FINANCIAL REVIEW                                                      EX.13



                            TABLE OF CONTENTS
                          ----------------------------------



                      26     Management's Discussion and Analysis

                      30     Consolidated Statements of Income

                      31     Consolidated Balance Sheets

                      32     Consolidated Statements of Shareholders' Equity

                      33     Consolidated Statements of Cash Flows

                      34     Notes to Consolidated Financial Statements

                      46     Statement of Management Responsibility

                      46     Report of Independent Public Accountants


                                                                           25

FINANCIAL REVIEW

    Management's Discussion & Analysis


    AMP merged with M/A-COM, Inc. ("M/A-COM") on June 30, 1995 in an 
    acquisition accounted for as a pooling-of-interests.  As a result, all
    financial amounts and per share data have been restated to include M/A-
    COM in periods prior to that date.

    Results of Operations -- 1995 Compared with 1994

    Sales for the year were $5.23 billion, increasing 19.6% from $4.37 billion 
    in 1994. The significant increase is attributable to good economic growth 
    in the major countries in which AMP operates throughout the world, with 
    the exception of Japan, as well as increased market share resulting from 
    greater acceptance of AMP products globally.  The weakening of the U.S. 
    dollar throughout the year, particularly against the Japanese yen and the 
    German mark,  increased 1995 sales by $198 million.  Economic growth was 
    more accelerated in the first half of 1995. The more modest growth 
    experienced in the latter part of the year is expected to continue in the 
    first half of 1996; however, faster growth should occur in the second half 
    if, as generally expected, the economies of the U.S., Japan and Europe 
    improve.

        Net income increased 14% in 1995 to $1.96 per share from $1.72 per
    share in 1994.  Net income without the negative impact of the one-time
    charges and share dilution associated with the merger with M/A-COM was
    $2.15 per share in 1995.  Exchange rate movements did not have a
    significant impact on earnings per share.  Weighted average shares
    outstanding increased slightly due to the exercise of stock options
    resulting from the merger with M/A-COM on June 30, 1995.

        During 1995, the Company improved its return-on-equity to 16.2% from
    15.9% in 1994.  Return-on-assets remained consistent with 1994's 9.9%.
    However, 1995's return-on-equity and return-on-assets excluding the
    effects of the one-time costs associated with the merger with M/A-COM were
    17.3% and 10.6%, respectively.

         Gross income decreased to 32.3% of sales in 1995 from 34% in the
    prior year.  Most of this decline was due to product mix, principally as a
    result of the more rapid growth of the Company's newer technology
    businesses (Global Interconnect Systems Business, "GISB").  Gross margins
    are lower for GISB businesses since they are in the development stage and
    have not yet achieved the commercial volumes and efficiencies associated
    with the Company's mature businesses.  Improvements in the gross margin of
    GISB were achieved in 1995 and further improvements are projected for
    1996.  Also contributing to the gross margin decline were the AMP-AKZO
    operating results for the second half of the year, which were included in
    the consolidated income statement in full due to AMP assuming 100% control
    on June 30, 1995 of this former 50% joint venture.

         Selling, General and Administrative Expenses declined as a percentage
    of sales in 1995 to 18.6% from 18.9% in 1994 due to increases in sales
    volume without commensurate increases in operating expenses. Offsetting
    this decline were the one-time charges of $48.7 million (approximately 1%
    of sales) associated with the M/A-COM merger. Research, Development and
    Engineering (RD&E) expenditures reached $568 million in 1995, up 18.8%
    from 1994's $478 million.  With this growth, RD&E remained at the 
    historical rate of approximately 11% of revenue.   Of the $568 million
    expended this year, $351 million qualifies for the creation and
    application of new and improved products and processes as defined by
    Statement of Financial Accounting Standards No. 2, "Accounting for
    Research and Development Costs."  

         Other Deductions, net, decreased by $18.6 million in 1995 to $13.4
    million primarily as a result of gains on the sales of securities and real
    property realized in 1995, lower amortization of intangible assets related
    to acquisitions and the consolidation of AMP-AKZO, previously a 50% joint
    venture.

         Interest expense increased by $7.7 million due to higher levels of
    debt in France, Great Britain, Japan and Korea, as well as debt assumed
    in the acquisition of Simel in late 1994.  Offsetting these increases was
    a decrease in interest expense incurred by M/A-COM due to the redemption
    of $66 million in debentures in August of 1995.

         The effective tax rate decreased to 36% in 1995 from 37.6% in 1994
    as a result of the reduction of certain state rates and the change in the
    overall level and mix of income and dividends from the international
    companies.

         Significant sales growth occurred in each of the geographic segments
    in 1995, a year when, based on the Company's estimates, the connector
    industry grew approximately 7%.   The Americas, which includes the
    Terminal/Connector, GISB and Wireless business units in the United States
    and other countries in the Americas,  had sales to trade customers of
    $2.47 billion, reflecting a 13.9% increase over the prior year.   The
    strongest growth was in the automotive, communications, and
    industrial/commercial equipment markets, along with very robust growth
    associated with the GISB products.  Americas sales were 47.2% of the
    worldwide total, down from 49.6% in 1994.

         European segment sales to trade customers increased 18.7% in local
    currencies and 29.8% in U.S. dollars in 1995.  Sales growth was strongest
    in Germany, Great Britain, The Netherlands, Scandinavia and Spain.
    Significant industry growth was experienced in the communications,
    commercial/industrial equipment and, until later in the year, automotive
    markets.  European sales represented 32.5% of the worldwide total in 1995
    as compared to 30% in 1994.

26

         Asia/Pacific segment sales to trade customers grew 10.5% in local
    currencies and 18.7% in U.S. dollars.  The continued slow economic
    recovery in Japan resulted in only modest sales growth in that country. 
    Sales in Japan account for over half of the sales in the region. Strong
    broad-based sales growth continued in the rest of the segment because of 
    economic expansion and further migration of manufacturing activities to
    the Asia/Pacific region.  Markets with the strongest growth were
    commercial/industrial equipment, computers, and networking equipment and
    systems. 

    Results of Operations -- 1994 Compared with 1993

    Sales for the year reached $4.37 billion, increasing 15% over 1993's $3.79
    billion. Improving economic conditions in Europe and Japan contributed to
    broad-based sales growth throughout the world.  In the United States, the
    Company increased sales in every major market category it serves with the
    exception of M/A-COM's planned decrease in U.S. Department of Defense
    related sales, which was more than offset by increased sales in the
    commercial markets M/A-COM serves.  Changes in exchange rates increased
    sales by $62.7 million as the U.S. dollar weakened throughout the year
    against the Japanese yen and in the second half against the currencies of
    Western Europe.

         Net income increased 31.5% in 1994 to $1.72 per share from $1.31 per
    share in 1993 before the cumulative effect of 15 cents per share from the
    adoption of Statement of Financial Accounting Standards No. 109,
    "Accounting for Income Taxes", in 1993.  Exchange rate movements that
    increased sales in 1994 added a few cents per share to net income. 
    Average shares outstanding were slightly lower during 1994 as a result of
    the Company's share repurchase plan.

         During 1994, the Company improved its return-on-equity to 15.9% from
    13.4% in 1993 while also improving its return-on-assets to 9.9% from 8.4%
    in 1993 (1993 return computed before cumulative effect of accounting
    change).

         Gross income as a percent of sales was 34% in 1994 compared with
    32.9% in 1993.  This increase is the result of productivity gains and
    improved utilization of manufacturing capacity.  Cost reduction programs
    and product stratification strategies helped offset the negative impact of
    new business startups and pricing pressures.

         Selling, General and Administrative Expenses were 18.9% of sales in
    1994 down from 19.6% of sales in 1993.   The Company increased its
    investment in future-oriented SG&A infrastructure and new business
    startups during 1994 which served to increase expenses.  However, this was
    more than offset by the $26.3 million decrease in M/A-COM's SG&A expense.
    This decrease was primarily attributable to restructuring charges of $27.5
    million recorded in 1993, which were reduced by non-recurring gains
    resulting from the sale of a product line and insurance recoveries of $5.8
    million recognized in the same period. This restructuring was the result
    of a continued decline in M/A-COM's defense business which in 1994
    accounted for 50% of its customer orders.  The remaining decrease in SG&A
    attributable to M/A-COM is mainly the result of efficiencies realized from
    consolidation and downsizing initiatives over the last two years. 
    Research, Development and Engineering expenditures reached $478 million in
    1994, up 12% from 1993's $425 million.  Of the $478 million expended this
    year, $287 million qualifies for the creation and application of new and
    improved products and processes as defined by Statement of Financial
    Accounting Standards No. 2, "Accounting for Research and Development
    Costs." 

         Other Deductions, net, increased $16.6 million in 1994 to $31.9
    million.  Major changes were non-recurring investment portfolio gains in
    1993, write-down of the carrying value of two of the Company's minority-
    interest investments, continued accelerated amortization of certain
    intangible assets related to acquisitions and decreased interest income.  

         Interest expense was $29 million, up $1 million from 1993 due to M/A-
    COM's increased borrowings and higher interest rates.

         The income tax rate on pretax income declined from 38.4% in 1993 to
    37.6% in 1994 reflecting changes in the geographic mix of taxable income.

         Significant sales growth over 1993 occurred in each of the geographic
    segments.  In 1994, the Company believes the worldwide connector industry
    grew at an annual rate of 8%.  During the same period, the Company
    increased sales 15%, exceeding the Company's objective of growing 1.5
    times the industry growth rate. 

         Sales to trade customers in the Americas, which includes the
    Terminal/Connector, GISB and Wireless business units in the United States
    and other countries in the Americas,  increased 13.4% in 1994 to $2.17
    billion.  The strongest growth was in the automotive, communications
    equipment, industrial/commercial equipment and GISB markets.  Sales
    increased every quarter in the United States in 1994 as the domestic
    economy continued to perform well.  Americas sales were 49.6% of the
    worldwide total, down from 50.5% in 1993.

         European segment sales to trade customers increased 15% in local
    currencies and 17% in U.S. dollars as economic recovery continued
    throughout the year.  Sales growth was broad-based and was strongest in
    the automotive, computer/business equipment, telecommunications and
    industrial machinery markets.  Geographically, France, Great Britain,
    Italy and Spain were the leaders.  European sales in 1994 were 30% of the
    worldwide total, unchanged from 1993.  

                                                                            27  

       Asia/Pacific segment sales to trade customers grew 10% in local
    currencies and 17% in U.S. dollars.  Economic growth outside of Japan
    continued to be strong as markets expanded and outsourcing of
    manufacturing from Japan increased.  The Company experienced improving
    business conditions within Japan in 1994 as the recovery continued to
    slowly gather strength.  Strongest market growth in the region was in
    consumer electronics, computers and communication equipment.  

    Price and Cost Trends

    The primary raw materials used in the Company's products include
    industrial metals, such as copper, gold and zinc, as well as plastics. 
    The costs of these materials early in this decade were relatively stable
    to declining; however, over the last two years prices have increased
    significantly.  Copper prices on average increased 26% in both 1994 and
    1995 from $.85 per pound in 1993 to $1.07 in 1994 and $1.35 in 1995. Gold
    prices stabilized in 1995 at $384 per troy ounce after increasing 7% in
    1994.  The cost of zinc has been relatively stable, increasing by less
    than 4% in both 1994 and 1995.  Plastic raw materials prices have held
    relatively steady in 1995 after increasing significantly in 1994 and early
    1995. The impact of plastic price increases on the Company was limited to
    2% to 4% in 1995 primarily through contractual arrangements with suppliers.
    The Company's ability to manage the costs of its raw materials is largely
    dependent on more efficient material usage, and with respect to plastics,
    its size advantage and volume purchasing capability.  The use of
    protective hedging is a small component of the overall cost containment
    strategy. 
 
         Labor and service cost increases were again moderate in 1995,
    continuing a trend evident since 1990.  Wage rate increases were modest
    and continued to parallel industry, regional and national averages in the
    countries in which the Company operates.   

         Offsetting both pricing pressures and the negative impact of product
    mix on margins are productivity improvements and the reduction of the
    amount of raw materials, particularly metals, used to manufacture
    products.  The marketplace has experienced price declines of about 2% to
    3% per annum since 1990.  The Company believes the availability of the
    materials and labor skills it requires should remain adequate during 1996
    and for the next several years.

    Financial Position and Liquidity

    The Company has over $1 billion of working capital at December 31, 1995. 
    Cash and short-term investments decreased $130 million from the prior
    year-end as a result of significantly increased capital expenditures, the
    redemption of $66 million of M/A-COM convertible debentures, and increased
    accounts receivable and inventory associated with strong sales growth and
    expansion.  Cash provided by operations for 1995 was $747 million, an
    increase of 9% from the prior year, in spite of the significant increases
    in both accounts receivable and inventory without offsetting increases in
    accrued liabilities.  Accounts receivable increased $103 million or 11%
    due to the higher level of sales in the fourth quarter of 1995 as compared
    to the same period in the prior year.  The average number of days sales
    outstanding in trade accounts receivable at December 31, 1995 held
    generally steady with the prior year.  Inventories increased $121 million
    to $763 million at December 31, 1995 from $642 million at December 31,
    1994.  Inventory turns increased only slightly.  

         Approximately half of the Company's operating cash flows are
    generated overseas.  There are currently no material restrictions on the
    transfer of these funds within the Company; however, certain business
    decisions result in the permanent investment of a portion of these funds
    in the international companies.  These permanent investments have no
    significant impact on the Company's ability to fund its cash requirements.

         In the fourth quarter of 1995, AMP signed an agreement for a $150
    million five-year revolving credit facility with a group of U.S. banks
    primarily to support a $200 million commercial paper program, also
    established in the fourth quarter.  This formal, syndicated credit
    facility replaced certain existing uncommitted short-term facilities.  The
    commercial paper program has received the highest ratings from Standard &
    Poor's Ratings Group, Moody's Investors Service, Inc. and Duff & Phelps
    Credit Rating Co.  Neither of these funding sources has been used as of
    December 31, 1995.   In 1996, AMP plans to fund the majority of its
    working capital needs, dividends and capital expansion using cash flow
    from operations and, to a lesser extent, investing activities.  However,
    these external sources of funding can be drawn upon if necessary to
    finance additional growth requirements.  AMP's low debt-to-equity ratio of
    19.2% affords it considerable leverage for future expansion.  


    Capital Expenditures

    Because of the Company's need for additional capacity as well as
    significant expansion into new product areas and geographic markets in
    1995, capital expenditures increased to $713 million from $473 million in
    1994 and $370 million in 1993.  Approximately 75% of this spending was for
    machinery and equipment for capacity additions, 

28

    productivity improvements and tooling for new products.  The balance of
    the expenditures was for additional floor space, including new production
    facilities and/or expansion of existing facilities in France, the Czech
    Republic, Hungary, Scotland, Switzerland, Malaysia,  China and Colorado,
    USA.  In addition, an engineering facility and human resources development
    center were added in Harrisburg, PA. Capital expenditures for 1996 should
    remain relatively consistent with the 1995 level.

    Environmental Matters

    The Company continued to implement and enhance its corporate-wide program
    for managing environmental matters.  This program, which was established
    more than ten years ago, has evolved into a truly global effort in
    response to Company initiatives and worldwide business and regulatory
    forces.  A global approach is necessary as regional and worldwide
    environmental initiatives gain momentum through our customers,
    organizations such as the European Union, the Organization for Economic
    Cooperation and Development (OECD), the International Organization for
    Standards (ISO), NAFTA and the Company's own strict global standards.  The
    Company also continued to implement various environmental management
    programs to provide an infrastructure that better ensures environmental
    compliance on a global basis and to be positioned for timely response to
    possible customer requirements in 1996 for certification under the new ISO
    14000 environmental standard.  Led by Global Environmental Services, a
    corporate governance group with staff in Harrisburg, London and Singapore,
    the global environmental program involves the efforts of Company employees
    from a variety of functions and locations, including but not limited to
    executive management on the Environmental Oversight Committee, a cadre of
    environmental coordinators in the various Company business units, staff
    from the Global Engineering and Manufacturing Assurance, Global Products
    Standards, Government Relations and Materials Engineering groups, and
    operations staff in connection with the integration of the Company's
    environmental policies into newly acquired businesses and expanding
    operations around the world. 

         Despite these proactive efforts in recent years, potential
    liabilities for investigative and remedial costs are known to exist
    related to activities conducted in earlier periods. In 1995, as a result
    of Company site investigations, including those related to the planned
    closure of the Matrix Science operations in California, and the 
    acquisition of M/A-COM, the Company's environmental contingencies
    increased.   However, the Company continues to expect that the costs
    associated with such environmental sites will not have a material impact
    on the Company's financial position, liquidity and capital resources, or
    competitive position in the next several years.

         Specifically, the Company has potential liabilities at five National
    Priorities List (NPL) sites in the U.S. under the U.S. Environmental
    Protection Agency (EPA) Superfund program as a "generator" of wastes.  At
    one site, the Company faces potential liability for wastes sent to a
    former municipal landfill.  Expenditures to date amount to approximately
    $360,000, with costs in the $1.5 to $6 million range possible over the
    next two years.  At the four other NPL sites owned by third parties and
    where the Company allegedly sent wastes in prior years, as well as three
    other sites in the U.S. that are under state jurisdiction, expenditures to
    date have not exceeded $150,000 and are not expected to exceed $750,000 in
    the future.  

         In addition, the Company has also identified potential liabilities at
    22 of its current or former facilities, including those of its
    subsidiaries.  Investigations or remediation are ongoing at these
    properties as required by government regulations or as part of the
    Company's property management policy.  One such site, an NPL site under
    the EPA Superfund program, is also subject to a corrective action consent
    order under the Resource Conservation and Recovery Act.  The Company has
    spent approximately $1.9 million since 1984 to remediate this property and
    cleanup progressed sufficiently enough in 1995 for the Company to petition
    to have the site removed from the NPL.  Future costs associated with this
    property are expected to total $1 million over the next five years.  At
    the Matrix Science facilities in California, the Company has spent
    approximately $1.1 million for investigations, remediation and legal
    expenses since the merger in 1988, and could possibly spend up to $10
    million over the next five years based on current information. 
    Additionally, the Company has incurred approximately $1.7 million in costs
    to remediate conditions at its current facility in Williamstown, PA; an
    additional $2.8 million in costs are expected.  Two properties formerly
    occupied by M/A-COM in Sunnyvale, CA and New Brunswick, NJ are also
    undergoing remediation, with expected future costs of approximately $1.5  
    million.  The Company has spent approximately $12.2 million on the
    remaining 17 current or former properties since 1984 and future costs are
    anticipated to be $1 to $2 million annually for the next several years. 
    Several of these facilities are believed to have been impacted by third
    parties and the Company is taking appropriate legal action.  At one such
    site, local citizens have filed a notice of intent to bring a claim
    against the Company; however, based on current information the Company
    believes it will not incur additional liability.

         The Company's accounting policy with respect to environmental costs
    in general is described in Note 1 to the Consolidated Financial
    Statements.
                                                                          29
<TABLE>
<CAPTION>
    CONSOLIDATED FINANCIAL STATEMENTS

    CONSOLIDATED STATEMENTS OF INCOME

    -----------------------------------------------------------------------------------------------
    (dollars in thousands except per share data)         Year Ended December 31,
    -----------------------------------------------------------------------------------------------
                                                        1995           1994           1993
                                                     ----------------------------------------------
    <S>                                               <C>            <C>            <C>
    Net Sales                                         $5,227,226     $4,369,067     $3,790,476
    Cost of Sales                                      3,539,715      2,884,185      2,541,801
    -----------------------------------------------------------------------------------------------
           Gross income                                1,687,511      1,484,882      1,248,675
    Selling, General and Administrative Expenses         969,512        824,945        744,131
    -----------------------------------------------------------------------------------------------
           Income from operations                        717,999        659,937        504,544
    Interest Expense                                     (36,847)       (29,153)       (27,961)
    Other Deductions, net                                (13,418)       (31,972)       (15,360)
    -----------------------------------------------------------------------------------------------
           Income before income taxes and
             cumulative effect of change
             in accounting principle                     667,734        598,812        461,223
     Income Taxes                                        240,400        225,022        176,874
    -----------------------------------------------------------------------------------------------
           Income before cumulative effect of
             change in accounting principle              427,334        373,790        284,349
    Cumulative effect of change in
        accounting principle (Note 16)                   --             --              33,100
    -----------------------------------------------------------------------------------------------
    Net Income                                          $427,334       $373,790       $317,449
    -----------------------------------------------------------------------------------------------
    -----------------------------------------------------------------------------------------------
    Income per share before cumulative effect
        of change in accounting principle               $   1.96       $   1.72       $   1.31
    Cumulative effect of change in
        accounting principle per share                   --             --                 .15
    -----------------------------------------------------------------------------------------------
    -----------------------------------------------------------------------------------------------
    Net Income Per Share                                $   1.96       $   1.72       $   1.46
    -----------------------------------------------------------------------------------------------
    -----------------------------------------------------------------------------------------------
           The accompanying Notes to Consolidated Financial Statements
                  are an integral part of these statements.
</TABLE>
30
<TABLE>
<CAPTION>
    CONSOLIDATED BALANCE SHEETS


                                                                 December 31,      December 31,
(dollars in thousands)                                               1995              1994
-----------------------------------------------------------------------------------------------
<S>                                                              <C>                <C> 
Assets
Current Assets:
  Cash and cash equivalents                                      $    212,538       $  244,568
  Securities available for sale                                        58,197          156,708
  Receivables                                                       1,011,460          908,390
  Inventories                                                         762,803          641,953
  Deferred income taxes                                               137,043          135,498
  Other current assets                                                 95,867           87,183
-----------------------------------------------------------------------------------------------
          Total current assets                                      2,277,908        2,174,300
-----------------------------------------------------------------------------------------------
Property, Plant and Equipment                                       4,352,026        3,713,660
    Less - Accumulated depreciation                                 2,413,760        2,138,978
-----------------------------------------------------------------------------------------------
          Property, plant and equipment, net                        1,938,266        1,574,682
-----------------------------------------------------------------------------------------------
Investments and other assets                                          288,565          343,564
-----------------------------------------------------------------------------------------------
Total Assets                                                     $  4,504,739       $4,092,546
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
<S>                                                              <C>               <C>
Current Liabilities:
  Short-term debt                                                $    318,169      $   182,338
  Payables, trade and other                                           460,892          403,947
  Accrued payrolls and employee benefits                              168,667          156,322
  Accrued income taxes                                                196,417          247,997
  Other accrued liabilities                                           121,948          116,318
-----------------------------------------------------------------------------------------------
          Total current liabilities                                 1,266,093        1,106,922
-----------------------------------------------------------------------------------------------
Long-Term Debt                                                        212,485          278,843
Deferred Income Taxes                                                  45,768           34,249
Other Liabilities                                                     212,365          176,777
-----------------------------------------------------------------------------------------------
          Total liabilities                                         1,736,711        1,596,791
-----------------------------------------------------------------------------------------------
Shareholders' Equity:
  Common stock, without par value-
      Authorized 700,000,000 shares,
        issued 232,491,889 shares                                      79,580           70,135
  Other capital                                                        83,454           80,105
  Deferred compensation                                                (2,489)          (4,568)
  Cumulative translation adjustments                                  156,837          129,612
  Net unrealized investment gains                                      19,423           21,585
  Retained earnings                                                 2,667,755        2,442,317
  Treasury stock, at cost                                            (236,532)        (243,431)
-----------------------------------------------------------------------------------------------
          Total shareholders' equity                                2,768,028        2,495,755
-----------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity                       $  4,504,739       $4,092,546
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
            The accompanying Notes to Consolidated Financial Statements
                     are an integral part of these statements.
</TABLE>
                                                                           31
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                             Net
                                                                      Cumulative   Unrealized
                                    Common     Other      Deferred   Translation   Investment   Retained      Treasury Stock
(amounts in thousands)               Stock   Capital  Compensation   Adjustments   Gains, net   Earnings     Shares     Amount
---------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>        <C>           <C>           <C>        <C>          <C>        <C>
Balance at January 1, 1993         $62,003   $78,992    $(5,806)      $ 81,804      $  --      $2,090,132   (14,781)   $(235,988)
Net income                                                                                        317,449
Cash dividends-80 cents per share                                                                (167,838)
Purchases of treasury stock                                                                                    (135)      (3,771)
Distributions of treasury
   stock under bonus plans                       134                                                             88        2,431
Issuance of common stock under
   bonus plans                       3,403               (1,822)
Amortization of deferred
   compensation                                           2,026
Translation adjustments                                                (16,587)
Other                                                                                                 (32)
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993        65,406    79,126     (5,602)        65,217         --       2,239,711   (14,828)    (237,328)
Net income                                                                                        373,790
Cash dividends - 84 cents per share                                                              (176,177)
Change in subsidiaries' year-ends                                                                   5,034
Purchases of treasury stock                                                                                    (336)     (10,800)
Distributions of treasury
    stock under bonus plans                      979                                                            160        4,697
Issuance of common stock under
    bonus plans                      4,729                 (606)
Amortization of deferred
    compensation                                          1,640
Translation adjustments                                                 64,395
Net unrealized investment gains                                                      21,585
Other                                                                                                 (41)
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994        70,135    80,105     (4,568)       129,612       21,585     2,442,317   (15,004)    (243,431)
Net income                                                                                        427,334
Cash dividends - 92 cents per share                                                              (196,521)
Change in subsidiary's year-end                                                                    (5,375)
Purchases of treasury stock                                                                                     (87)      (3,439)
Distributions of treasury
    stock under bonus plans                    1,075     (3,734)                                                209        7,228
Issuance of common stock under
    bonus plans                      9,445
Amortization of deferred
    compensation                                          5,813
Translation adjustments                                                 27,225
Net unrealized investment losses                                                     (2,162)
ESOP termination                               2,274
Acquisition of business                                                                                          83        3,110
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995       $79,580   $83,454    $(2,489)      $156,837      $19,423    $2,667,755   (14,799)   $(236,532)
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
32
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS


(dollars in thousands)                                                  Year Ended December 31,
-------------------------------------------------------------------------------------------------------------
                                                                1995            1994            1993
                                                          ---------------------------------------------------
<S>                                                           <C>             <C>             <C>
CASH AND CASH EQUIVALENTS at January 1                        $ 244,568       $ 267,702       $ 406,889
-------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
  Net income                                                    427,334         373,790         317,449
  Noncash adjustments-
    Depreciation and amortization                               361,394         324,509         306,435
    Deferred income taxes                                        35,460         (43,565)        (64,911)
    Increase to other liabilities                                41,688          17,334          18,554
    Other, net                                                   42,292          43,693          35,773
    Changes in operating assets and liabilities
      net of effects of acquisitions of businesses             (164,356)        (25,777)        (63,393)
    Change in subsidiaries' year-ends                             3,164          (4,568)           --
---------------------------------------------------------------------------------------------------------
      Cash provided by operating activities                     746,976         685,416         549,907
---------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
  Additions to property, plant and equipment                   (712,976)       (472,612)       (369,819)
  Decrease (increase) in securities
    available for sale                                           97,545          24,323         (43,843)
  Acquisitions of businesses, less cash acquired                   (299)        (56,377)        (16,230)
  Increase in investments                                       (71,423)        (47,619)        (37,059)
  Other, net                                                     28,626          (3,813)         13,698
---------------------------------------------------------------------------------------------------------
      Cash used for investing activities                       (658,527)       (556,098)       (453,253)
---------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
  Changes in short-term debt                                    139,968         (37,515)       (137,177)
  Proceeds from long-term debt                                   36,773          71,343         107,265
  Repayments of long-term debt                                  (99,748)        (13,347)        (23,120)
  Purchases of treasury stock                                    (3,439)        (10,800)         (3,771)
  Dividends paid                                               (196,521)       (176,177)       (167,838)
  Other, net                                                      1,188           1,333          (1,490)
---------------------------------------------------------------------------------------------------------
      Cash used for financing activities                       (121,779)       (165,163)       (226,131)
---------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                           1,300          12,711          (9,710)
---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS at December 31                      $ 212,538       $ 244,568        $267,702
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
CHANGES IN OPERATING ASSETS AND LIABILITIES:
  Receivables                                                 $ (78,348)      $(117,789)       $(57,851)
  Inventories                                                  (103,359)        (70,125)        (23,857)
  Other current assets                                           19,818           5,577         (18,923)
  Payables, trade and other                                      14,460          59,547          (5,302)
  Accrued payrolls and employee benefits                         14,138          30,142          13,626
  Other accrued liabilities                                     (31,065)         66,871          28,914
---------------------------------------------------------------------------------------------------------
                                                              $(164,356)      $ (25,777)       $(63,393)
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
                                                                           33

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    1.  SUMMARY OF ACCOUNTING PRINCIPLES
    Principles of Consolidation--The consolidated financial statements include
    the accounts of the Company and its wholly-owned subsidiaries. 
    Investments representing ownership of 20% to 50% in affiliates and joint
    ventures are accounted for using the equity method.

         The Company's M/A-COM, Inc. subsidiary (See Note 4) changed its
    fiscal year-end in 1995 from the Saturday nearest September 30 to December
    31 in order to be consistent with the rest of the companies' year-ends. 
    In 1994, the Company's Asia/Pacific and Americas subsidiaries changed
    their fiscal year-ends from November 30 to December 31 for the same
    purpose.   In accordance with guidelines of the Securities and Exchange
    Commission, only twelve months of income and expense for the affected
    companies were included in the Consolidated Statements of Income for 1995
    and 1994.  Results of operations associated with the additional months
    were recorded directly to retained earnings in each year and cash flow
    activity for these same periods was reflected as a single line item in the
    operating activities section of the Consolidated Statements of Cash Flows.

         Cash and Cash Equivalents--Cash and cash equivalents are comprised of
    cash in banks, time deposits, repurchase agreements and investments with
    original maturities of 91 days or less on their acquisition date.

         Investments--On January 1, 1994, the Company adopted Statement of
    Financial Accounting Standards No. 115, "Accounting for Certain
    Investments in Debt and Equity Securities" ("SFAS No. 115").  This
    standard requires that certain debt and equity securities be adjusted to
    market value at the end of each accounting period.  Unrealized market
    value gains and losses are charged to earnings if the securities are
    traded for short-term profit.  Otherwise, such unrealized gains and losses
    are charged or credited to a separate component of shareholders' equity. 
    SFAS No. 115 was adopted prospectively, and had no impact on earnings.  
    Management determines the proper classifications of investments in
    obligations with fixed maturities and marketable equity securities at the
    time of purchase and reevaluates such designations as of each balance
    sheet date.  At December 31, 1995 and 1994, all securities covered by SFAS
    No. 115 were designated as available for sale.  Accordingly, these
    securities are stated at fair value, with unrealized gains and losses
    reported in a separate component of shareholders' equity. Realized gains
    and losses on sales of investments, as determined on a specific
    identification basis, are included in the Consolidated Statements of
    Income.

         Inventories--Inventories, consisting of material, labor and overhead,
    are stated at the lower of first-in, first-out ("FIFO") cost or market.

         Property, Plant and Equipment and Depreciation--Property, plant and
    equipment is stated at cost, adjusted to current exchange rates where
    applicable.  Depreciation is computed by applying principally the
    straight-line method to individual items.  Depreciation rate ranges are
    substantially as follows:

          Buildings.................................5%
          Leasehold improvements....................Life of lease
          Machinery and equipment...................7 1/2% to 33 1/3%
          Machines and tools with customers.........20% to 33 1/3%

    Where different depreciation methods or lives are used for tax purposes,
    deferred income taxes are recorded.

         Maintenance and repairs are charged to expense as incurred.  Major
    repairs and improvements which extend the lives of the related assets are
    capitalized and depreciated at applicable straight-line rates.

         The cost and accumulated depreciation of items of plant and equipment
    retired or otherwise disposed of are removed from the related accounts,
    and any residual values are charged or credited to operating income.

         Other Assets--The excess of cost over the fair value of assets
    acquired is amortized over periods not exceeding 15 years.  In assessing
    the recoverability of goodwill, impairment is measured against the
    emergence and success of competing technologies.  When factors indicate
    that goodwill should be evaluated for possible impairment, the Company
    uses an estimate of the related business's undiscounted cash flows over
    the remaining life of the goodwill to assess recoverability.

         Estimates--The preparation of financial statements in conformity with
    generally accepted accounting principles requires management to make
    estimates and assumptions that affect the reported amounts of assets and
    liabilities and disclosure of contingent assets and liabilities at the
    date of the financial statements and the reported amounts of revenues and
    expenses during the reporting period.  Actual results could differ from
    those estimates.  

34
         Environmental Costs--Environmental expenditures which relate to
    current operations are capitalized or charged to expense as appropriate. 
    Future remedial expenses are accrued without regard to possible recoveries
    from third parties when their outcome appears probable and their potential
    liability can be reasonably estimated.

         Per Share Amounts--Per share amounts have been calculated using the
    weighted average number of shares outstanding during each period, adjusted
    for the impact of  common stock equivalents using the Treasury Stock
    Method when the effect is dilutive.  The weighted average number of shares
    outstanding used to compute per share data was 217,716,093 in 1995,
    217,012,611 in 1994 and 216,628,525 in 1993.

         Future Accounting Changes--In March 1995, the Financial Accounting
    Standards Board issued Statement of Financial Accounting Standards No.
    121, "Accounting for the Impairment of Long-Lived Assets and for Long-
    Lived Assets to Be Disposed Of" (SFAS No. 121).  This statement requires
    recognition of impairment losses for long-lived assets whenever events or
    changes in circumstances result in the carrying amount of the assets
    exceeding the sum of the expected future cash flows associated with such
    assets. The measurement of the impairment losses to be recognized is to be 
    based on the difference between the fair values and the carrying amounts
    of the assets.  The statement also requires that long-lived assets held
    for sale be reported at the lower of carrying amount or fair value less
    cost to sell. SFAS No. 121 must be adopted by the Company in 1996 and such
    adoption is not expected to have a material effect on the financial
    position or results of operations of the Company.

         Statement of Financial Accounting Standards No. 123, "Accounting for
    Stock-Based Compensation" ("SFAS No. 123") was issued in October 1995. 
    This statement establishes a fair value based method of accounting for
    grants of equity instruments to employees or suppliers in return for goods
    or services.  With respect to stock-based employee compensation
    arrangements, SFAS No. 123 permits entities to continue to apply the
    current accounting methods prescribed by APB Opinion No. 25; however, if
    the effect is significant, proforma disclosures of net income and earnings
    per share, determined as if the fair value based method had been applied
    in measuring compensation cost, are to be provided in the footnotes to the
    1996 financial statements.  The provisions of the new statement are not
    anticipated to have any material effect since the accounting for stock-
    based compensation arrangements will not be changed.

    2.  STOCK SPLIT
    On January 25, 1995, the Board of Directors authorized a two-for-one stock
    split that was distributed on March 2, 1995, to shareholders of record on
    February 6, 1995.  In addition, authorized shares were increased from
    350,000,000 to 700,000,000.  All references in the financial statements to
    number of shares, per share amounts and market prices of the Company's
    common stock have been retroactively restated to reflect the increased
    number of common shares outstanding.

    3.  PROPERTY, PLANT AND EQUIPMENT
    At December 31, property, plant and equipment was comprised of the
    following:
<TABLE>
<CAPTION>

    (dollars in thousands)                              1995         1994
    -------------------------------------------------------------------------
    <S>                                             <C>          <C>  
    Land                                            $   81,565   $   66,135
    Buildings and leasehold improvements               898,362      747,996
    Machinery and equipment                          3,003,591    2,546,700
    Machines and tools with customers                  368,508      352,829
    -------------------------------------------------------------------------
                                                    $4,352,026   $3,713,660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Depreciation expense was $348,216,000, $293,245,000 and $284,609,000 in
    1995, 1994 and 1993, respectively.
</TABLE>

    4.  MERGER WITH M/A-COM, INC.
    On June 30, 1995, M/A-COM, Inc. (M/A-COM) was merged with and into the
    Company through the issuance of 7.6 million shares of AMP common stock
    which were exchanged for all of the outstanding common shares of M/A-COM.  
    The merger qualifies as a tax-free reorganization and was accounted for as
    a pooling-of-interests.  Accordingly, the Company's financial statements
    have been restated to include the results of M/A-COM for all periods
    presented. 

         As discussed in Note 1, prior to the merger, M/A-COM used a fiscal
    year ending on the Saturday nearest September 30.  Accordingly, the
    restated financial statements combine the October 1, 1994 and October 2,
    1993 financial statements of M/A-COM with the December 31, 1994 and 1993
    financial statements of AMP, respectively.  Net sales and the net loss of
    M/A-COM for the three-month period ended December 31, 1994 were $81.6
    million and $5.4 million, respectively, with the net loss reflected as an
    adjustment to retained earnings effective January 1, 1995.

         Combined and separate results of AMP and M/A-COM during the periods
    preceding the merger were as follows (in thousands): 
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Six Months Ended
June 30, 1995 (unaudited)              AMP        M/A-COM      Adjustment     Combined
----------------------------         ---------------------------------------------------
  <S>                                <C>           <C>           <C>           <C>
  Sales                              $2,440        $192          $  --         $2,632
  Net income (loss)                     233           1            (31)           203

Fiscal Year 1994
----------------
  Sales                              $4,027        $342          $  --         $4,369
  Net income (loss) before
   cumulative effect of change in
    accounting principle                369           4              1            374
  Cumulative effect of change in
    accounting principle               --             3             (3)           --
----------------------------------------------------------------------------------------
  Net income (loss)                  $  369        $  7          $  (2)        $  374
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------

Fiscal Year 1993
----------------
  Sales                              $3,450        $340          $  --         $3,790
  Net income (loss) before
   discontinued operations and
   cumulative effect of change in
    accounting principle                297         (23)            10            284
  Discontinued operations, less
    income taxes                       --             1             (1)           --
  Cumulative effect of change in
    accounting principle               --            --             33             33 
----------------------------------------------------------------------------------------
  Net income (loss)                  $  297        $(22)         $  42         $  317
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
</TABLE>
          The combined financial results presented above include adjustments
    made to conform the accounting policies of the two companies, as well as
    transaction fees and one-time expenses associated with the merger.  The
    primary adjustment affecting income was the restatement of M/A-COM's
    adoption of SFAS No. 109, "Accounting for Income Taxes" ("SFAS No. 109")
    due to the reduction of the valuation allowance for deferred tax assets
    that were not expected to be realized by M/A-COM operating separately.
    M/A-COM adopted this accounting principle originally at the beginning of
    its fiscal year 1994; however, the timing of this adoption was changed to
    the beginning of fiscal year 1993 in order to conform with the timing of
    AMP's adoption.  The effect of this adjustment is reflected as income from
    the cumulative effect of a change in accounting principle of $35 million
    and a $7 million reduction in the tax provision in fiscal year 1993 and
    a $1 million reduction in the tax provision in fiscal year 1994.  Prior
    to the restatement for the M/A-COM merger, AMP's effect of adopting SFAS
    No. 109, a $2 million charge, was included in net income from operations.
    No intercompany transactions existed between the two companies during the
    periods presented.

         Transaction costs and one-time charges resulting from the merger of
    $48.7 million ($31 million net-of-tax) include expenses for investment
    banker and professional fees, severance related costs and charges to
    standardize the accounting practices of the companies.

36

    5.  SECURITIES AVAILABLE FOR SALE
    Securities available for sale at December 31, are summarized as follows:
<TABLE>
<CAPTION>

 December 31, 1995
                                                  Gross        Gross
                                             Unrealized   Unrealized
                                                Holding      Holding       Market
(dollars in thousands)              Cost          Gains       Losses        Value
-----------------------------------------------------------------------------------
<S>                                <C>         <C>          <C>           <C>
State and Municipal Securities--
  Maturing in 1 year or less       $ 2,800     $     1      $  --         $  2,801

Common Stock                        23,027      32,369         --           55,396
-----------------------------------------------------------------------------------
                                  $ 25,827     $32,370      $  --          $58,197
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994                                 Gross        Gross
                                             Unrealized   Unrealized
                                                Holding      Holding       Market
(dollars in thousands)              Cost          Gains       Losses        Value
-----------------------------------------------------------------------------------
<S>                               <C>         <C>          <C>           <C>
U. S. Government Securities--
  Maturing in 1 year or less      $ 1,987     $   --       $  --         $  1,987
  Maturing between 1 and 5 years   54,724         --        1,777          52,947

State and Municipal Securities--
  Maturing in 1 year or less       20,340         --            1          20,339
  Maturing between 1 and 5 years    8,475         --          199           8,276

Commercial Paper                   12,358         --          329          12,029

Common Stock                       21,595      39,535         --           61,130
-----------------------------------------------------------------------------------
                                 $119,479     $39,535      $2,306        $156,708
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
</TABLE>
         Differences between cost and market of $32,370,000 (less deferred
    taxes of $12,896,000) and $37,229,000 (less deferred taxes of $15,644,000)
    were credited to a separate component of shareholders' equity called "Net
    Unrealized Investment Gains" as of December 31, 1995 and 1994,
    respectively.

         Proceeds from sales of securities available for sale were
    approximately $127,186,000 and $249,098,000 for the years ended December
    31, 1995 and 1994, respectively.  Gross gains and gross losses on such
    sales were not significant. At December 31, 1995 and 1994, approximately
    $89,994,000 and $42,000,000 of securities available for sale with original
    maturities of 91 days or less were included in cash and cash equivalents.
    The market values of these securities approximate cost. 

    6.  INVENTORIES
    At December 31, inventories were comprised of the following:
<TABLE>
<CAPTION>
(dollars in thousands)                              1995       1994
-----------------------------------------------------------------------
<S>                                                <C>        <C>
Finished goods and work in process                 $411,504   $373,094
Purchased and manufactured parts                    263,926    199,493
Raw materials                                        87,373     69,366
-----------------------------------------------------------------------
                                                   $762,803   $641,953
-----------------------------------------------------------------------
-----------------------------------------------------------------------
</TABLE>

    7.  LEASE COMMITMENTS
    The Company leases certain buildings and transportation and other
    equipment.  Capital leases are not significant.

         Total rental expense under operating leases for the year ended
    December 31 was $79,978,000 in 1995, $67,564,000 in 1994 and
    $62,606,000 in 1993.  Minimum rental commitments at December 31,
    1995 under leases with initial terms in excess of one year were:

          1996 -- $43,665,000      1999 -- $14,901,000
          1997 -- $34,257,000      2000 -- $10,847,000
          1988 -- $23,000,000      2001 and beyond -- $70,392,000

    8.  FINANCIAL INSTRUMENTS
    The Company has only limited involvement with derivative financial
    instruments and does not use them for trading purposes.  They are
    used to manage well-defined commodity price and foreign currency
    risks.

         Commodities swap agreements are utilized to hedge anticipated
    purchases of certain metals used in the Company's manufacturing
    operations.  Under these swap agreements, payments are made or received
    based on the differential between a specified price and the actual price
    of the metals.  These contracts generally cover a one-year period and are
    accounted for as hedges, with all gains and losses recognized in cost of
    sales when the commodities are consumed.  At December 31, 1995 and 1994,
    commodity contracts involving notional amounts of $1,400,000 and
    $52,000,000, respectively, were outstanding.  These notional amounts do
    not represent amounts exchanged by the parties; rather, they are used as
    the basis to calculate the amounts due under the agreements.

         From time to time the Company and its subsidiaries utilize forward
    foreign currency exchange contracts to minimize the impact of currency
    movements, principally on intercompany royalties, inventory purchases and
    dividends denominated in currencies other than their functional
    currencies.  The terms of these contracts are generally less than one year
    and they also are hedges of anticipated transactions.  Gains and losses
    related to these agreements are recorded when the related transaction
    occurs.  The purpose of the Company's hedging is to protect it from the
    risk that the eventual functional currency inflows resulting from the
    intercompany payments will be adversely affected by changes in exchange
    rates.  The major currency exposures hedged by the Company include the
    German mark, the Japanese yen, the British pound, the Singapore dollar and
    the Mexican peso.  At December 31, 1995 and 1994, the Company and its
    subsidiaries had forward foreign currency exchange contracts with
    aggregate contract amounts of approximately $66,000,000 and $95,000,000,
    respectively.

         On March 11, 1994, the Company entered into a foreign currency swap
    with a AAA-rated counterparty to hedge a portion of its net investment in
    its Japanese subsidiary.  Under terms of the agreement, the Company will
    swap 15.9 billion yen for U.S. $150 million in ten years based on the
    exchange rate on the day the contract became effective.  In addition, the
    contract provides for the Company to make semi-annual interest payments of
    4.61% on the 15.9 billion yen, while receiving semi-annual interest
    payments of 6.71% on the U.S. $150 million.  The Company has the
    unilateral right to unwind the swap early.  Due to the fact that this
    contract is an effective hedge of an investment in a foreign entity, any
    gain or loss on the contract is recorded directly to cumulative
    translation adjustments.
 
         While it is not the Company's intention to terminate any of the above
    financial instruments, the fair values were estimated by obtaining quotes
    from brokers which represented the amounts that the Company would receive
    or pay if the agreements were terminated at the balance sheet dates. 
    These fair values indicated that termination of the commodities swap
    agreements, the forward foreign currency exchange contracts and the
    foreign currency swap agreement at December 31, 1995 would have resulted
    in an $11,000 gain, a $4,900,000 gain and a $12,100,000 loss,
    respectively. Termination of these agreements at December 31, 1994 would
    have resulted in a $23,000,000 gain on the commodities contracts, a
    $3,900,000 gain on the forward foreign currency exchange contracts and a
    $21,300,000 loss on the foreign currency swap agreement. Due to the
    volatility of currency exchange rates and commodity prices, these
    estimated results may or may not be realized.

    9.  INTEREST
    The Company capitalizes interest costs associated with the construction of
    certain assets.  These costs are not significant.  Interest paid during
    the periods was approximately equal to amounts charged to expense.
    Interest income for the year ended December 31 was $17,204,000 in 1995,
    $18,097,000 in 1994 and $19,594,000 in 1993.
 
    10.  RESEARCH AND DEVELOPMENT
    Research and development expenditures for the creation and application of
    new and improved products and processes for the year ended December 31
    were $351,000,000 in 1995, $287,000,000 in 1994 and $277,000,000 in 1993.

38

    11.  DEBT
    At December 31, debt was comprised of the following:
<TABLE>
<CAPTION>
                                                    1995                    1994
--------------------------------------------------------------------------------------------
                                                              Due                     Due
                                              Long         Within      Long        Within
(dollars in thousands)                        Term       One Year      Term      One Year
--------------------------------------------------------------------------------------------
<S>                                          <C>          <C>         <C>        <C>
International bank loans, 5.4% weighted
  interest rate (1994--5.3%), repayable
  in varying amounts through 2013            $206,575     $ 26,715    $202,744   $ 15,666

Convertible subordinated debentures, 9.25%
  M/A-COM debt redeemed August 14, 1995         --            --        65,836       --

Mortgages and other indebtedness, 7.0%
  weighted interest rate (1994--8.6%),
  repayable through 2010                        5,910       15,156      10,263      9,956

International overdrafts and demand loans,
  5.9% weighted interest rate
  (1994--6.5%)                                  --         276,298        --      156,716
--------------------------------------------------------------------------------------------
                                             $212,485     $318,169    $278,843   $182,338
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
</TABLE>
         At December 31, 1995, the payment schedule of debt due after one year
    is as follows:  $26,784,000 in 1997, $44,801,000 in 1998, $21,032,000 in
    1999, $39,272,000 in 2000 and $80,596,000 in 2001 and beyond.

         In the fourth quarter of 1995, the Company established a commercial
    paper program for maximum borrowing of $200,000,000.  In addition, an
    agreement for a $150,000,000 five-year revolving credit facility was
    signed with a group of U.S. banks primarily to back-up the commercial
    paper program. The facility fee is 6.25 basis points annually and interest
    rate options on the facility include: (1) the higher of the Federal funds
    rate plus 1/2 of 1% or the prime commercial lending rate of the lead bank,
    (2) LIBOR, or (3) rates determined as part of a competitive bidding
    process. This formal syndicated credit facility replaced certain existing
    uncommitted short-term facilities and has a minimum shareholders' equity
    requirement of approximately $2 billion.  Neither of these funding sources
    has been used as of December 31, 1995.

         At December 31, 1995 and 1994, the fair values of the Company's
    short-term and long-term debt were not significantly different from the
    respective carrying values.

    12.  SHAREHOLDER RIGHTS PLAN
    On October 25, 1989, the Board of Directors adopted a Shareholder Rights
    Plan and declared a dividend of one Common Stock Purchase Right (a
    "Right") for each outstanding share of Common Stock.  Such Rights only
    become exercisable, or transferable apart from the Common Stock, ten
    business days after a person or group (an "Acquiring Person") acquires
    beneficial ownership of, or commences a tender or exchange offer for, 20%
    or more of the Company's Common Stock.

         Each Right then may be exercised to acquire one share of the
    Company's Common Stock at an exercise price of $87.50, subject to
    adjustment.  Thereafter, upon the occurrence of certain events (for
    example, if the Company is the surviving corporation of a merger with an
    Acquiring Person), the Rights entitle holders other than the Acquiring
    Person to acquire Common Stock having a value of twice the exercise price
    of the Rights.  Alternatively, upon the occurrence of certain other events
    (for example, if the Company is acquired in a merger or other business
    combination transaction in which the Company is not the surviving
    corporation), the Rights would entitle holders other than the Acquiring
    Person to acquire Common Stock of the Acquiring Person having a value
    twice the exercise price of the Rights.

         The Rights may be redeemed by the Company at a redemption price of
    1/2 cent per Right at any time until the tenth business day following
    public announcement that a 20% position has been acquired or ten business
    days after commencement of a tender or exchange offer.  The Rights will
    expire on November 6, 1999.

                                                                          39

    13.  EMPLOYEE RETIREMENT PLANS AND RETIREE MEDICAL BENEFITS
    Defined Benefit Plans--The Company has defined benefit pension plans for
    substantially all U.S. employees, excluding M/A-COM.  Pension benefits are
    based on years of service and earnings near retirement.  Assets of the
    plans are comprised principally of equity securities and fixed income
    investments.  The U.S. plans include provisions to increase benefit
    obligations in the event of a change in control of the Company, as
    defined.  It is the Company's policy to fund at least the minimum amounts
    required by Federal law and regulation.  

         Certain international subsidiaries also have pension plans.  In most
    cases, the plans are defined benefit in nature.  Assets of the plans are
    comprised of insurance contracts and equity securities--or book reserves
    are maintained.  Benefit formulas are similar to those used by the U.S.
    plans.  It is the policy of these subsidiaries to fund at least the
    minimum amounts required by local law and regulation.

         Defined Contribution Plans--The Company also provides retirement
    benefits to U.S. employees through defined contribution plans.  Employees
    working for AMP and certain other U.S. subsidiaries may elect to
    participate in the "Employee Savings and Thrift Plan," a defined
    contribution 401(k) plan, which has been established as a supplemental
    retirement program.  Under this program the Company contributes 60 cents
    for each dollar contributed by an employee up to 4% of an employee's base
    pay.  U.S. employees of M/A-COM may elect to participate in the "MERIT
    Plan of Benefits," a defined contribution 401(k) plan.  Under this plan,
    M/A-COM contributes a certain percentage based on the employee's years of
    service (50%-100%) of each dollar contributed by an employee up to 6% of an
    employee's cash compensation.  Assets of the defined contribution plans
    consist primarily of  various mutual funds, a fixed income fund and AMP
    stock.  Amounts charged to expense for contributions to these plans were
    $15,330,000, $13,641,000 and $13,103,000 for 1995, 1994 and 1993,
    respectively.

         Retiree Medical Benefits--In addition to providing pension and 401(k)
    benefits, the Company also provides health care coverage continuation for
    qualifying U.S. retirees from date of retirement to age 65.

         M/A-COM, Inc. Employee Stock Ownership Plan--M/A-COM had an Employee
    Stock Ownership Plan (ESOP) which enabled employees to accumulate shares
    of stock to supplement their retirement benefits.  The discretionary
    contributions of the ESOP were made entirely by M/A-COM and ESOP share
    purchases were financed by a loan from the Company.  On December 15, 1995,
    M/A-COM terminated the ESOP and made a final contribution in the amount of
    the outstanding loan balance of $2,274,000.  All shares were allocated to
    the participants at December 31, 1995.

    Key economic assumptions used for defined benefit plans were:
<TABLE>
<CAPTION>
                                            U. S. Plans       International Plans
------------------------------------------------------------------------------------
                                           1995      1994       1995       1994
------------------------------------------------------------------------------------
<S>                                        <C>       <C>        <C>        <C>
Settlement rate--
  January 1                                8.50%     7.00%      5.75%      6.25%
  December 31                              7.00%     8.50%      5.25%      5.75%
Rate of increase in compensation levels    4.50%     4.00%      3.25%      4.00%
Expected long-term rate of return          9.50%     9.50%      5.75%      6.25%
</TABLE>
     Components of net periodic pension cost for the year ended
     December 31 were:
<TABLE>
<CAPTION>
                                        U. S. Plans                 International Plans
-------------------------------------------------------------------------------------------------
(dollars in thousands)            1995      1994      1993      1995       1994       1993
-------------------------------------------------------------------------------------------------
<S>                            <C>        <C>       <C>       <C>        <C>        <C>
Service cost - benefits
  earned during the period     $  23,539  $ 22,297  $ 17,787  $ 14,044   $ 13,980   $ 12,988
Interest cost on projected
  benefit obligation              42,188    38,580    35,058    14,922     12,765     13,293
Actual return on plan assets    (126,967)    8,213   (69,507)  (23,541)   (10,126)   (15,457)
Net amortization and deferral     74,918   (55,187)   23,198     8,221     (3,308)     3,339
-------------------------------------------------------------------------------------------------
Net periodic pension cost      $  13,678  $ 13,903  $  6,536  $ 13,646   $ 13,311   $ 14,163  
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
</TABLE>
                                                                          41
     The funded status of these plans at December 31 was:
<TABLE>
<CAPTION>
                                            U. S. Plans          International Plans
------------------------------------------------------------------------------------------
(dollars in thousands)                     1995       1994          1995       1994
------------------------------------------------------------------------------------------
<S>                                      <C>        <C>           <C>        <C> 
Plan assets at fair value                $617,103   $501,305      $265,258   $237,778
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Actuarial present value of
  benefit obligations:
    Vested benefits                       494,089    354,380       192,981    173,070
    Nonvested benefits                     51,946     44,666        35,039     29,391
-----------------------------------------------------------------------------------------
Accumulated benefit obligation            546,035    399,046       228,020    202,461
Additional benefits based on
  projected future salary increases       108,579    110,437        34,533     26,990
------------------------------------------------------------------------------------------
Projected benefit obligation             $654,614   $509,483      $262,553   $229,451
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Plan assets greater (less) than
  projected benefit obligation           $(37,511)  $ (8,178)     $  2,705   $  8,327
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Accrued liability at year-end             (76,745)   (69,408)      (13,973)   (11,601)
  Unrecognized net gain                    28,726     59,528        30,219     33,261
  Unrecognized prior service cost          (9,326)   (14,429)       (1,514)       (88)
  Unrecognized transition amount,
    net of amortization                    19,834     16,131       (12,027)   (13,245)
------------------------------------------------------------------------------------------
Plan assets greater (less) than
  projected benefit obligation           $(37,511)  $ (8,178)     $  2,705   $  8,327
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>
     Components of net periodic retiree medical cost for the year ended
     December 31 were:
<TABLE>
<CAPTION>
(dollars in thousands)                    1995     1994     1993
------------------------------------------------------------------------
<S>                                      <C>      <C>      <C>
Service cost - benefits
  earned during the period               $1,595   $2,417   $1,957
Interest cost on accumulated
  postretirement benefit obligation       1,882    2,266    2,245
Net amortization and deferral               615    1,071    1,071
------------------------------------------------------------------------
Net periodic postretirement benefit      $4,092   $5,754   $5,273
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
     The funded status of these retiree medical plans at December 31 was:
<TABLE>
<CAPTION>
(dollars in thousands)                               1995         1994
---------------------------------------------------------------------------
<S>                                                <C>          <C>  
Plan assets at fair value                          $  --        $  --
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Actuarial present value of
  benefit obligations:
    Retirees                                       $  8,748     $ 11,261
    Employees eligible to retire                      4,771        4,378
    Employees not eligible to retire                 12,989       14,551
---------------------------------------------------------------------------
Accumulated postretirement benefit obligation      $ 26,508     $ 30,190
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Plan assets less than accumulated
  postretirement benefit obligation                $(26,508)    $(30,190)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Accrued liability at year-end                      $(17,284)    $(12,116)
  Unrecognized net gain                               8,982        1,203
  Unrecognized transition amount,
    net of amortization                             (18,206)     (19,277)
---------------------------------------------------------------------------
Plan assets less than accumulated
  postretirement benefit obligation                $(26,508)    $(30,190)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
         For disclosure purposes, the transition asset associated with the
    retiree medical benefits has been netted against the related accrued
    liability.

         Retiree medical benefits expense was computed using a medical cost
    trend rate of 11% graded to 5.5% in year 2002 and later.  For each
    increase of 1% in the medical cost trend rate the benefit obligation
    would increase approximately $1,140,000 and annual expense would increase
    approximately $250,000.  The settlement rate used to compute the
    obligation was 7.00% and 8.50% at December 31, 1995 and 1994, respectively.

    14.  STOCK AWARD PLANS
    Long-Term Equity Incentive Plans--In April 1993, the shareholders approved
    AMP's 1993 Long-Term Equity Incentive Plan (the "AMP Plan").  The AMP
    Plan, as amended in April 1995, provides that Stock Bonus Units ("SARs"),
    Incentive Stock Options ("ISOs"), Non-Qualified Stock Options ("NQSOs")
    and/or restricted stock may be issued to key employees.  Awards of up to
    10,000,000 shares of the Company's Common Stock may be made under this
    plan.  The M/A-COM Long-Term Incentive Plan (the "M/A-COM Plan"), adopted
    in 1990, authorized 336,000  shares for the granting of ISOs, NQSOs,
    outside Directors' options, SARs and restricted stock.  The M/A-COM Plan
    replaced all existing stock award plans but the awards outstanding under
    such existing plans were not affected. Subsequent to June 30, 1995, no
    awards will be made under the M/A-COM Plan.

         Stock Options--The Board of Directors determines the terms and
    conditions applicable to each Stock Option award.  The option price per
    share of Common Stock will not be less than 100% of the fair value of the
    stock on the award date.  Options expire no later than ten years from date
    of grant and may not be exercised earlier than twelve months from such
    date. Generally, options granted under the AMP Plan since inception become
    exercisable on the third anniversary of the grant date.  Currently, no
    options granted under the AMP Plan are exercisable until July 27, 1996. 

         Options granted under the M/A-COM Plan become exercisable over a
    four-year period with 138,317 and 532,000 exercisable at December 31, 1995
    and 1994, respectively. SARs, with an option price of $20.33, were issued
    in tandem with 294,000 of the stock options outstanding under the M/A-COM
    Plan at December 31, 1994.  Based on past experience, the expressed intent
    of the two holders not to elect the SAR option, and the underlying
    economics to the holders, it was management's opinion that SARs would not
    be exercised, and therefore, no compensation expense had been recognized
    through December 31, 1994.  However, as a result of the merger with and
    into AMP on June 30, 1995, the holders elected the SAR option for 196,729
    of the tandem shares and exercised 97,271 options.  The SAR elections were
    made primarily to pay personal income taxes resulting from the exercises,
    as well as the exercise price on the stock options.  Compensation expense
    equal to the difference between the market price at June 30, 1995 and the
    exercise price amounting to $6,557,600 was recorded as part of the merger
    expenses. 

         A summary of the status of the Company's stock option plans follows:
<TABLE>
<CAPTION>
                                ISO's     Average       NQSO's      Average
                               Number       Price       Number        Price
                            of Shares   Per Share    of Shares    Per Share
-----------------------------------------------------------------------------
<S>                           <C>         <C>       <C>           <C>
Outstanding at 12/31/92           --      $  --       780,321     $ 20.04
-----------------------------------------------------------------------------
Granted                       122,400      30.25      532,080       30.15
Exercised                         --         --       (92,082)      19.50
Cancelled                         --         --       (60,262)      20.46
-----------------------------------------------------------------------------
Outstanding at 12/31/93       122,400     $30.25    1,160,057     $ 24.72
-----------------------------------------------------------------------------
Granted                       263,800      35.71      634,560       35.47
Exercised                         --         --       (69,264)      19.64
Cancelled                     (11,600)     34.19      (29,040)      28.84
-----------------------------------------------------------------------------
Outstanding at 12/31/94       374,600     $33.98    1,696,313     $ 28.87
-----------------------------------------------------------------------------
Granted                       377,300      42.85      633,180       42.63
Exercised                         --         --      (282,846)      20.44
Cancelled                     (16,400)     37.87     (242,628)      21.57
-----------------------------------------------------------------------------
Outstanding at 12/31/95       735,500     $38.44    1,804,019     $ 35.77
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
         Stock Bonus Units--Stock Bonus Units awarded under the AMP Plan may
    be granted to participants with or without a Supplemental Cash Bonus, at
    the discretion of the Board of Directors.  The designated value of each
    Stock Bonus Unit may not be less than 95% of the average fair value of the
    stock over the 10 days preceding the award date.  Awards are computed by
    multiplying vested Bonus Units by the excess of the market price of the
    Company's Common Stock over the designated value of the Stock Bonus Unit. 
    Approximately 159,500 shares would be distributed in the years 1996
    through 2000 for Stock Bonus Units granted before and outstanding at
    December 31, 1995, based on the market price at that date.  Stock Bonus
    Units awarded under the M/A-COM Plan of 56,000 were issued and outstanding
    at December 31, 1994.  All of these units converted to shares during 1995
    on a one-for-one basis upon the lapsing of certain restrictions.
    Currently, it is the Company's intention that no future grants of Stock
    Bonus Units will be made under either the AMP or the M/A-COM Plan.

42
         Cash (or Stock) Plan--Key employees, designated by the Board of
    Directors, participate in the Cash (or Stock) Plan.  Compensation under
    the plan is related to the achievement of specified performance
    objectives.  Payments are made in cash or in shares of the Company's
    Common Stock, at the election of the participant.

        Restricted Stock Plan--In April 1995, the Company's shareholders
    approved an amendment to the AMP Plan which provides for a restricted
    stock feature.  This feature represents a fourth type of award under the
    AMP Plan which is available to key executives and is performance-based,
    linking vesting to attainment by the Company of pre-set average annual
    earnings growth targets.  As of December 31, 1995, 87,100 shares have been
    awarded under the plan.

         Charges to income before income taxes for current and future
    distributions under the aforementioned plans for the year ended December
    31 totaled $21,272,600 in 1995, $17,998,000 in 1994 and $12,194,000 in
    1993.

         The M/A-COM, Inc. 1990 Restricted Treasury Stock Plan--This Plan
    reserved 560,000 shares of common stock for granting share allocations as
    an incentive to officers and key employees of M/A-COM.  After receiving an
    allocation of restricted shares, a participant was awarded specified
    percentages of such share allocation on subsequent dates based on the
    achievement of performance targets.  Vesting of the restricted shares
    awarded occurred over a three-year period with all granted share
    allocations ultimately awarded and vested at September 19, 2000, if the
    participant was still employed.  However, due to the merger, all share
    allocations and restricted shares were awarded and/or vested on June 30,
    1995.  Deferred compensation had been recorded as a component of equity
    when the share allocations were granted based on the market price of the
    stock at that date, with deferred compensation amortized over the periods
    to be benefited. Upon the vesting of all share allocations outstanding and
    restricted stock awards, amounting to 405,160 shares at June 30, 1995, 
    deferred compensation of $3,622,000  was expensed entirely.  Deferred
    compensation amortization was $4,568,000, $1,640,000 and $2,026,000 in
    1995, 1994 and 1993, respectively.   No future grants will be made under
    this Plan.

    15.  SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(dollars in thousands              For the 3 Months Ended
except per share data)
---------------------------------------------------------------------------
                        March 31      June 30   September 30  December 31
---------------------------------------------------------------------------
1995
--------------------                                           
<S>                    <C>          <C>          <C>           <C>
Net sales              $1,295,769   $1,336,059   $1,297,413    $1,297,985
Gross income              420,912      448,341      413,285       404,973
Net income                105,315       97,518      110,722       113,779
Net income per share     48 cents     45 cents     51 cents      52 cents

1994
--------------------
Net sales              $  985,243   $1,087,836   $1,105,175    $1,190,813
Gross income              329,556      373,687      378,383       403,256
Net income                 80,620       96,396       95,144       101,630
Net income per share     37 cents     44 cents     44 cents      47 cents
</TABLE>

         The first quarter of 1995 and the year 1994 have been restated to
    reflect the merger with M/A-COM treated as a pooling-of-interests.  Per
    share data for 1994 has been restated to reflect the 2-for-1 stock
    split on March 2, 1995.  The second quarter of 1995 includes expenses
    associated with the merger with M/A-COM of $31 million net-of-tax,
    which reduced net income per share by 15 cents.

    16. INCOME TAXES
    On January 1, 1993, the Company adopted Statement of Financial Accounting
    Standards No. 109, "Accounting For Income Taxes" ("SFAS No. 109").  The
    cumulative effect of adopting SFAS No. 109 was $33,100,000 of income. 
    This amount is reflected in the Consolidated Statement of Income for 1993
    as the cumulative effect of a change in accounting principle.

         Provisions are made for estimated U.S. and foreign income taxes, less
    available tax credits and deductions, which may be incurred on the
    remittance of the Company's share of subsidiaries' undistributed earnings
    not deemed to be indefinitely invested.  Taxes have not been provided on
    international subsidiaries' earnings of approximately $265 million at both
    December 31, 1995 and 1994.  These earnings are deemed to be indefinitely
    reinvested.

                                                                          43

    Components of income tax expense for the year ended December 31 were:
<TABLE>
<CAPTION>
(dollars in thousands)              1995       1994        1993
---------------------------------------------------------------------------
<S>                               <C>       <C>          <C>
U.S. Federal:
  Taxes currently payable         $107,698   $129,236    $ 95,913
  Deferred taxes                     8,243    (36,760)    (21,386)
Foreign:
  Taxes currently payable          105,657    121,414      87,958
  Deferred taxes                     2,102     (2,968)     (2,166)
Other:
  Taxes currently payable           17,082     17,744      21,130
  Deferred taxes                      (382)    (3,644)     (4,575)
---------------------------------------------------------------------------
                                  $240,400   $225,022    $176,874
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
         At December 31, gross deferred tax assets and liabilities were:
<TABLE>
<CAPTION>
(dollars in thousands)                           1995       1994
---------------------------------------------------------------------------
<S>                                           <C>         <C>
Gross deferred tax assets:
  Inventories                                 $ 91,924    $ 92,008
  Pensions                                      23,979      22,357
  Bonus plans                                   16,461      15,794
  Medical benefits                              13,181      10,402
  Accruals                                      31,301      31,174
  NOL carryovers                                44,619      32,448
  Other                                         29,005      23,661
---------------------------------------------------------------------------
                                              $250,470    $227,844
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Gross deferred tax liabilities:
  Depreciation                                $ 66,195    $ 69,831
  Undistributed earnings of subsidiaries        53,200      21,600
  Unrealized investment gains                   12,896      15,644
  Other                                         26,904      19,520
---------------------------------------------------------------------------
                                              $159,195    $126,595
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
         The valuation allowances for deferred tax assets were not
    significant at December 31, 1995 and 1994.

         The Company's effective tax rate varied from the U.S. Federal
    income tax rate for the following reasons:
<TABLE>
<CAPTION>
                                                 1995      1994      1993
---------------------------------------------------------------------------
<S>                                              <C>       <C>       <C>
U.S. Federal income tax rate                     35.0%     35.0%     35.0%
State income taxes, net of federal tax benefit    1.6       2.3       2.6 
Foreign income taxes                              0.6       1.5       2.7 
Other items not individually significant         (1.2)     (1.2)     (1.9)
---------------------------------------------------------------------------
Effective tax rate                               36.0%     37.6%     38.4%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
         The Company has U.S. Federal net operating loss carryforwards
    related to the recently acquired M/A-COM and AMP-AKZO businesses
    amounting to approximatley $100 million at December 31, 1995.  The
    net operating loss carryforwards expire primarily in 2004 to 2010.

         For the year ended December 31, income before income taxes,
    after allocation of eliminations, is as follows:
<TABLE>
<CAPTION>
(dollars in thousands)                      1995      1994      1993
---------------------------------------------------------------------------
<S>                                        <C>       <C>       <C>
United States operations                   $395,126  $285,616  $253,343
International operations                    272,608   313,196   207,880
---------------------------------------------------------------------------
Worldwide income before income taxes       $667,734  $598,812  $461,223
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
         Income tax payments were $243,500,000 in 1995, $190,025,000 in
    1994, and $176,090,000 in 1993.

44

    17.  BUSINESS SEGMENTS
    AMP develops, manufactures and markets electrical, electronic and electro-
    optic connection products,  interconnection systems and connector-
    intensive assemblies.  The Company's customers include original equipment
    manufacturers and their subcontractors, utilities, government agencies, 
    distributors and value-added resellers.   Business is concentrated  in one
    product area--electrical and electronic components. 

         The operations of the Company are worldwide and can be grouped into
    several geographic segments.  Operations outside the United States are
    conducted through wholly-owned subsidiary companies that function within
    assigned, principally national, markets.  The subsidiaries manufacture 
    locally where required by market conditions and/or customer demands, and
    where permitted by economies of scale.  Most are also self-financed. 
    However, while they operate fairly autonomously, there are substantial
    intersegment and intrasegment sales.

         Pertinent financial data by major geographic segments for the year
    ended December 31 are:
<TABLE>
<CAPTION>
(dollars in thousands)           1995          1994          1993
------------------------------------------------------------------------
<S>                          <C>           <C>           <C>
Net sales to trade customers:
  United States              $2,238,594    $1,955,329    $1,747,294
  Europe                      1,698,407     1,308,604     1,117,884
  Asia/Pacific                1,059,095       892,085       759,822
  Americas                      231,130       213,049       165,476
------------------------------------------------------------------------
      Total                  $5,227,226    $4,369,067    $3,790,476
------------------------------------------------------------------------
------------------------------------------------------------------------
Intersegment sales:
  United States              $  482,962    $  399,968    $  346,601
  Europe                         64,688        49,274        37,105
  Asia/Pacific                   95,443        73,706        44,767
  Americas                       11,222        15,301         9,206
    Eliminations               (654,315)     (538,249)     (437,679)
------------------------------------------------------------------------
      Total                  $   --        $     --      $     --
------------------------------------------------------------------------
------------------------------------------------------------------------
Pretax income:
  United States             $   398,826    $  300,173    $  283,731
  Europe                        192,807       184,666       130,910
  Asia/Pacific                   74,305       112,302        75,224
  Americas                       11,096        21,797         2,126
    Eliminations                 (9,300)      (20,126)      (30,768)
------------------------------------------------------------------------
      Total                 $   667,734    $  598,812    $  461,223
------------------------------------------------------------------------
------------------------------------------------------------------------
Identifiable assets:
  United States             $ 2,676,394    $2,495,379    $2,235,201
  Europe                      1,135,606       956,351       703,448
  Asia/Pacific                1,022,667       905,289       763,843
  Americas                      121,489       107,874        87,152
    Eliminations               (451,417)     (372,347)     (344,022)
------------------------------------------------------------------------
      Total                 $ 4,504,739    $4,092,546    $3,445,622
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
         Transfers between geographic segments are generally priced at
    "large quantity customer prices less a discount" for items not
    requiring further manufacture and at "cost plus a percentage" for
    items subject to further processing.

         Availability of remittances to the parent company is subject
    to exchange controls and other restrictions of the various countries.

         Foreign currency transaction net losses, after adjustment for
    income taxes to the extent appropriate, decreased net income by
    $5,525,000 in 1995, $4,452,000 in 1994, and $2,665,000 in 1993.
                                                                          45
       
    STATEMENT OF MANAGEMENT RESPONSIBILITY

    The financial statements and other financial information contained in this
    Annual Report are the responsibility of management.  They have been
    prepared in accordance with generally accepted accounting principles
    applied on a materially consistent basis and are deemed to present fairly
    the consolidated financial position of AMP Incorporated and subsidiaries,
    and the consolidated results of their operations.  Where necessary,
    management has made informed judgments and estimates of the outcome of
    events and transactions, with due consideration given to materiality.

         As a means of fulfilling its responsibility for the integrity of
    financial information included in this Annual Report, management relies on
    the Company's system of internal controls.  This system has been
    established to ensure, within reasonable limits, that assets are
    safeguarded, that transactions are properly recorded and executed in
    accordance with management's authorization and that the accounting records
    provide a solid foundation from which to prepare the financial statements. 
    It is recognized that no system of internal controls can detect and
    prevent all errors and irregularities.  Management believes that the
    established system provides an acceptable balance between benefits to be
    gained and their related costs.

        It has always been the policy and practice of the Company to conduct
    its affairs ethically and in a socially responsible manner.  Employee
    awareness of these objectives is achieved through regular and continuing
    key written policy statements.  Management maintains a systematic program
    to ensure compliance with these policies.

        As part of their audit of the financial statements, the Company's
    independent public accountants review and assess the effectiveness of
    selected internal accounting controls to establish a basis for reliance
    thereon in determining the nature, timing and extent of audit tests to be
    applied.  In addition, the Company maintains a staff of internal auditors
    who work with the independent public accountants to ensure adequate
    auditing coverage of the Company and who conduct operational audits of
    their own design.  Management emphasizes the need for constructive
    recommendations as part of the auditing process and implements a high
    proportion of their suggestions.

         The Audit Committee of the Board of Directors meets with the 
    independent public accountants, internal auditors and management
    periodically to review their respective activities and the discharge of
    each of their responsibilities.  Both the independent public accountants
    and the internal auditors have free access to the Audit Committee, with or
    without management, to discuss the scope of their audits and the adequacy
    of the system of internal controls.

    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

    To the Shareholders and Board of Directors of AMP Incorporated:

    We have audited the accompanying consolidated balance sheets of
    AMP Incorporated (a Pennsylvania Corporation) and subsidiaries as of
    December 31, 1995 and 1994, and the related consolidated statements of
    income, shareholders' equity and cash flows for each of the three years in
    the period ended December 31, 1995.  These financial statements are the
    responsibility of the Company's management.  Our responsibility is to
    express an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally accepted
    auditing standards.  Those standards require that we plan and perform the
    audit to obtain reasonable assurance about whether the financial
    statements are free of material misstatement.  An audit includes
    examining, on a test basis, evidence supporting the amounts and
    disclosures in the financial statements.  An audit also includes assessing
    the accounting principles used and significant estimates made by
    management, as well as evaluating the overall financial statement
    presentation.  We believe that our audits provide a reasonable basis for
    our opinion.

         In our opinion, the financial statements referred to above present
    fairly, in all material respects, the consolidated financial position of
    AMP Incorporated and subsidiaries as of December 31, 1995 and 1994, and
    the consolidated results of their operations and their cash flows for each
    of the three years in the period ended December 31, 1995, in conformity
    with generally accepted accounting principles.

         As explained in Note 16 to the financial statements, effective 
    January 1, 1993, the Company changed its method of accounting for income
    taxes to conform with the provisions of Statement of Financial Accounting
    Standards No. 109, "Accounting for Income Taxes."




    Philadelphia, PA
    February 16, 1996                               Arthur Andersen LLP

		



46