----------- Total liabilities................ 1,236,568 1,061,564 Shareholders' Equity................. 2,188,431 2,056,355 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................. $ 3,424,999 $ 3,117,919 =========== =========== AMP Incorporated & Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (June 30, 1994, Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report and Form 10-K, and Form 10-Q as of and for the three months ended March 31, 1994. The information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Second Quarter and First Half 1994 Set New Highs in Orders, Sales, and Earnings SECOND QUARTER 1994 Sales -- $1.004 billion, up 14% from $883 million in second quarter 1993, up 11% from $906 million in the first quarter of 1994 Earnings Per Share -- 91 cents/share, up 26% from 72 cents in the year-earlier quarter and 20% from 76 cents in first quarter 1994 Order Backlog -- Up $53 million during quarter to $625 million compared to $493 million at year-end 1993 and $559 million a year ago Employment -- Up 1,000 during quarter to record 28,200 SIX MONTHS Sales -- $1.91 billion, up 11% from $1.72 billion in first half 1993 Earnings per Share -- $1.67/share, up 18% from $1.41 in first half 1993 Capital Expenditures -- Record $190 million in first half; $375-400 million expected for entire year - ----------------------------------------------------------------------------- As with the first quarter, second quarter results were a little better than earlier expected. For the second quarter and first half, sales, margins, and profits increased in all regions over the year-earlier periods. We passed a historic one billion dollar milestone, with second quarter sales reaching $1.004 billion, up 14% over $883 million in the year-earlier quarter and up 11% over $906 million in the first quarter. An earlier sales milestone was reached in 1979 when ANNUAL sales set a new high of $1.013 billion. The new highs reflect the broadening economic recovery, the leverage in our basic terminal and connector business, the introduction of many new products, increased market share, and continued diversification into related product areas and relatively new geographic markets. We are now reaping the benefits of our extensive efforts in recent years to reduce costs, improve productivity and service, continue the steady flow of new products, diversify into value- added assemblies and related components, and expand into newly emerging geographic markets on a timely basis. Compared to the year-earlier period, second quarter sales were up 12% in the U.S., and up 16% in both local currencies and in U.S. dollars internationally. The weakening of the U.S. dollar from the first quarter to the second quarter increased second quarter sales by $17 million. If currency rates were to remain constant during the rest of 1994, the effect on international sales would be positive when compared to the year-earlier period and to the first half of this year. First half sales in the U.S. were up 11% -- with growth strongest in the automotive and communications markets. International sales were up 11% in both local currencies and U.S. dollars. European sales were up 12% in local currencies and 6% in U.S. dollars. Strongest markets were automotive and industrial/commercial electronics. Asia/Pacific sales were up 6% in local currencies and 14% in U.S. dollars. While Japanese sales were down very slightly for the entire six months, good growth was achieved in the second quarter over both the year-earlier and prior quarters. Strong, broad-based growth continued in the rest of the region. In the Americas (Canada and Latin America) sales were up 30%. The record second quarter earnings of 91 cents/share reflect the effects of both good sales gains and improved margins over the year-earlier (72 cents/share) and prior quarter (76 cents/share). OUTLOOK The outlook continues to improve. Because of the usual summer seasonal effects, sales and earnings will probably be slightly lower in the third quarter, and then could set new highs in the fourth quarter. AMP is fully participating in the broadening economic recovery in North America, Latin America, Europe, and Asia/Pacific. Economic recovery is underway in Europe and is just beginning in Japan. We expect our sales to grow this year in local currency terms between 10-15% in the U.S. (up 10% in 1993); about 10% in Europe (up 1% in 1993); 5-10% in the Asia/Pacific region (up 2% in 1993); and about 20% in the Americas (up 15% in 1993). Unless there is a significant change in economic conditions or currency rates, second half sales and earnings should be better than the record first half results. We are optimistic about growth prospects for the next few years. We believe we are entering a period of sustainable, low-inflation economic growth in most of the industrialized world, and continued rapid growth in world trade. The electrical/electronic markets we serve should continue to grow two to three times the Gross Domestic Product growth rate in most countries. Connectors and interconnection assemblies will play an increasingly critical role in the performance of electrical and electronic systems. We believe our goals are realistic; our strategies sound. Our growth goal is to increase sales better than 1 1/2 times the 6-9% annual rate expected for the connector industry under favorable economic conditions. Our profitability goals, given a reasonably good business environment, are 18-20% pretax margins and 20% return on shareholders' equity. Our strategies include maintaining our leadership in connectors; increasing the proportion of our business in total interconnection systems, value-added assemblies, and related electrical/electronic components; making more acquisitions and strategic alliances; and aggressively expanding into new geographic markets. ORGANIZATIONAL CHANGE New Financial Officer Added Robert M. Ripp, former Corporate Vice President and Treasurer of IBM, was elected Corporate Vice President-Finance. Mr. Ripp, age 53, held various operating and financial management positions during his 29 years with IBM. He will report to Benjamin Savidge, Executive Vice President and Chief Financial Officer. EXPANSION We continue to expand our facilities. In the U.S., construction has started on a new 180,000 sq. ft. engineering building in the Harrisburg, PA area; operations have begun in a 200,000 sq. ft. manufacturing plant in Greensboro, NC, to serve the U.S. automotive market, where we are experiencing rapid growth, and in a new panel assembly plant in Austin, TX; and facilities are being added in North Carolina for greater production capacity in cable and cable assemblies. Internationally, construction of a second plant in Korea is nearing completion and plans are progressing for additional plants in China and India and additional space in Japan. The immediate need for additional floor space is being moderated by closer regional management of the deployment of manufacturing resources, and by continuing progress toward maximization of multi-shift operations in many of our facilities where required and feasible. Over two-thirds of the record $375-400 million capital expenditures we expect this year will be for machinery, equipment, and systems to not only add capacity on many existing products, but also to tool up new products and improve quality, productivity, and delivery. ACQUISITIONS/ALLIANCES We continue to make acquisitions and alliances to speed our entry into new product and market areas and leverage our resources. In the past year we have made over a dozen acquisitions and minority equity interest investments. During the second quarter we announced four more minority equity position investments. ADFlex Solutions Inc. (Chandler, AZ), formerly part of Rogers Corp, is the leading U.S. provider of flexible circuits and flex-based assemblies. Sales are over $60 million; employment is 1900. Smartflex Systems, Inc. (Tustin, CA) is a leading supplier of intelligent electronic subsystems for OEMs, emphasizing surface mount technology and flexible circuit substrates--particularly for the hard disk and portable computer markets--and has pioneered the Chip-on-Flex technology. Sales exceed $70 million; employment is over 600. Intellon Corporation (Ocala, FL; 30 employees) is a leader in home automation control systems. Its Spread Spectrum Carrier technology implements the Electronic Industry Association's CEBus (Consumer Electronics Bus) technology standards on power line and radio frequency products. Powerflor, Inc. (Charlotte, NC; 20 employees) provides an innovative, low-profile, raised-floor cable management system that integrates modular carpeted floor panels with power and communications cabling and outlets for a total floor wiring system. AMP JOINS RECYCLING PARTNERSHIP AMP is a charter member of "Waste Wi$e," a voluntary partnership of 280 U.S. firms with the EPA aimed at reduction in the generation of solid waste, collection of recyclables, and buying of recycled goods. In 1993, AMP's U.S. operations recycled 3,500 tons of paper, cardboard, pallets, and skids. DIVIDEND ACTION On July 27, 1994 the Board of Directors declared a regular quarterly dividend of 42 cents/share payable September 1, 1994 to shareholders of record August 8, 1994. The current rate indicates an annual dividend of $1.68/share for 1994 compared to $1.60 in 1993, $1.52 in 1992, and $1.44 in 1991 -- the 41st consecutive annual increase. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits -- None. (B) Reports on Form 8-K -- There were no reports on Form 8-K filed for the three months ended June 30, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 12, 1994 AMP INCORPORATED (Registrant) By: /s/ B. Savidge __________________________________ B. Savidge Executive Vice President, Chief Financial Officer By: /s/ David C. Cornelius __________________________________ David C. Cornelius Controller -----END PRIVACY-ENHANCED MESSAGE-----