-----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, B8BRHrHQUsI9/1F1g2lXnx8SxzpvOgJmPofUFQPTpFj3Nj/FsfOCAAeB+meMSjsI U5Bi17dIZqYUzkr/xccFGA== 0000006164-99-000010.txt : 19991229 0000006164-99-000010.hdr.sgml : 19991229 ACCESSION NUMBER: 0000006164-99-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980518 DATE AS OF CHANGE: 19991228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMP INC CENTRAL INDEX KEY: 0000006164 STANDARD INDUSTRIAL CLASSIFICATION: 3678 IRS NUMBER: 230332575 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04235 FILM NUMBER: 99779095 BUSINESS ADDRESS: STREET 1: P O 3608 CITY: HARRISBURG 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 1998 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, 1998 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 (Exact Name of Registrant as Specified in Charter) ******************************** Commonwealth of Pennsylvania 23-0332575 (State or Other Jurisdiction of Incorporation IRS Employer Identification No. or Organization) Harrisburg, Pennsylvania 17105-3608 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (717) 564-0100 ******************************** 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 12, 1998 was 219,416,099 (excluding shares held in the treasury of the Corporation, all of which are issued but not outstanding and are not entitled to vote). 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, 1998 and 1997, and the Condensed Consolidated Balance Sheets at March 31, 1998 and December 31, 1997, are presented below. See the notes to these condensed consolidated financial statements at the end thereof. AMP Incorporated & Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in thousands, except per share data) For the Three Months Ended March 31, 1998 1997 ---------- ---------- Net Sales .................... $1,394,889 $1,392,867 Cost of Sales (see Note 2).... 958,971 970,963 ---------- ---------- Gross income ............. 435,918 421,904 Selling, General and Administrative Expenses (see Note 2) ........... 275,879 261,235 ---------- ---------- Income from operations ... 160,039 160,669 Interest Expense ............. (7,898) (8,098) Other Income (Deductions), net (176) (2,457) ---------- ---------- Income before income taxes 151,965 150,114 Income Taxes ................. 49,389 48,786 ---------- ---------- Net Income before cumulative.. effect of accounting changes $ 102,576 $ 101,328 Cumulative Effect of Accounting Changes, (see Note 2)..... - 15,450 =========== =========== Net income.................... $ 102,576 $ 116,778 =========== =========== Basic and Diluted Per Share Earnings: Net income before cumulative effect of accounting changes 47 cents 46 cents Cumulative Effect of Accounting Changes .................. - cents 7 cents Net income.................... 47 cents 53 cents Cash dividends................ 27 cents 26 cents =========== =========== The accompany Notes to Condensed Consolidated Financial Statements are an integral part of these statements. AMP Incorporated & Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and Unaudited) (dollars in thousands) For the Three Months Ended March 31, 1998 1997 --------- --------- Cash and Cash Equivalents at January 1 ............... $350,320 $223,779 Operating Activities: Net Income ..................................... 102,576 116,778 Non-cash items - Depreciation and amortization ............... 102,023 109,443 Cumulative effect of accounting changes (see Note 2) -- (22,889) Changes in operating assets and liabilities . (62,437) (32,372) Other, net ..................................... (6,485) (5,078) ------- ------- Cash provided by operating activities ....... 135,677 165,882 ======= ======= Investing Activities: Additions to property, plant and equipment ..... (107,162) (120,956) Other, net ..................................... 12,105 16,059 -------- -------- Cash used for investing activities .......... (95,057) (104,897) -------- -------- Financing Activities: Changes in short-term debt ..................... (12,336) (13,136) Additions to long-term debt .................... 23,409 19,071 Reductions of long-term debt ................... (27,507) (9,302) Purchases of treasury stock .................... (17,944) -- Dividends paid ................................. (59,201) (57,039) ------- ------- Cash used for financing activities .......... (93,579) (60,406) ------- ------- Effect of Exchange Rate Changes on Cash .............. (2,791) (6,904) ------- ------- Cash and Cash Equivalents at March 31 ................ $294,570 $217,454 ======= ======= Changes in Operating Assets and Liabilities: Receivables .......................................... (4,063) (71,560) Inventories .......................................... (42,715) (1,829) Other current assets ................................. (1,814) 6,729 Payables, trade and other ............................ (35,331) (13,180) Accrued payrolls and benefits ........................ 35,218 22,578 Other accrued liabilities ............................ (13,732) 24,890 ------- ------- (62,437) (32,372) ======= ======= Interest paid during the periods was approximately equal to amounts charged to expense. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. AMP Incorporated & Subsidiaries CONSOLIDATED BALANCE SHEETS (condensed) - - ------------------------------------------------------------------------------- (dollars in thousands) March 31, December 31, 1998 1997 - - ------------------------------------------------------------------------------- ASSETS (Unaudited) Current Assets: Cash & cash equivalents ........... $ 294,570 $ 350,320 Securities available for sale ..... 89,763 79,350 Receivables ....................... 1,044,297 1,051,422 Inventories -- Finished goods & work in process. 520,696 491,688 Purchased and manufactured parts. 302,988 314,375 Raw materials.................... 115,527 102,156 ---------- ---------- Total inventories................ 939,211 908,219 Other Current Assets............... 273,199 260,489 ---------- ---------- Total current assets............. 2,641,040 2,649,800 ---------- ---------- Property, Plant and Equipment ....... 4,640,794 4,627,419 Less-Accumulated depreciation ..... 2,752,104 2,711,434 ---------- ---------- Property, plant & equipment, net .......................... 1,888,690 1,915,985 ---------- ---------- Investments and Other Assets ........ 284,482 282,318 ---------- ---------- TOTAL ASSETS ........................ $4,814,212 $4,848,103 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt ................... $ 445,433 $ 465,233 Payables, trade and other ......... 450,860 487,863 Accrued liabilities ............... 534,624 492,200 ---------- ---------- Total current liabilities ....... 1,430,917 1,445,296 Long-Term Debt ...................... 153,122 159,695 Other Liabilities and Deferred Credits .................. 281,276 291,577 ---------- ---------- Total liabilities ............... 1,865,315 1,896,568 Shareholders' Equity ................ 2,948,897 2,951,535 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................. $4,814,212 $4,848,103 ========== ========== The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. AMP Incorporated & Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (March 31, 1998, Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated 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. The following table presents a reconciliation of the shares used to calculate earnings per share as well as per share amounts: For the Three Months Ended March 31,: - - ------------------------------------------------------------------------------ 1998 1997 - - ------------------------------------------------------------------------------ Shares EPS Shares EPS Basic Calculation 219,639,946 $0.47 219,602,584 $0.53 Dilutive Securities - Primarily Options 473,263 329,070 - - ------------------------------------------------------------------------------ Diluted Calculation 220,113,209 $0.47 219,931,654 $0.53 ============================================================================== 2. ACCOUNTING CHANGES Effective January 1, 1998, AMP Incorporated, the United States parent company of AMP Incorporated and Subsidiaries (the "Company"), consolidated the majority of its operating divisions and reorganized into functional organizations, including manufacturing, materials management, engineering and finance. As a result of this change, certain manufacturing administrative functions are now included in general and administrative expenses, a classification which is consistent with the Company's subsidiaries. The prior period amounts have been reclassified to provide for consistent data comparisons. In the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). For interim periods, SFAS No. 130 permits footnote presentation of a description of the impact of SFAS No. 130 on the Company, total comprehensive income, any material components of total comprehensive income for the periods presented and cumulative other comprehensive income. Under SFAS No. 130, comprehensive income is defined as the total of net income and all other non-owner changes in equity. The Company's non-owner changes in equity include: unrealized holding gains/losses on securities classified as available-for-sale under FASB Statement No. 115 and foreign currency translation adjustments accounted for under FASB Statement No. 52. The adoption of SFAS No. 130 involves new disclosure requirements only and did not impact the reported financial position or results of operations. Total comprehensive income and its components are as follows: For the Three Months Ended: March 31, 1998 March 31, 1997 --------------------------------------- Net Income $102,576 $116,778 Unrealized gains/(losses) on securities 3,750 (3,823) Cumulative translation adjustment (36,682) (56,332) --------------------------------------- Total comprehensive income $ 69,644 $ 56,623 ======================================= Cumulative other comprehensive income was ($6,226) and $26,706 at March 31, 1998 and December 31, 1997, respectively. During the first quarter of 1997, the Company made two changes to the accounting practices used to develop its inventory costs. The first change was made to standardize globally the definition of capacity used to determine volume assumptions for overhead rates. The new definition more properly reflects the Company's objectives for plant and equipment utilization and provides for consistent measurements of AMP facilities. In an effort to provide increased focus on engineering efforts for both product development and manufacturing cost reductions, the Company also changed its inventory costing methodology to include manufacturing engineering costs in the inventory costs. Previously, these costs were expensed in the period incurred and included in Cost of Sales on the Consolidated Statement of Income. The net benefit of the preceding changes in accounting for inventory of $15.5 million, or $.07 per share, was presented as a cumulative effect of accounting changes on the Consolidated Statement of Income for the three months ended March 31, 1997.
AMP Incorporated & Subsidiaries RECLASSIFIED CONSOLIDATED STATEMENTS OF INCOME 1997 (Unaudited) (dollars in thousands except Quarter 1 Quarter 2 Quarter 3 Quarter 4 per share data) 1997 1997 1997 1997 ============================================================================================================ Net Sales $ 1,392,867 $ 1,468,005 $ 1,432,600 $1,451,763 Cost of Sales 970,963 995,617 954,530 975,133 ----------- ----------- ------------ ---------- Gross income 421,904 472,388 478,070 476,630 30.3% 32.2% 33.4% 32.8% Selling, General and Administrative Expenses 261,235 283,105 284,176 274,703 18.8% 19.3% 19.8% 18.9% Restructuring & One-time (Credits) -- -- -- (21,338) ----------- ----------- ------------ ---------- Income from operations 160,669 189,283 193,894 223,265 Interest Expense (8,098) (8,964) (8,098) (6,683) Other Income (Deductions), net (2,457) (21,366) (5,640) (27,820) ----------- ----------- ------------ ---------- Income before income taxes 150,114 158,953 180,156 188,762 Income Taxes 48,786 51,660 58,551 61,348 ----------- ----------- ------------ ---------- Net Income before Cumulative Effect of Accounting Changes $ 101,328 $ 107,293 $ 121,605 $ 127,414 ========== ========== ============ ========== Cumulative Effect of Accounting Changes $ 15,450 $ -- $ -- $ -- ========== ========== ============ ========== Net Income $ 116,778 $ 107,293 $ 121,605 $ 127,414 ========== ========== ============ ========== BASIC AND DILUTED EPS DATA: Net Income before Cumulative Effect of Accounting Changes $ 0.46 $ 0.49 $ 0.55 $ 0.58 Cumulative Effect of Accounting Changes $ 0.07 $ -- $ -- $ -- ----------- ---------- ------------ ---------- Net Income $ 0.53 $ 0.49 $ 0.55 $ 0.58 ========== ========== ============ ========== 1996 (Unaudited) (dollars in thousands except Quarter 1 Quarter 2 Quarter 3 Quarter 4 per share data) 1996 1996 1996 1996 ============================================================================================================ Net Sales $ 1,362,975 $ 1,365,487 $ 1,336,233 $1,403,333 Cost of Sales 915,360 930,839 929,586 1,058,529 ----------- ----------- ------------ ---------- Gross income 447,615 434,648 406,647 344,804 32.8% 31.8% 30.4% 24.6% Selling, General and Administrative Expenses 262,654 260,108 250,371 259,875 19.3% 19.0% 18.7% 18.5% Restructuring & One-time Charges -- -- -- 98,000 ----------- ----------- ------------ ---------- Income from operations 184,961 174,540 156,276 (13,071) Interest Expense (7,982) (8,166) (7,959) (7,049) Other Income (Deductions), net 3,561 7,132 (3,520) (40,415) ----------- ----------- ------------ ---------- Income before income taxes 180,540 173,506 144,797 (60,535) Income Taxes 64,092 57,885 49,955 (20,608) ----------- ----------- ------------ ---------- Net Income $ 116,448 $ 115,621 $ 94,842 $ (39,927) =========== ========== ============ ========== Basic and Diluted EPS 0.53 $ 0.53 $ 0.43 $ (0.18) =========== ========== ============ ========== Includes a charge to net income of $17.7 million to establish a litigation reserve. Represents a favorable adjustment to reduce the Restructuring reserve established in 1996. Includes a $26 million charge to write-down certain equity investments. Restrucuring and One-time Charges were recorded in the fourth quarter of 1996 related to the Company exiting certain facilities and product lines, as well as equity ventures. The charges were recorded in the Consolidated Statement of Income as follows: $62.5 million to Cost of Sales, $98 million to Restructuring and One-time Charges and $34.5 million to Other Income/(Deductions). This statement reflects the reclassification of certain expenses from cost of sales to selling, general and administrative expenses to be consistent with the current year presentation as noted in Footnote 2 to the Consolidated Statements of Income for the 3 months ended March 31, 1998 and 1997 included in this Report on Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales for the first quarter of 1998 were $1.395 billion, essentially flat with 1997. On a local currency basis, sales were up 4.1%. The continued strength of the U.S. dollar reduced sales approximately $55 million from the year-earlier quarter. Bookings for the first quarter were $1.426 billion, down 1.7% in U.S. dollars and up 2.3% in local currencies from the $1.451 billion in the year-earlier quarter. The Company's order backlog increased $26 million to $970 million from $944 million at the end of 1997. Sales in the Americas, approximately 50% of total sales, were down 1% from the year-earlier quarter. Driven by weakness in the Communications and Personal Computer markets, sales in the United States were down 2%. United States sales in the first quarter of 1997 included approximately $22 million for businesses discontinued last year. Normalized for these discontinued businesses, U.S. sales grew 1%. The rest of the Americas, led by Canada and Argentina, posted double- digit growth in local currencies and 8.8% growth in U.S. dollars. Asia/Pacific sales, approximately 18% of total sales, were up 2% in local currencies and down 5% in U.S. dollars. Taiwan, Singapore, China and Hong Kong experienced double-digit local currency growth driven by the Personal Computer and Business and Retail Equipment markets, while sales in Japan were down 5% in local currencies. Europe, Middle East and Africa sales, approximately 32% of total sales, were up 13% in local currencies and 6% in U.S. dollars. Led by the Communications and Motor Vehicles markets, growth was strong in most countries. Gross income increased to 31.3% of net sales for the quarter ended March 31, 1998, up from 30.3% in the year-earlier quarter. The increase in gross margin was primarily due to the benefits of ongoing cost reduction programs. Selling, general and administrative expenses (S,G&A) for the quarter ended March 31, 1998 of 19.8% of net sales represent an increase from 18.8% in the year-earlier quarter. The increase in S,G&A expenses is related to additional investments in information systems and sales deployment. Net income for the first quarter of 1998 was $102.6 million, up $1.3 million from $101.3 million before the cumulative effect of the accounting changes in the year-earlier quarter. Basic and diluted earnings per share were $0.47, up 2.2% compared to $0.46 before the cumulative effect of accounting changes in the first quarter 1997. First quarter 1997 net income, after the cumulative effect of accounting changes, was $116.8 million or $0.53 per share. Capital expenditures for the first quarter 1998 were $107.1 million, down 11.5% from $121.0 million in the prior year first quarter. The Company continues to focus on improving existing asset utilization and productivity. Capital expenditures for 1998 are expected to be below $600 million, up from the 1997 capital expenditures of $481 million. OUTLOOK As a result of the April 1998 operating earnings falling short of expectations, the Company is expecting the financial results for the second quarter to be below prior year levels for the same comparable period. April sales were down about 7% in U.S. dollars and down 4% in local currencies. Sales are weak in both Asia/Pacific and the United States and the trend primarily relates to the computer and communications markets. The Company is finalizing comprehensive action plans to stimulate sales growth and to improve manufacturing effectiveness. The specific plans will be communicated by the time we report the results for the second quarter. CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" - - ------------------------------------------------------- Statements in this Report on Form 10-Q that are not strictly historical are "forward-looking" statements which should be considered as subject to the many 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 AMP Report on Form 10-K for the year ended December 31, 1997 filed with the Securities and Exchange Commission on or about March 30, 1998. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in quantitative and qualitative disclosures in 1998. Reference is made to Item 7A in the Annual Report on Form 10-K for the year ended December 31, 1997. 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 22, 1998 beginning at 10:30 a.m., local time, at the AMP Global Executive Leadership Center, 441 South 40th Street, Harrisburg, Pennsylvania. As of the record date (March 3, 1998) for the Annual Meeting, 219,559,875 shares of Common Stock were outstanding and entitled to vote. 197,113,256 shares, representing over 89.7% 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, eleven in number, were elected at the Annual Meeting, each by an affirmative vote of at least 99.2% of the votes cast. The results of the vote tabulation for each director are as follows: Director Votes For Votes Withheld -------- --------- -------------- Ralph D. DeNunzio ...... 195,693,785 1,419,471 Barbara H. Franklin .... 195,668,033 1,445,223 Joseph M. Hixon III .... 195,657,682 1,455,574 William J. Hudson, Jr... 195,663,075 1,450,181 Joseph M. Magliochetti.. 195,714,322 1,398,934 James E. Marley ........ 195,718,112 1,395,144 Harold A. McInnes ...... 195,615,887 1,497,369 Jerome J. Meyer ........ 195,731,714 1,381,542 John C. Morley ......... 195,713,745 1,399,511 Paul G. Schloemer ...... 195,640,809 1,472,447 Takeo Shiina ........... 195,703,772 1,409,484 The proposal for shareholder approval of the Company's 1998 Employee Stock Purchase Plan, a plan intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended, and under which eligible employees of the Company and its subsidiaries throughout the world will have the opportunity to purchase the Company's common stock through payroll deductions and at a discount from market price, was approved by an affirmative vote of more than 98.4% of the votes cast and more than 98.0% of the quorum for the Annual Meeting. On this matter, which was deemed a routine proposal under the rules of The New York Stock Exchange, 193,323,371 votes were for the proposal, 3,042,770 votes were against, and 747,115 votes abstained. Abstentions were not counted as votes cast but were included in the quorum. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits -- Exhibit Number Description ------- ----------- 10 - Fourth Amendment to the Pension Restoration Plan, effective as of January 1, 1998 27 - Financial Data Schedule (B) Reports on Form 8-K -- No Report on Form 8-K was filed by the Company during the three months ended March 31, 1998. 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 15, 1998 AMP INCORPORATED (Registrant) By: /s/ W. S. Urkiel ____________________________________________ William S. Urkiel Vice President and Chief Financial Officer By: /s/ Mark E. Lang ____________________________________________ Mark E. Lang Corporate Controller ** EXHIBIT INDEX ------------- Exhibit Number Description ------- ----------- 10 - Fourth Amendment to the Pension Restoration Plan, effective as of January 1, 1998 27 - Financial Data Schedule EX-10 2 FOURTH AMENDMENT TO THE PENSION RESTORATION PLAN FOURTH AMENDMENT to the AMP INCORPORATED PENSION RESTORATION PLAN The AMP Incorporated Pension Restoration Plan (January 1, 1995 Restatement), as heretofore amended on three occasions, is hereby further amended as set forth below. 1. Effective for Retirements Dates after January 1, 1998, Section 6.1 of the Plan is amended to provide as follows: SECTION 6 AMOUNT AND PAYMENT OF BENEFIT 6.1 Effective for Retirement Dates that occur after January 1, 1998, a Retiree's monthly accrued benefit under this Plan shall have a value on a pre-tax basis that is equal to the difference between A and B, where A is the monthly accrued benefit the Retiree would have been entitled to receive under the pension provisions of the Pension Plan (a) disregarding any reductions or restrictions on such benefit as a result of the Code Limitations, (b) using as the annual earnings measurement periods for Plan purposes the twelve consecutive calendar months that end on a relevant benefit computation date and the nine prior such twelve-month periods, (c) including as earnings attributable to an annual earnings measurement period both base earnings and annual cash bonus amounts paid or payable in the measurement period (without regard to whether a portion of such base earnings or cash bonus amounts have been deferred under the terms of the AMP Incorporated or Whitaker Corporation Deferred Compensation Plan or under any AMP-sponsored plan complying with the provisions of Sections 401(k) or 125 of the Code), (d) determining final 3-year average earnings by reference to the three such measurement periods that have the highest annual earnings totals, without regard to whether the periods are consecutive, and (e) augmenting a Retiree's credited years of service with any additional credit years of service granted to the Retiree for Plan purposes by written employment agreement, and B is the monthly accrued benefit actually payable to the Retiree under the Pension Plan. 2. Effective January 1, 1998, Exhibit A is hereby amended to add certain individuals as Eligible Employees for Plan purposes. As of such date, the Exhibit A attached to this Amendment shall replace and become Exhibit A for purposes of the Plan. Executed this 14th day of May, 1998. AMP Incorporated /s/ W. J. Hudson By:___________________________________ President & CEO Title:________________________________ APPENDIX A The following are Employees for purposes of the Plan on and after the indicated effective date: Eligibility Name SSAN Effective Status Date Hudson, W. J. 01/01/89 Active Marley, J. E. 01/01/89 Active Cole, H. 12/31/93 Active Dalrymple, T. 12/31/93 Retired Drysdale, K. 12/31/93 Active Gassner, R. 12/31/93 Active Goonrey, C. 12/31/93 Active Guarneschelli, P 12/31/93 Retired Gurski, J. 12/31/93 Active Hassan, J. 10/01/93 Active Kastel, A. 12/31/93 Active Knerr, Jr. G. R. 12/31/93 Retired Maher, J. 12/31/93 Retired Seitchik, J. 12/31/93 Active Timmins, H. 12/31/93 Retired Ripp, R. 08/15/94 Active Horowitz, D. 09/12/94 Terminated Vested Cornelius, D. 02/01/95 Active Hooper, D. 02/01/95 Active Kegel, J. 02/01/95 Active Proietto, N. 02/01/95 Active Clark, R. 02/01/96 Active DiClemente, T. 02/01/96 Active Keizer, A. 02/01/96 Active Overbaugh, J. 02/01/96 Active Peiffer, H. 02/01/96 Retired Roche, D. 02/01/96 Active Spatz, N. 02/01/96 Active Urkiel, W. 02/01/96 Active Walker, L. 02/01/96 Active Wilkie, D. 02/01/96 Active Zettlemoyer, A. 02/01/96 Active Grabbe, D. 02/01/97 Active Kapany, N. 02/01/97 Active Miller, Jr., L. 02/01/97 Active Timashenka, P. 02/01/97 Active Yohe, Jr., M. 02/01/97 Active Bruggeworth, R. 02/01/98 Active Dittmann, L. 02/01/98 Active Goldstein, J. 02/01/98 Active Henschel, D. 02/01/98 Active Kaleida, R. 02/01/98 Active Lemaitre, P. 02/01/98 Active Lightner, L. 02/01/98 Active Unter, T. 02/01/98 Active Usner, J. 02/01/98 Active Vance, R. 02/01/98 Active EX-27 3 FDS 1ST Q. 1998
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S 1998 FIRST QUARTER 10Q AND IS QUALIFIED BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 MAR-31-1998 294,570 89,763 1,044,297 0 939,211 2,641,040 4,640,794 2,752,104 4,814,212 1,430,917 0 81,725 0 0 2,867,172 4,814,212 1,394,889 1,394,889 958,971 958,971 0 0 7,898 151,965 49,389 102,576 0 0 0 102,576 .47 .47
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