AMP comments on third quarter estimated results and outlook.

HARRISBURG, Pa.--(BUSINESS WIRE)--Sept. 14, 1995--AMP Inc. President and Chief Executive Officer William J. Hudson commented on current results and outlook in a presentation at 4 p.m. Thursday (Sept. 14, 1995) at the Merrill Lynch Connector Industry Conference in New York City.

He indicated results are essentially in line with analyst expectations. Third quarter sales should approach $1.30 billion -- up about 15% or more from $1.11 billion in the year earlier period -- and down slightly from the record $1.34 billion sales in the second quarter of this year.

Third quarter earnings are estimated at 50-53 cents -- up about 15-20% from 44 cents in third quarter 1994 (restated) and above 45 cents in the second quarter and 48 cents (restated) in the first quarter of this year.

Hudson stated AMP's growth goal is to reach $10 billion in the year 2000. A key factor to whether we can reach that goal is, of course, the economic, business, and market environment ahead. We believe the evidence is mounting that the most likely scenario is moderate, sustainable economic growth throughout most of the industrialized world for the rest of this decade.

Consensus economic growth forecasts for the major regions and countries 1994, 1995, 1996, and beyond shows generally a fairly good environment for continued good AMP growth next year and the rest of the decade. Several points to note here: -- U.S. and European growth continues in 1996 at a rate similar to 1995 -- no recession; -- Japan very slow recovery -- better next year; -- Rest of Asia/Pacific continues at 6+% GDP growth.

We also subscribe to the increasingly accepted belief that we are in a "golden era" of growth in technology-based industries, particularly electronics, because of a confluence of many factors of technological progress; application to many new areas; dramatic improvement in quality, capability, and value; and strong demand -- particularly in personal computers, networking, communications, and infrastructure building.

Thus our planning is based on continuation of strong secular trends that should predominate over the usual historical cyclical pattern.

Another way of measuring a company's progress is how are they doing now compared to what they earlier said they thought they could do. Early this year, before we became involved with M/A-COM, we said sales might approach $5 billion and earnings looked like $2.10-2.20 if the U.S. dollar stayed steady. We assumed some slowing in U.S. economic growth by mid-year and a rather slow economic recovery in Japan.

We merged with M/A-COM in the second quarter, which added $100 million to second quarter sales, and took a one-time charge and dilution effect of 16 cents/share for a reported 45 cents/share. First quarter was restated from 50 cents to 48 cents. So six months earnings were 93 cents.

The third quarter looks like about 50-53 cents on sales slightly less than the record $1.34 billion in the second quarter because of seasonal effects, a barely growing Japanese economy, a leveling off in car production in Europe and Japan, and a little higher average value of the dollar against the yen and D-mark third quarter vs. second quarter.

We had earlier expected third quarter sales to be flat or up slightly from the second quarter, but instead they will be down a few percent because of the factors cited -- but up about 15% year-to-year. We expect the fourth quarter to set new highs in sales and earnings. Fourth quarter earnings estimates of 55-58 cents seem reasonable if currencies stay fairly constant at today's level.

So as we said in our six months report, the year looks like $2.00-2.10 after deducting the 16 cents merger expense and having 4% more shares outstanding -- probably the lower end of that range because of the strengthening of the U.S. dollar in recent months.

This most recent estimate is right in line with beginning of the year estimates of $2.10-2.20 before we became involved with M/A-COM. Sales growth by regions in local currencies for the entire year looks like 12-15% in the Americas and Asia-Pacific and about 20% in Europe.

Currency effects on our sales are as follows: -- Third quarter 1995 vs. second quarter 1995, $21 million reduction -- Third quarter 1995 vs. third quarter 1994, $33 million addition -- Nine months 1995 vs. nine months 1994, $183 million addition -- Full year 1996 vs. full year 1995 if rates stay at present levels,

a $116 million reduction.

The most recent First Call earnings consensus report shows $2.54 for next year. At this early time we won't disagree with the $2.45-2.65 range being used. Assuming consensus economic growth projections for next year, and not too much increase in the value of the U.S. dollar, we should be in that earnings range on 10-15% sales growth and some margin improvement.

Key factors in addition to the economic environment, market growth, and the U.S. dollar are the product pricing environment, which should improve slightly, and continued progress on reducing the operating loss in our Global Interconnect Business Group. We continue to expect this group will reach or be close to break-even by the end of next year.

Capital expenditures are on a fast track toward a $675-700 million range -- up sharply from $473 million last year and $370 million in 1993. This, of course, is resulting in higher depreciation and amortization which is another factor to consider in projecting earnings -- moving up from $300 million last year to about $350 million this year and higher again next year.

The next year or two may show a more moderate spending growth and bring capital expenditures back closer in line with its longer-term relationship of about 10% of sales. We will add about a million sq. ft. of space this year -- from 11 million to 12 million. We are expanding facilities in over a dozen countries.

We continue to spend 11-12% on research, development and engineering. This year should be a record $550 million or more. This heavy spending each year results in: -- AMP being in the top 25 among U.S. companies and top 50 among all

corporations in the world; -- A steady flow of new products; -- Creation of new part numbers at a rate of over 200 per day; -- A number of new application tools and machines to apply our products

to wires, cables, and boards; and -- Many new manufacturing advances that improve quality, productivity,

and delivery times -- for example, on time shipments to customers

are now up to the 95-96% level.

The merger with M/A-COM is going well and exceeding our expectations. Sales are rising and should surpass $100 million this quarter, margins are improving, and we are making good progress on integration with AMP worldwide.

One good current example of this integration, and the high level of engineering capabilities at M/A-COM, is a multi-day technical conference to be held next month in which over five dozen M/A-COM engineers will make presentations to several hundred AMP and M/A-COM technical personnel.

The recent acquisition of the 40,000 sq. ft. gallium arsenide plant of Cray Computer adds about one-third more capacity for only a few million dollars investment.

We have just launched a new approach to total quality improvement that we believe is ahead of all other companies according to our benchmarking with leaders like Motorola and Hewlett-Packard.

The emphasis is on far deeper and broader involvement by top and middle management, and development of an overall global corporate top-down as well as bottom-up process that will be so thorough and reliable that it will permit elimination of outside, third-party certification of individual plants and business units.

One very visible sign of this new leadership approach is that our 45 top executives, including the Chairman, CEO, and CFO have recently taken two and one-half days of intensive training on Malcolm Baldrige criteria so they can serve as examiners in our annual internal quality improvement competition that involves dozens of plants, departments, business units, and subsidiaries each year.

Another new aspect is development of new approaches to more effectively address global accounts and markets. We recently created the Global Account Management program and assigned senior marketing directors to coordinate our efforts on serving some of our very largest multinational customers.

Also, a few weeks ago we assigned to vice president Rudy Gassner the responsibility for creating an organization and process for marketing to the personal computer industry throughout the world. And we are in the process of creating a specialized global organization to better focus and accelerate our participation in the electric utility industry where we have a very small market share.

The acquisition of SIMEL last December broadened our product scope in this industry, which should have good growth in many countries because of the need for infrastructure building.

We are planning several other organizational changes that will focus our resources on a global basis to better develop and market certain families of products and better serve certain markets. This increasingly global approach should help us penetrate, gain share, and act faster on new product opportunities.

One indication of the globalization of our organization is that we now have nearly 100 middle and upper management and professional employees in our expatriate program where they are on assignment for three to five years from one region to another. This is up from about a dozen as we began this decade.

We are very optimistic and are confident we can continue growing the rest of this decade and beyond. We are addressing markets with good potential. Through diversification we are now addressing new markets that add another $60-80 billion in size in addition to the $25 billion connector industry.

We will continue to make acquisitions and to expand into more countries on a timely basis as those markets develop. We are very excited about what is happening in the electronics industry -- the rapid rate of technology change and the application of electronics to a steadily expanding range of uses is providing AMP with more opportunities for growth than we have resources to pursue -- a nice problem to have.

Harrisburg, Pennsylvania-based AMP Inc. is the world's leading producer of electrical/electronic connection devices. It has 36,100 employees in 200 facilities in the U.S. and 38 other countries. AMP stock is listed on the New York, Pacific and other regional stock exchanges (Symbol -- "AMP"). -0-

AMP INC.
CONSOLIDATED STATEMENTS OF INCOME -- RESTATED FOR 1994 (2)
(Unaudited)
(dollars in thousands except per share data)

                                         1994                1994
                                      1st Qtr             2nd Qtr
Net Sales                         $   985,243        $  1,087,836
Cost of Sales                         655,687             714,149
  Gross Income                        329,556             373,687
Selling, General and
 Administrative Expenses              186,354             203,233
  Income from Operations              143,202             170,454
Interest Expense                      (6,502)             (7,320)
Other (Deductions), net               (6,380)             (7,596)
  Income before income taxes          130,320             155,538
Income Taxes                           49,700              59,142
Net Income                        $    80,620         $    96,396

(1) Per share--Net income            37 cents            44 cents
      Cash dividends                 21 cents            21 cents
(1) Weighted average
    number of shares              217,059,054         216,979,153

(1) Per share data and weighted average shares have been retroactively
    restated to reflect the 2-for-1 stock split on March 2, 1995.
(2) Consolidated data has been restated to reflect merger with M/A-COM.

                                 1994           1994           1994
                              3rd Qtr        4th Qtr     Total Year
Net Sales                  $1,105,175     $1,190,813     $4,369,067
Cost of Sales                 726,792        787,557      2,884,185
  Gross Income                378,383        403,256      1,484,882
Selling, General and
 Administrative
 Expenses                     214,531        220,827        824,945
  Income from Operations      163,852        182,429        659,937
Interest Expense              (7,238)        (8,093)       (29,153)
Other (Deductions), net       (5,930)       (12,066)       (31,972)
  Income before
   income taxes               150,684        162,270        598,812
Income Taxes                   55,540         60,640        225,022
Net Income                  $  95,144     $  101,630        373,790

(1) Per share--
    Net income               44 cents       47 cents          $1.72
      Cash dividends         21 cents       21 cents       84 cents
(1) Weighted average
    number of shares      216,923,674    217,088,899    217,012,611

(1) Per share data and weighted average shares have been retroactively
    restated to reflect the 2-for-1 stock split on March 2, 1995.
(2) Consolidated data has been restated to reflect merger with M/A-COM.

CONTACT: AMP Inc., Harrisburg

William Oakland, 717/780-6371