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AMP FOURTH QUARTER EARNINGS TO BE ABOUT 65-70 CENTS PER SHARE, LOWER THAN CONSENSUS EARNINGS ESTIMATE OF 76 CENTS PER SHARE; WOULD RESULT IN $2.80-$2.85 PER SHARE VS. $2.75 IN 1992 AND $2.45 IN 1991

 Outlook For 1994 Remains Unchanged -- Good Growth Expected
 Conference Call Set For 9 A.M. Est Tomorrow, Tuesday, Nov. 16
 HARRISBURG, Pa., Nov. 15 /PRNewswire/ -- AMP Incorporated (NYSE: AMP) today released the following:
 In reporting nine months results in late October, the company said fourth quarter sales were expected to be similar to the record $883 million in the second quarter of 1993, and earnings would be similar to or slightly higher than the third quarter's 74 cents per share. However, it now looks like sales, while projected to be up $5-10 million from the $857 million in the third quarter, will be about $20-25 million less than expected a few weeks ago -- and earnings will be about 65-70 cents per share. This adjustment arises from less than anticipated bookings in Europe, Japan, and in the computer/ telecommunications OEM market in the U.S. These bookings are essentially flat with the third quarter level instead of the modest improvement earlier expected.
 It has become more difficult to anticipate sudden changes in bookings because of short delivery lead times, and the increasing prevalence of just-in-time manufacturing systems that maintain extremely low inventories and emphasize quick adjustment to changes in end customer demand. Other contributing factors are customer shifts of manufacturing between in-house and external sources, and between customer locations in various countries. This modest 2-3 percent change in the expected sales level has a more leveraged effect on earnings (estimated 10-15 percent) than before because direct costs have been steadily declining as a proportion (now about 20 percent) of total costs due to reduced materials costs and dramatic productivity gains. In contrast, AMP's fixed/indirect costs have risen steadily in absolute terms and as a percent of total costs -- costs such as employee benefits, safety and health, employee training, regulatory compliance, taxes, marketing, customer service, engineering, and administrative. In addition, depreciation and amortization has doubled in recent years from higher capital expenditures and from acquisitions. Earnings are also currently significantly negatively impacted by the relatively recent launching of the Strategic Business Group and by several new international subsidiary start-ups. It should also be noted that the $2.80-2.85 per share earnings now indicated for 1993 is after a 5 cents per share reduction for the retroactive U.S. corporate tax rate increase enacted earlier this year.
 This leveraged effect on earnings from changes in sales levels should have a positive effect in 1994. We have not changed our economic and AMP growth expectations for next year. Modest to good sales growth is expected in all regions and in all major market categories. We believe the lower level of our second half sales to the computer/telecom OEM market is due primarily to inventory correction by key customers after we experienced a better-than-expected first half sales level. We


believe this is a temporary effect and expect our sales to this market to resume their growth trend within the next month or two. While recent economic forecasts for Germany and Japan have become slightly more cautious, they continue to project some economic recovery to become evident by mid-1994 in Europe and Japan. This should permit higher AMP sales there in the second half. Higher sales levels should permit better profit margins. We therefore expect 1994 to be the third consecutive year of earnings improvement from the low point of $2.45 in 1991.
 The company will hold a conference call with analysts at 9 a.m. EST Tuesday, Nov. 16, 1993.
 AMP will hold its regular semi-annual open meeting with analysts on Friday, Dec. 10, 1993, at the Harrisburg Marriott. For further information or to sign up, call Melissa Witsil at 717-780-4483.
 Harrisburg-based AMP Incorporated is the world's leading producer of electrical/electronic connection devices. It has 26,800 employees in 165 facilities in the United States and 35 other countries. AMP stock is listed on the New York, Pacific and other regional stock exchanges (Symbol -- "AMP").
 /delval/
 -0- 11/15/93 R
 /CONTACT: William Oakland of AMP, 717-780-6371/
 (AMP)


CO: AMP Incorporated ST: Pennsylvania IN: CPR SU: ERP

LJ -- PH034R -- 5653 11/17/93 16:08 EST
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Publication:PR Newswire
Date:Nov 17, 1993
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