-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BZ+8iiBLdPWrjMFyPFC1vcjPzkxwnmyoYnlhm9Hs/6jhoigQiSZjzhdo3j13l3iL hQtWk0io1rkvpqxg1x1IGg== 0000006164-96-000016.txt : 19960515 0000006164-96-000016.hdr.sgml : 19960515 ACCESSION NUMBER: 0000006164-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMP INC CENTRAL INDEX KEY: 0000006164 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [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: 96563432 BUSINESS ADDRESS: STREET 1: P O 3608 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 1ST QUARTER 1996 10-Q TEXT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (mark one) [XX] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ ******************************** Commission File No. 1-4235 AMP INCORPORATED a Pennsylvania corporation (Exact name of registrant as specified in charter, and state of incorporation) ******************************** Employer Identification No. 23-0332575 Harrisburg, Pennsylvania 17105-3608 (Address of principal executive offices of registrant) (717) 564-0100 (Registrant's telephone number, including area code) ******************************** Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X]. NO [ ]. The number of shares of AMP Common Stock (without Par Value) outstanding at May 10, 1996 was 219,347,585. Includes an Exhibit Index. AMP Incorporated & Subsidiaries PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The Consolidated Statements of Income and the Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995, and the Consolidated Balance Sheets at March 31, 1996 and December 31, 1995, are presented below. See the notes to these condensed consolidated financial statements at the end thereof. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in thousands, except per share data) For the Three Months Ended March 31, 1996 1995(1) ----------- ----------- Net Sales .................... $ 1,362,975 $ 1,295,769 Cost of Sales ................ 932,585 874,857 ----------- ----------- Gross income ............. 430,390 420,912 Selling, General and Administrative Expenses ..... 245,429 228,212 ----------- ----------- Income from operations ... 184,961 192,700 Interest Expense ............. (7,982) (9,071) Other Income (Deductions), net 3,561 (14,137) ----------- ----------- Income before income taxes 180,540 169,492 Income Taxes ................. 64,092 64,177 ----------- ----------- Net Income ................... $ 116,448 $ 105,315 =========== =========== *Per Share - Net income...... $.53 $.48 Cash dividends....... $.25 $.23 *Weighted average number of shares.218,762,121 217,169,900 =========== =========== *Per share data and weighted average shares have been retroactively restated to reflect the 2-for-1 stock split on March 2, 1995. (1) Figures have been restated to reflect the pooling of interests with M/A-COM on June 30, 1995. AMP Incorporated & Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and Unaudited) (dollars in thousands) For the Three Months Ended March 31, 1996 1995(1) --------- --------- Cash and Cash Equivalents at January 1 ............... $ 212,538 $ 244,568 Operating Activities: Net Income ..................................... 116,448 105,315 Noncash adjustments - Depreciation and amortization ............... 98,303 83,748 Changes in operating assets and liabilities . (87,714) (67,642) Change in subsidiary's year-end ................ -- 3,164 Other, net ..................................... 24,517 9,845 --------- --------- Cash provided by operating activities ....... 151,554 134,430 ========= ========= Investing Activities: Additions to property, plant and equipment ..... (136,442) (143,561) Purchase of subsidiary - Net of cash and cash equivalents acquired ... (2,000) -- Other, net ..................................... (27,921) 219 --------- --------- Cash used for investing activities ............. (166,363) 143,342 --------- --------- Financing Activities: Changes in short-term debt ..................... 51,696 50,670 Additions to long-term debt .................... 1,312 10,466 Reductions of long-term debt ................... (11,491) (13,743) Purchases of treasury stock .................... (65) (112) Dividends paid ................................. (54,409) (48,261) Other, net ..................................... 108 409 --------- --------- Cash used for financing activities .......... (12,849) (571) --------- --------- Effect of Exchange Rate Changes on Cash .............. 930 6,929 --------- --------- Cash and Cash Equivalents at March 31 ................ 185,810 242,014 ========= ========= Changes in Operating Assets and Liabilities: Receivables .......................................... (72,878) (61,869) Inventories .......................................... (41,373) (18,468) Other current assets ................................. (23,326) (20,188) Payables, trade and other ............................ (3,143) (15,254) Accrued payrolls and benefits ........................ 35,361 28,741 Other accrued liabilities ............................ 17,645 19,396 --------- --------- (87,714) (67,642) ========= ========= Interest paid during the periods was approximately equal to amounts charged to expense. (1) Figures have been restated to reflect the pooling of interests with M/A-COM on June 30, 1995. AMP Incorporated & Subsidiaries CONSOLIDATED BALANCE SHEETS (Condensed, Unaudited) (dollars in thousands) March 31, December 31, 1996 1995 ---------- ---------- ASSETS Current Assets: Cash and cash equivalents ......... $ 185,810 $ 212,538 Securities available for sale ..... 60,453 58,197 Receivables ....................... 1,078,166 1,011,460 Inventories--- Finished goods and work in process ....................... 428,742 411,504 Purchased and manufactured parts 281,767 263,926 Raw materials ................... 93,213 87,373 ---------- ---------- Total inventories ............. 803,722 762,803 Other current assets .............. 247,993 232,910 ---------- ---------- Total current assets .......... 2,376,144 2,277,908 ---------- ---------- Property, Plant and Equipment ....... 4,439,242 4,352,026 Less - Accumulated depreciation ... 2,464,902 2,413,760 ---------- ---------- Property, plant and equipment, net .......................... 1,974,340 1,938,266 ---------- ---------- Investments and Other Assets ........ 305,409 288,565 ---------- ---------- TOTAL ASSETS ........................ $ 4,655,893 $4,504,739 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt ................... $ 369,082 $ 318,169 Payables, trade and other ......... 454,107 460,892 Accrued liabilities ............... 541,229 487,032 ---------- ---------- Total current liabilities ....... 1,364,418 1,266,093 Long-Term Debt ...................... 208,599 212,485 Other Liabilities and Deferred Credits .................. 258,125 258,133 ---------- ---------- Total liabilities ............... 1,831,142 1,736,711 Shareholders' Equity ................ 2,824,751 2,768,028 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................. $4,655,893 $4,504,739 ========== ========== AMP Incorporated & Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (March 31, 1996, Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report and Form 10-K. The information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HIGHLIGHTS - ---------- FIRST QUARTER 1996 SALES - Record $1.36 billion; up 5% from $1.30 billion in the year-earlier and fourth quarter 1995 EARNINGS - 53 cents/share; up 10% from 48 cents/share in first quarter 1995 and up slightly from the 52 cents/share in fourth quarter 1995 BOOKINGS - $1.41 billion, up from $1.24 billion in fourth quarter 1995 ORDER BACKLOG - Up $42 million during quarter to $1.04 billion EMPLOYMENT - Increased 1,050 during quarter to 41,850 through acquisitions and international expansion CAPITAL EXPENDITURES - $136 million in first quarter; total for year expected to be similar to $713 million in 1995 DIVIDEND ACTION On Wednesday, April 24, 1996, the Board of Directors declared a regular quarterly dividend of 25 cents per share, payable June 3, 1996 to holders of record May 6, 1996. The current indicated annual rate of $1.00 per share is up from 92 cents per share in 1995 and 84 cents in 1994 - and is the 43rd consecutive annual increase. ANNUAL MEETING REPORT - --------------------- The AMP Incorporated Annual Meeting was held April 24, 1996, at 10:30 a.m. at the AMP Incorporated Global Executive Leadership Center, 411 South 40th Street, Harrisburg, Pennsylvania. FORMAL BUSINESS Chairman James E. Marley stated that 81% of the stock was represented in person or by proxy. The following Directors were elected: D.F. Baker, H.A. McInnes, R.D. DeNunzio, J.J. Meyer, B.H. Franklin, J.C. Morley, J.M. Hixon, W.F. Raab, W.J. Hudson, P.G. Schloemer, J.E. Marley, and T. Shiina. Each of the directors received over 98% of the votes cast. NEWS RELEASE - ------------ A news release on current results and outlook was made Wednesday, April 24, 1996: SALES AND EARNINGS Sales rose 5% to a record $1.36 billion from the $1.30 billion of the year-earlier and prior quarters. The modest rate of growth reflects the effects of slow economic growth in the U.S., Japan, and Europe, and the slowdown in some of the markets we serve such as personal computers and cellular phones. In our Preliminary Year End Report in January, we stated that we expected sales growth to be rather modest in the first part of this year, and confirmed this expectation in a March 27, 1996 news release. Earnings of 53 cents/share were up 10% from 48 cents in the year-earlier quarter (restated to include M/A-COM) and up slightly from the 52 cents in the fourth quarter of 1995. This is closely in line with current analyst expectations. The strengthening of the U.S. dollar reduced first quarter sales $9 million from the year-earlier quarter and $17 million from the prior quarter. Exchange rates staying at current levels the rest of this year would reduce second quarter sales by over $50 million and the full year by approximately $125 million. The Americas, aided by solid growth in our Global Interconnect Business Group and M/A-COM operations, were up 10% in sales compared to the year-earlier first quarter. Sales in the U.S. (44% of the worldwide total) were up 10%. Sales growth in the U.S. was strongest in the automotive and communications markets. European sales (33% of the worldwide total) were up 2% in local currencies and up 4% in U.S. dollars. Strongest country growth was in Spain and Great Britain. Best sales growth by markets was in automotive, communications, and computer/office equipment. Asia/Pacific sales (18% of the worldwide total) grew 4% in local currencies and declined 3% in U.S. dollars. Strongest country growth was in China, Korea, and Singapore; strongest sales growth by markets was in communications and consumer goods. Still affected by slow economic growth, our sales in Japan were essentially flat. Pretax profit margins held steady despite continuing product price erosion, product mix changes, and higher costs - including unusually high weather-related costs. OUTLOOK We believe the outlook is for continued AMP growth during the rest of the year. We are assuming stronger economic growth in the U.S. and Japan, continued strong economic growth in the rest of the Asia/Pacific region, and modest economic growth in Europe. We expect an improved demand picture from markets we serve such as personal computers and cellular phones that have slowed in recent months and are apparently going through an inventory correction period. We also have a strong flow of new products and a growing contribution from the faster-growing businesses that we are building. Negative factors include continuing price erosion in the connector industry, reflecting intense global competition in the entire electronics industry, and the strengthening U.S. dollar, which reduces our international results when translated into dollars. We continue to expect earnings to grow faster than sales for the full year because of cost reduction efforts combined with the effects of improving margins at M/A-COM and the diminishing loss in our Global Interconnect Systems Business group where most of our product/market diversification is concentrated. We continue to build our capabilities for growth in pursuit of our Vision 2000 goal of $10 billion sales by the end of this decade. We are making good progress in our diversification into logically related product and market segments - areas such as cable and cable assemblies, printed circuit boards, panel assemblies, electro-optic products, networking/premises wiring products, sensors, and components for wireless communications systems. We are steadily expanding our presence in international markets - with companies now in 39 countries outside the U.S. We continue to spend heavily on research, development, and engineering (11% of sales for many years), and are achieving a steady flow of new products. For eight consecutive years AMP has been rated the top performing connector supplier in independent customer surveys. So looking beyond the current period of slow growth, we believe we have laid an excellent foundation for continued good longer-term growth assuming a reasonably favorable business environment during the rest of this decade. EXPANSION We now have over 15 million sq. ft. of floor space. Last year we increased floor space 2.6 million sq. ft. - partly through extensive expansion of AMP facilities and partly through acquisitions. Capital expenditures were a record $713 million up from $473 million in 1994. Expansion continues in the U.S. and several other countries in 1996, although the floor space likely to be added will be a more modest amount. Total capital spending in 1996 is expected to be similar to 1995 as we add more equipment to improve capacity, quality, and productivity and tool up new products. ACQUISITION In February we completed the pooling of interests with Madison Cable Corporation, a leading producer of computer cables, and issued 1.6 million AMP shares in an exchange of stock. ANNUAL MEETING Comments at the annual meeting included a review of 1995 by President and CEO William J. Hudson on our good growth in sales and earnings, significant expansion of our facilities and capabilities, and steady progress of our product/market diversification efforts. He was followed by brief reviews of M/A-COM by its President, Richard P. Clark, and of the home automation market by G. Russell Knerr, Vice President-AMP Building Systems. FORTUNE 500 RANKINGS (based on 1995 results) Overall** Electronics* --------- ------------ Sales ........................... 254 11 Net Income ...................... 170 10 Net Income as % of Sales (8.2%) . 145 18 Net Income as % of Assets (9.5%) 70 16 Net Income as % of Equity (15.4%) 202 22 10-Year Earnings Per Share Growth Rate (14.6%) ..... 78 11 *43 Companies **Now includes both industrial and service companies CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" - -------------------------------------------------------- Statements in this Report on Form 10-Q that are not strictly historical facts are "forward-looking" statements which should be considered as subject to uncertainties that exist in the Company's operations and business environment. These uncertainties which include economic and currency conditions, market demand and pricing, competitive and cost factors, and the like, are set forth in the Company's Report on Form 10-K for the year ended December 31, 1995 filed with the Securities and Exchange Commission on or about March 29, 1996. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS The Annual Meeting of Shareholders of AMP Incorporated was held on Wednesday, April 24, 1996 beginning at 10:30 a.m., local time, at the AMP Global Executive Leadership Center, 441 South Fortieth Street, Harrisburg, Pennsylvania. As of the record date (March 8, 1995) for the Annual Meeting, 219,313,134 shares of Common Stock were outstanding and entitled to vote. 178,671,101 shares, representing over 81% of the outstanding Common Stock eligible to vote, were represented at the Annual Meeting either in person or by proxy. * All of the directors of the Company, twelve in number, were elected at the Annual Meeting, each by an affirmative vote of at least 98% of the votes cast. The results of the vote tabulation for each director are as follows: Director Votes For Votes Withheld -------- --------- -------------- Dexter F. Baker ...... 177,878,976 792,125 Ralph D. DeNunzio .... 177,969,600 701,501 Barbara H. Franklin .. 177,990,806 680,295 Joseph M. Hixon III .. 177,997,662 673,439 William J. Hudson, Jr 177,974,462 696,639 James E. Marley ...... 178,003,351 667,750 Jerome J. Meyer ...... 177,966,901 704,200 Harold A. McInnes .... 177,880,064 791,037 John C. Morley ....... 177,892,091 779,010 Walter F. Raab ....... 177,832,511 838,590 Paul G. Schloemer .... 177,983,773 687,328 Takeo Shiina ......... 176,543,062 2,128,039 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits -- Exhibit Number Description ------- ----------- 10 - AMP Incorporated Management Incentive Plan (January 1, 1996 Restatement) 27 - Financial Data Schedule (B) Reports on Form 8-K -- There were no reports on Form 8-K for the three months ended March 31, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 1996 AMP INCORPORATED (Registrant) By: /s/ W. J. Hudson __________________________________ William J. Hudson Chief Executive Officer and President By: /s/ W. S. Urkiel __________________________________ William S. Urkiel Controller ** EXHIBIT INDEX ------------- Exhibit Number Description ------- ----------- 10 - AMP Incorporated Management Incentive Plan (January 1, 1996 Restatement) 27 - Financial Data Schedule EX-10 2 MANAGEMENT INCENTIVE PLAN AMP INCORPORATED (the "Corporation") Management Incentive Plan (the "Plan") For the purpose of (a) providing additional incentive to key employees to achieve a high level of performance, (b) attracting and retaining key employees, and (c) furthering the identity of interest of such employees with the business objectives of AMP Incorporated and its subsidiaries, the Corporation will pay a Cash Bonus to Participant pursuant to the terms and conditions of the Plan. This document is an amendment and restatement in its entirety of the Corporation's original Management Incentive Plan first adopted effective January 1, 1991. Article I. Definitions 1.1 "Annual Base Salary" means the aggregate base salary paid to Participant by the Corporation or any of its subsidiaries during the Designation Year. 1.2 "Bonus Certificate" means the document issued by the Corporation to a Participant relating to a Designation Year that specifies the Participant's Bonus Potential Range, Bonus Calculation Provision, Bonus Component Weighting, and Financial Measures Weighting for such year. 1.3 "Bonus Component Weighting" means the percentage weighting applied to those Corporate, Region, Business Unit, and Individual performance objectives applicable to Participant, as designated by the Committee and set forth on the Bonus Certificate. 1.4 "Bonus Computation Date" means the close of business of the Corporation on the 31st day of December of the Designation Year. 1.5 "Bonus Potential Range" means the range of percentages of Annual Base Salary (stated as a minimum, target, and a maximum) within which the Cash Bonus of Participant is to be computed based upon achievement of Corporate, Region, Business Unit and Individual performance objectives, as applicable and set forth on the Bonus Certificate. 1.6 "Business Unit" means the division, group or organization within the Corporation or subsidiary of the Corporation to which Participant is assigned, as set forth on the Bonus Certificate. 1.7 "Cash Bonus" means a cash bonus in the amount computed in accordance with the relevant Exhibit to this Plan, as designated by the Committee and set forth on the Bonus Certificate. Cash Bonus shall not exceed in the aggregate the Bonus Potential Range maximum percentage of Participant's Annual Base Salary as set forth on such Bonus Certificate. 1.8 "Committee" means the committee designated in Section 6.1 of the Plan. 1.9 "Designation Year" means the full calendar year with respect to which a Cash Bonus is computed under the Plan, as set forth on the Bonus Certificate. 1.10 "Distribution Date" means on or about the first day of March of the calendar year following the Bonus Computation Date. 1.11 "Financial Measures Weighting" means the percentage weighting applied to each Corporate, Region, and Business Unit financial measure applicable to Participant, as designated by the Committee and set forth on the Bonus Certificate. 1.12 "Minimum Performance Level" means the minimum actual Corporate, Region, Business Unit and individual performance results for the Designation Year, as so determined by the office of the Corporate Controller, that must be achieved in order for a Cash Bonus calculation to be made. 1.13 "Participant" means an employee of the Corporation or any of its subsidiaries who has been designated by the Committee to participate in the Plan. 1.14 "Region" means the geographic region or major global business sector under or within which Participant's Business Unit is maintained, as set forth on the Bonus Certificate. 1.15 "Termination of Employment" means the termination of employment by the Corporation or by a subsidiary as provided in Sections 5.2, 5.3, or 5.4, but not the transfer of employment from the Corporation to a subsidiary of the Corporation or vice versa or from one subsidiary of the Corporation to another such subsidiary. Article II. Designation 2.1 "Designation of a Participant" During or prior to the month of January each Designation Year, the Committee shall designate for the Designation Year (a) Participants in the Plan; (b) Bonus Potential Ranges and Performance Levels applicable to each such Participant; and (c) the Business Unit to which each Participant is assigned. Article III. Computation 3.1 "Computation of Cash Bonus" As promptly as practicable, but not later than on or about the 1st day of March after the end of the Designation Year, the Cash Bonus, if any, shall be computed as of the Bonus Computation Date, and the amount so determined shall be distributed to Participant in accordance with the provisions of the Plan. Article IV. Distribution of Bonus 4.1 "Distribution of Cash Bonus" The computed Cash Bonus shall be distributed in a single installment on the Distribution Date, subject to all the terms and conditions of the Plan. Article V. Transfer or Termination of Employment 5.1 "Transfer" If Participant is transferred during the Designation Year, and Participant remains an employee of the Corporation (or a subsidiary of the Corporation) for the entire Designation Year, Participant's Cash Bonus (to the extent based on Region/Business Unit Performance) shall be equal to the Cash Bonus for Region/Business Unit Performance paid by that Region/Business Unit to which Participant was assigned during the Designation Year that paid the largest Cash Bonus. 5.2 "Retirement, Death or Involuntary Termination of Employment Without Fault" If Termination of Employment occurs during or after the Designation Year, the Cash Bonus not paid to Participant prior to the date of such Termination of Employment, shall be distributed as follows: (a) In case of death, disability or illness of Participant, payment shall be made to the person or persons determined by the Committee and distribution to the person or persons designated by the Committee shall relieve the Corporation from any and all further responsibility under the Plan. (b) In case of retirement of Participant pursuant to the provisions of a retirement plan of the Corporation or because of reasons not of Participant's own choosing and not due to any fault on Participant's part, payment shall be made on the Distribution Date following Termination of Employment. 5.3 "Other Termination of Employment" In case of Termination of Employment of Participant during the Designation Year or after the end of the Designation Year but prior to the Distribution Date, except as provided in Section 5.2, Participant shall upon Termination of Employment have no rights whatsoever under this Plan to a Cash Bonus with respect to the Designation Year. Notwithstanding the foregoing sentence, however, the Committee may in its sole and absolute discretion authorize the computation and payment of such Participant's Cash Bonus or any portion thereof. 5.4 "Limitation on What Constitutes Termination of Employment" If the Committee in its sole and absolute discretion so determines, employment shall not be considered as terminated for purposes of Sections 5.2 or 5.3 of this Plan so long as Participant continues to perform services for the Corporation or a subsidiary thereof on either a full or part time basis either as an independent contractor or on a consulting basis. Article VI. Administration of Plan 6.1 "Committee" The Compensation and Management Development Committee of the Board of Directors of the Corporation shall administer the Plan and make all final decisions with respect thereto. The Committee shall have full power to construe and interpret the Plan and each provision thereof, and its constructions and interpretations shall be in all respects final, conclusive and binding upon all Participants and all persons claiming under or through them or under the Plan. Article VII. Miscellaneous 7.1 "Continuance of Employment" Nothing herein contained shall in any way restrict the right of the Corporation or any subsidiary thereof to terminate the employment of the Participant at any time or be construed as evidence of an agreement or understanding as to employment or continued employment in any position or at any rate of remuneration. 7.2 "Non-Alienation of Benefits" No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No right or benefit under the Plan shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If the Participant under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under the Plan, then such right or benefit shall, in the sole discretion of the Committee, cease and determine, and in such event, the Corporation may hold or apply the same or any part thereof for the benefit of the Participant, Participant's spouse, children, dependents, or other person(s), or any of them in such manner and in such proportion as the Committee may deem proper. 7.3 "Legal Holiday" If and when the date on which a distribution is to be made or other action is to be taken under the Plan falls on a Saturday, Sunday, or a legal holiday, such distribution shall be made on the next succeeding business day. 7.4 "Management, Accounting and Financial Decisions" Nothing in this Plan shall affect the authority of the management of the Corporation to make management, business, accounting and financial decisions concerning the Corporation, a Region, or any Business Unit, including, without limitation, decisions concerning write-offs, the timing of or recognition of income or loss, or changes in accounting principles. 7.5 "Corporate Restructuring, Product Line or Account Transfers" In the event of a restructuring of the Business Unit, or a transfer of product lines or accounts into or out of the Business Unit, or the addition or deletion of, or change in, any indirect sales program during a Designation Year, the Chief Financial Officer or Controller of the Corporation shall make any adjustments to the annual budget, forecast, and annual statement of income of the affected Region or Business Unit that may be necessary or appropriate to reflect those organizational changes, and any resultant adjustments, up or down, shall be deemed substituted where applicable into the Bonus Certificates of effected Participants and applied in making Cash Bonus calculations for such Designation Year. 7.6 "Non-Uniform Determinations" The Committee's determinations under this Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan, whether or not such persons are similarly situated. MIPPLAN.DOC Rev. (03/25/96) Exhibit A AMP INCORPORATED (the "Corporation") Management Incentive Plan (the "Plan") Bonus Calculation Provisions for Headquarters Personnel This Exhibit A to the Plan sets forth the bonus calculation provisions applicable to any Participant whose Cash Bonus is to be calculated in accordance with Exhibit A, as shown on the Bonus Certificate issued by the Corporation to Participant. All terms used in this Exhibit have the same meaning ascribed to them in the Plan and, for purposes of this Exhibit A, all terms and all calculations contained herein shall be expressed in U.S. dollars. Article VIII. Special Definitions 8.1 "AMP Value Added Percentage (AVA)" means an operating return on assets generated by the Corporation in the Designation Year, calculated as operating income divided by the average operating assets employed. Operating assets will normally include accounts receivable, inventory and property, plant and equipment. 8.2 "Discretionary Award Percentage" means an award percentage, not to exceed 100%, as determined by Participant's management, which indicates completion or attainment of individual performance objectives established between Participant and his/her management. 8.3 "Operating Income" means the amount of profit or loss by the Corporation in the Designation Year at the Operating Income line (i.e., sales less the cost of operations) as shown in the Management Reporting P&L Statement. Cost of operations will normally include all manufacturing, logistic, engineering, R&D, sales, marketing and general and administrative expenses. 8.4 "Trade Sales" means sales to trade customers by the Corporation in the Designation Year as reported to the Corporate Controller. These sales are to unaffiliated third parties and exclude all intercompany transfers of product (intercompany sales). 8.5 "Cash Bonus Percentage Corresponding to the Financial Measure Performance Level" shall be the Cash Bonus percentage determined as follows: For each applicable financial measure (e.g., AVA, Operating Income, or Trade Sales), the range of financial measure performance levels from the minimum financial measure performance level to the target financial measure performance level to the maximum financial measure performance level shall be mapped linearly onto the Participant's Bonus Potential Range from the minimum Cash Bonus percentage to the target Cash Bonus percentage to the maximum Cash Bonus percentage, with the minimum financial measure performance level corresponding to the minimum Cash Bonus percentage, the target financial measure performance level corresponding to the target Cash Bonus percentage, and the maximum financial measure performance level corresponding to the maximum Cash Bonus percentage. With respect to each applicable financial measure, performance for a Designation Year below the minimum financial measure performance level will result in a corresponding Cash Bonus percentage of 0%; performance for a Designation Year greater than or equal to the minimum financial measure performance level and less than or equal to the maximum financial measure performance level will result in a corresponding Cash Bonus percentage derived from the linear mapping described in the previous sentence; and performance for a Designation Year greater than the maximum financial measure performance level will result in a Cash Bonus percentage equal to the maximum Cash Bonus percentage. Article IX. Calculation of Cash Bonus 9.1 "Composition of Cash Bonus". The Cash Bonus may be comprised of two components as specified in the applicable Bonus Certificate: (a) a Cash Bonus component based on the Corporation's worldwide performance; and/or (b) a discretionary Cash Bonus component based on Participant's individual job performance. 9.2 "Calculation of Cash Bonus Percentage Based on Corporate Worldwide Performance". With respect to the Corporate Cash Bonus component, the Participant's Bonus Certificate shall specify the financial measures applicable to Participant for the Designation Year and the weighting to be applied to each. For each applicable financial measure, the Cash Bonus Percentage Corresponding to the Financial Measure Performance Level for the Designation Year shall be determined, such Cash Bonus percentage weighted based on the assigned weighting factor, and then further weighted by the Bonus Component Weighting factor shown on the Bonus Certificate. All such weighted Cash Bonus percentages shall be totaled to arrive at the aggregate Cash Bonus percentage for the Corporate Cash Bonus component. 9.3 "Calculation of Cash Bonus Component Based on Individual Performance". In addition, irrespective of the financial measure performance during the Designation year, the Committee shall have the power, in its absolute and sole discretion, to approve an award to any Participant a bonus to be determined as follows: Participant shall be awarded a Cash Bonus equal to the Discretionary Award Percentage times the maximum bonus award level times the Bonus Component Weighting for individual performance, as set forth on Participant's Bonus Certificate. 9.4 "Calculation of Cash Bonus". The total Cash Bonus award for the Designation Year shall be calculated as follows: Participant shall be awarded a Cash Bonus equal to Participant's Annual Base Salary times the sum of the Cash Bonus components for the Corporation's Worldwide Performance and Individual Performance. MIPEXA.DOC Rev. (03/25/96) Exhibit B AMP INCORPORATED (the "Corporation") Management Incentive Plan (the "Plan") Bonus Calculation Provisions for Regional/Business Unit Personnel This Exhibit B to the Plan sets forth the bonus calculation provisions applicable to any Participant whose Cash Bonus is to be calculated in accordance with Exhibit B, as shown on the Bonus Certificate issued by the Corporation to Participant. All terms used in this Exhibit have the same meaning ascribed to them in the Plan and, for purposes of this Exhibit B, all terms and all calculations contained herein shall be expressed in U.S. dollars. Article VIII. Special Definitions 8.1 "AMP Value Added Percentage (AVA)" means an operating return on assets generated by the Corporation, a Region, or a Business Unit (as applicable) in the Designation Year, calculated as operating income (adjusted for intercompany activity) divided by the average operating assets employed. Operating assets will normally include accounts receivable, inventory and property, plant and equipment. 8.2 "Discretionary Award Percentage" means an award percentage, not to exceed 100%, as determined by Participant's management, which indicates completion or attainment of individual performance objectives established between Participant and his/her management. 8.3 "Operating Income" means the amount of profit or loss by the Corporation, Region, or Business Unit (as applicable) in the Designation Year at the Operating Income line (i.e., sales less the cost of operations) as shown in the Management Reporting P&L Statement. Cost of operations will normally include all manufacturing, logistic, engineering, R&D, sales, marketing and general and administrative expenses. 8.4 "Sales Cost Ratio" means the percentage figure that results from dividing the Business Unit's actual total selling costs by total billings generated by the Business Unit in the Designation Year as reported to the Corporate Controller. 8.5 "Trade Sales" means sales to trade customers by the Corporation, Region, or Business Unit (as applicable) in the Designation Year as reported to the Corporate Controller. These sales are to unaffiliated third parties and exclude all intercompany transfers of product (intercompany sales). 8.6 "Cash Bonus Percentage Corresponding to the Financial Measure Performance Level" shall be the Cash Bonus percentage determined as follows: For each applicable financial measure (e.g., AVA, Operating Income, Trade Sales, or Sales Cost Ratio), the range of financial measure performance levels from the minimum financial measure performance level to the target financial measure performance level to the maximum financial measure performance level shall be mapped linearly onto the Participant's Bonus Potential Range from the minimum Cash Bonus percentage to the target Cash Bonus percentage to the maximum Cash Bonus percentage, with the minimum financial measure performance level corresponding to the minimum Cash Bonus percentage, the target financial measure performance level corresponding to the target Cash Bonus percentage, and the maximum financial measure performance level corresponding to the maximum Cash Bonus percentage. With respect to each applicable financial measure, performance for a Designation Year below the minimum financial measure performance level will result in a corresponding Cash Bonus percentage of 0%; performance for a Designation Year greater than or equal to the minimum financial measure performance level and less than or equal to the maximum financial measure performance level will result in a corresponding Cash Bonus percentage derived from the linear mapping described in the previous sentence; and performance for a Designation Year greater than the maximum financial measure performance level will result in a Cash Bonus percentage equal to the maximum Cash Bonus percentage. Article IX. Calculation of Cash Bonus 9.1 "Composition of Cash Bonus". The Cash Bonus may be comprised of up to four components as specified in the applicable Bonus Certificate: (a) a Cash Bonus component based on the Corporation's worldwide performance; and/or (b) a Cash Bonus component based on the Region's performance; and/or (c) a Cash Bonus based on the Business Unit's performance; and/or (d) a discretionary Cash Bonus component based on Participant's individual job performance. 9.2 "Calculation of Cash Bonus Components Based on Corporate Worldwide or Region or Business Unit Performance". With respect to each Cash Bonus component (i.e., Corporate, Region or Business Unit), the Participant's Bonus Certificate shall specify the financial measures applicable to Participant for the Designation Year and the weighting to be applied to each. For each applicable financial measure, the Cash Bonus Percentage Corresponding to the Financial Measure Performance Level for the Designation Year shall be determined, such Cash Bonus percentage weighted based on the assigned weighting factor, and then further weighted by the applicable Bonus Component Weighting factor shown on the Bonus Certificate. All such weighted Cash Bonus percentages shall then be totaled to arrive at the aggregate weighted Cash Bonus percentage for the Cash Bonus component. 9.3 "Calculation of Cash Bonus Component Based on Individual Performance". In addition, irrespective of the financial measure performance during the Designation Year, the Committee shall have the power, in its absolute and sole discretion, to approve an award to any Participant a bonus to be determined as follows: Participant shall be awarded a Cash Bonus equal to the Discretionary Award Percentage times the maximum bonus award level times the Bonus Component Weighting for individual performance, as set forth on Participant's Bonus Certificate. 9.4 "Calculation of Cash Bonus". The total Cash Bonus award for the Designation Year shall be calculated as follows: Participant shall be awarded a Cash Bonus equal to Participant's Annual Base Salary times the sum of the Cash Bonus components for the Corporation's Worldwide Performance, Region and/or Business Unit Performance, and Individual Performance. MIPEXB.DOC Rev. (03/25/96) Exhibit C AMP INCORPORATED (the "Corporation") Management Incentive Plan (the "Plan") Bonus Calculation Provisions for Global Strategic Planning Committee Personnel This Exhibit C to the Plan sets forth the bonus calculation provisions applicable to any Participant whose Cash Bonus is to be calculated in accordance with Exhibit C, as shown on the Bonus Certificate issued by the Corporation to Participant. All terms used in this Exhibit have the same meaning ascribed to them in the Plan and, for purposes of this Exhibit C, all terms and all calculations contained herein shall be expressed in U.S. dollars. Article VIII. Special Definitions 8.1 "EPS" means the Corporation's worldwide earnings per share as shown in the Corporation's Annual Report to Shareholders for the Designation Year, such EPS arising solely from income from continuing operations. Excluded therefrom are net income or loss from investments accounted for by the equity method, any income or loss from discontinued operations, and any extraordinary gain or loss; provided that the foregoing exclusions are deemed to be of material significance by the Committee. 8.2 "Discretionary Award Percentage" means an award percentage, not to exceed 100%, as determined by Participant's management, which indicates completion or attainment of individual performance objectives established between Participant and his/her management. 8.3 "Cash Bonus Percentage Corresponding to the EPS Performance Level" shall be the Cash Bonus percentage determined as follows: For the EPS measure, the range of performance levels from the minimum EPS performance level to the target EPS performance level to the maximum EPS performance level shall be mapped linearly onto the Participant's Bonus Potential Range from the minimum Cash Bonus percentage to the target Cash Bonus percentage to the maximum Cash Bonus percentage, with the minimum EPS performance level corresponding to the minimum Cash Bonus percentage, the target EPS performance level corresponding to the target Cash Bonus percentage, and the maximum EPS performance level corresponding to the maximum Cash Bonus percentage. Performance for a Designation Year below the minimum EPS performance level will result in a corresponding Cash Bonus percentage of 0%; performance for a Designation Year greater than or equal to the minimum EPS performance level and less than or equal to the maximum EPS performance level will result in a corresponding Cash Bonus percentage derived from the linear mapping described in the previous sentence; and performance for a Designation Year greater than the maximum EPS performance level will result in a Cash Bonus percentage equal to the maximum Cash Bonus percentage. Article IX. Calculation of Cash Bonus 9.1 "Composition of Cash Bonus". The Cash Bonus may be comprised of two components as specified in the applicable Bonus Certificate: (a) a Cash Bonus component based on the Corporation's EPS performance; and/or (b) a discretionary Cash Bonus component based on Participant's individual job performance. 9.2 "Calculation of Cash Bonus Component Based on Corporate EPS Performance". The Cash Bonus Percentage Corresponding to the EPS Performance Level for the Designation Year shall be determined, and then such Cash Bonus percentage weighted by the Bonus Component Weighting factor shown on the Bonus Certificate to arrive at the Cash Bonus percentage for the Corporate EPS Cash Bonus component. 9.3 "Calculation of Cash Bonus Component Based on Individual Performance". In addition, irrespective of the Corporate EPS performance during the Designation year, the Committee shall have the power, in its absolute and sole discretion, to approve an award to any Participant a bonus to be determined as follows: Participant shall be awarded a Cash Bonus equal to the Discretionary Award Percentage times the maximum bonus award level times the Bonus Component Weighting for individual performance, as set forth on Participant's Bonus Certificate. 9.4 "Calculation of Cash Bonus". The total Cash Bonus award for the Designation Year shall be calculated as follows: Participant shall be awarded a Cash Bonus equal to Participant's Annual Base Salary times the sum of the Cash Bonus components for the Corporation's EPS Performance and Individual Performance. MIPEXC.DOC Rev. (04/01/96) AMP INCORPORATED (the "Corporation") MANAGEMENT INCENTIVE PROGRAM (the "Plan") BONUS CERTIFICATE for MIN TARGET MAX --- ------ --- BONUS POTENTIAL RANGE: % % % PERFORMANCE LEVEL: 90% 100% 120% (% of Target) REGION: BUSINESS UNIT: BONUS CALCULATION PROVISION Exhibit _ DESIGNATION YEAR 1996 - -------------------------------------------------------------------------------- BONUS COMPONENT WEIGHTING CORPORATE: % REGION: % BUSINESS UNIT: % INDIVIDUAL PERFORMANCE: % - -------------------------------------------------------------------------------- FINANCIAL MEASURES WEIGHTING CORPORATE REGION BUSINESS UNIT This Bonus Certificate evidences that the Committee has designated you as a Participant under the Plan and has also designated the above as applicable to participation hereunder, subject, however, to written acceptance hereof by such Participant as hereinafter provided. Date:_________________ AMP Incorporated By:___________________________ Participant hereby acknowledges receipt of this Bonus Certificate and accepts the designation as a Participant under and subject to all the terms and conditions set forth in said Plan. Participant further acknowledges the applicability of the provisions and obligations under the Limited Non-Competition Agreement, which has either been signed by Participant concurrently herewith, or has been signed by Participant heretofore and Participant acknowledges that said agreement continues to be in effect. ___________________________ Participant EX-27 3 FDS FOR 3-MOS 1996 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S 1996 FIRST QUARTER REPORT TO SHAREHOLDERS AND IS QUALIFIED BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 MAR-31-1996 185,810 60,453 1,078,166 0 803,722 2,376,144 4,439,242 2,464,902 4,655,893 1,364,418 0 80,647 0 0 2,744,104 4,655,893 1,362,975 1,362,975 932,585 932,585 0 0 7,982 180,540 64,092 116,448 0 0 0 116,448 .53 .53
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